tag:blogger.com,1999:blog-30863220136243721502024-03-28T05:11:21.138-07:00Bitcoin News - Latest Crypto & Bitcoin NewsLatest news about bitcoin, ethereum, blockchain, mining, cryptocurrency prices and more. The latest cryptocurrency news.Unknownnoreply@blogger.comBlogger509125tag:blogger.com,1999:blog-3086322013624372150.post-15244272849004569172024-03-28T05:10:00.001-07:002024-03-28T05:10:48.691-07:00Bitcoin Address Data Now Available In Google Search<p>In a significant move, Google has begun indexing Bitcoin blockchain data into its search engine results. Users can now search for Bitcoin addresses and see transaction details directly in Google searches.</p>
<blockquote class="twitter-tweet">
<p lang="en" dir="ltr" xml:lang="en">NEW: Google has recently started indexing <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> data into their search engine đ<br />
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Huge Development đ <a href="https://t.co/hIAJfLkYXh">pic.twitter.com/hIAJfLkYXh</a></p>
â Bitcoin Magazine (@BitcoinMagazine) <a href="https://twitter.com/BitcoinMagazine/status/1773268531041144968?ref_src=twsrc%5Etfw">March 28, 2024</a></blockquote>
<script async="async" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>This integration comes after years of Google's rocky relationship with Bitcoin. The tech giant banned Bitcoin-related ads in 2018 before reversing course in January 2024 and allowing Bitcoin ETF ads after their approval earlier this year. The policy change signaled Google's warming stance.</p>
<p>Now, displaying Bitcoin data in search results greatly expands public access to on-chain activity. With Google processing over 3.5 billion searches daily, basic Bitcoin blockchain data is now conveniently available alongside standard web results.</p>
<p>Currently, Google is allowing three address formats - P2PKH, P2SH, and Bech32. When searching any of these Bitcoin public addresses, users will see the current balance, its last update and the balance as of the last transaction.</p>
<p>The move is significant given Google's vast global user base. Mainstream Bitcoin adoption depends partly on accessible tools for exploring and understanding the Bitcoin blockchain, and Google search democratizes this capability to some extent.</p>
<p>For now, Bitcoiners are applauding Google for the incremental integration. By surfacing primary data alongside standard results, Google has opened the door to broader on-chain literacy. If adoption continues growing, more comprehensive indexing may be close behind.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-28317007880864137472024-03-27T09:11:00.001-07:002024-03-27T09:11:19.018-07:00Casa's New 'Bitcoin Inheritance' Product Aims to Protect Generational Wealth<p>Bitcoin self-custody platform Casa announced that itâs launching a new inheritance product â Casa Inheritance â for its global customer base. </p>
<p><a href="https://casa.io/">Casa</a>, known for helping crypto investors secure their BTC and other digital assets with multisig vaults, aims to make it easy for its customers to transfer their digital assets to their loved ones when said customers pass away.</p>
<p>âWhat weâve found through talking to our customers is that their family members do not know how to use a hardware wallet and do not want to [use them],â co-founder and CEO of Casa Nick Neuman told Bitcoin Magazine. </p>
<p>âThis [product] lets them have an experience that feels really comfortable. They just use the Casa mobile app to access [the] funds. It reduces anxiety [at] a time when theyâre already feeling pretty anxious," he added.</p>
<p>Casa Inheritance employs the technology that underpins all of its products: multi-key vaults. To access these vaults, a customer must use a combination of different private keys, a security protocol known as multi-signature or âmultisig.â </p>
<p>Casa Inheritance comes with a 3-key vault and costs $250 per year, according to a press release shared with Bitcoin Magazine. To unlock the funds in the vault, a user only needs two of the three keys.</p>
<p>The setup and transfer process look like this: A Casa customer grants a recipient access to one of the encrypted private keys via the Casa app. If the customer is incapacitated, the recipient can request access to the vault via the app, which sets into motion a six-month waiting period. </p>
<p>The customer is notified of the request. If they donât decline it, the recipient gains access to the account with the private key the customer shared as well as another private key that Casa holds. All of this is accomplished without any KYC (know-your-customer) requirements.</p>
<p>Originally, Casa only offered this type of service to its private client members, but in the wake of the spot bitcoin ETFs coming to market, Casa has received more inquiries from people looking to hold actual BTC and transfer it across generations.</p>
<p>âAfter the ETFs launched, weâve been getting more [inquiries] from people [who are] realizing that one of the really big benefits of bitcoin is that you can own it yourself,â Neuman told Bitcoin Magazine. </p>
<p>âFor people who are using Bitcoin as a hedge against systemic risk in the legacy financial system, you cannot hold Bitcoin in an ETF and still have that same investment thesis," he continued. "So, [our new clients] have been thinking about their thesis and what types of solutions actually align with it. The one that aligns with that type of hedge is self-custody."</p>
<p>"So, then you need to think: Within the realm of self-custody, how do I make sure I have a solution thatâs secure, easy to use and solves all of the problems that I would need to solve if I were holding a meaningful amount of wealth in bitcoin? And inheritance is a huge part of that. [They] need to make sure that wealth can actually be passed from generation to generation.â</p>
<p>For more information on Casa Inheritance and Casaâs other products, visit the companyâs website at <a href="https://casa.io/">https://casa.io/</a>.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-2300074057620525042024-03-27T08:10:00.001-07:002024-03-27T08:10:42.718-07:00Bitcoin ETFs Saw an Impressive $418 Million Rebound After Recent Outflows<p>Bitcoin U.S. spot ETFs saw a remarkable reversal this week, with a massive $418 million net inflow on Tuesday. This comes after the ETFs experienced 5 straight days of net outflows last week during Bitcoin's dip below $60,000.</p>
<blockquote class="twitter-tweet">
<p lang="en" dir="ltr" xml:lang="en">NEW: <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> ETFs saw a $418 million net inflow yesterday following five consecutive days of outflows last week.<br />
<br />
We are so back đ <a href="https://t.co/qfobpZOT5b">pic.twitter.com/qfobpZOT5b</a></p>
â Bitcoin Magazine (@BitcoinMagazine) <a href="https://twitter.com/BitcoinMagazine/status/1772907991991202114?ref_src=twsrc%5Etfw">March 27, 2024</a></blockquote>
<script async="async" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>The turnaround signals renewed confidence among institutional investors, who have eagerly piled into Bitcoin ETFs since the first US ETF approval earlier this year. The SEC has now approved eleven spot Bitcoin ETFs after years of rejecting applications.</p>
<p>Fidelity's Wise Origin Bitcoin Trust ETF (FBTC) led Tuesday's surge. It saw a staggering $279 million in inflows, the largest single-day gain since its launch. </p>
<p>The influx starkly contrasts last week's bearish sentiment, when over $200 million flowed out of Bitcoin ETFs as prices fluctuated amid a broader Bitcoin price dip.</p>
<p>Now, with Bitcoin stabilizing around $70,000, institutional interest is returning. While Grayscale's Bitcoin Trust (GBTC) continued bleeding assets, BlackRock's iShares Bitcoin ETF (IBIT) saw $162 million added on Tuesday. The total assets under management across Bitcoin ETFs are nearly $59 billion. </p>
<p>The sharp inflow reversal underscores Wall Street's growing appetite for Bitcoin exposure via regulated investment vehicles. Bitcoin ETFs are passing their first real test in a volatile market environment.</p>
<p>If the adoption trend persists despite market swings, Bitcoin ETFs could cement their status as the preferred Bitcoin on-ramps for institutional dollars. Their growth and resilience reflect Bitcoin's broadening mainstream acceptance.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-26989638154835660752024-03-27T06:11:00.000-07:002024-03-27T06:10:59.974-07:00Nigerian Binance Executive Escapes Custody, Deepening Ongoing Feud<p><strong><em>The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox,</em></strong> <strong><em><a href="https://bmpro.substack.com/">subscribe now</a>.</em></strong></p>
<figure><a href="https://bmpro.substack.com/"><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjAxMjU3OTE4Njk0MTcyMTYx/mtg5njayntyzmtmymjm2ode4.jpg" height="246" width="1200" /></a></figure>
<p>In Nigeria, home of the largest digital asset economy in Africa, a feud has been developing between the government and Binanceâa feud that has culminated with one of the companyâs executives escaping house arrest and fleeing the country.</p>
<p>Boasting the sixth-largest population in the entire world, the Federal Republic of Nigeria holds a large economic influence over the African continent and a respectable sway in the greater world market. Although the possible future for Nigeriaâs economic development has been a topic of great interest for global financial institutions, a particular point of interest is the nationâs apparent affinity for Bitcoin; for example, the country is at the <a href="https://cointelegraph.com/news/nigeria-becomes-the-most-crypto-obsessed-nation-after-april-crash-report">top</a> of nations by relevant Google searches such as âinvest in crypto," etc. Additionally, due to some of the classic reasons like rampant inflation and declining local currency, Nigeria also contains the <a href="https://www.aljazeera.com/news/2024/3/25/binance-executive-detained-in-nigeria-in-crypto-case-escapes-custody">largest</a> trading volumes in all of Africa. For these reasons, the possible bitcoinization of Nigeria would be a significant boon to Bitcoiners worldwide, and the country may one day be a real hub for the industry.</p>
<p>Therefore, Bitcoiners today should certainly be interested in the developing feud concentrated between Binance and the Nigerian government, with special attention to the possibility of a broader crackdown on the industry. The quarrel <a href="https://cryptoslate.com/binance-accused-of-manipulating-nigerian-naira-as-glitch-impacts-p2p-traders/">began</a> in earnest in February 2024, when an alleged âglitchâ in Binanceâs peer-to-peer (P2P) transaction platform led to deflated prices for users, as government officials formally accused the company of âblatantly setting a special exchange rate for Nigeriaâ and âtrying to manipulate our currency to Ground Zeroâ. The Central Bank (CBN) considered the widespread usage of P2P Bitcoin transactions as a possible contributor to the nairaâs falling performance, and sought to take action against Binance. <a href="https://www.bloomberg.com/news/articles/2024-01-15/nigeria-inflation-rate-climbs-to-27-year-high-on-transport-costs">Considering</a> that inflation in Nigeria is climbing at the fastest rate in decades, this problem seemed especially concerning to authorities.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MzE0Njk5NzIwNDAyNDMw/c87cac7f-f148-47d9-8559-fa3efb7b5c70_1200x675.jpg" height="675" width="1200" />
<figcaption><em><a href="https://www.bloomberg.com/news/articles/2024-01-15/nigeria-inflation-rate-climbs-to-27-year-high-on-transport-costs">Source</a></em></figcaption>
</figure>
<p>To this end, a somewhat confusing series of events unfolded: <a href="https://bitcoinmagazine.com/markets/nigeria-blocks-access-to-coinbase-binance-and-kraken-as-naira-falls-to-record-lows">reports</a> circulated in February that the government was blocking services from major exchanges like Binance, Coinbase, and Kraken. Coinbase, for its part, <a href="https://www.coindesk.com/policy/2024/02/22/coinbase-pushes-back-on-reports-its-blocked-in-nigeria/">claimed</a> that they had experienced no such troubles with the Nigerian government at the time. The government went on to clarify its position when the CBN singled out Binance, <a href="https://www.coindesk.com/policy/2024/02/28/binance-nigeria-moved-26b-worth-of-untraceable-funds-in-2023-central-bank-chief-says-reports/">announcing</a> that some $26 billion in âuntraceableâ funds had apparently passed through the companyâs operations in Nigeria. This quantity of cash would represent a significant capital outflow for the entire economy. Additionally, of course, such a large figure certainly reflects a relatively high level of interest and adoption in the broader population. After Binance refused to cooperate with allegations that it had enabled various financial crimes on its platform, the government took the <a href="https://decrypt.co/220090/nigeria-demands-arrests-binance-execs-crypto-crackdown">aggressive</a> step of detaining two executivesâa British and an American citizen.</p>
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<p>This step led to a flurry of activities as the situation between Nigeria and the crypto economy became increasingly muddied. Was the government targeting Binance due to its recalcitrant attitude, or is it only the first step in a planned crackdown on the wider world of Bitcoin? The government shuttered the largest P2P exchange in the nation, but is the practice of P2P Bitcoin trading itself next on the chopping block? Nigerian <a href="https://www.coindesk.com/policy/2024/03/07/nigerias-sec-updates-guidelines-for-crypto-firms-in-bid-to-stop-criminal-activity-report/">regulators</a> published an updated list of guidelines for foreign exchanges to follow, and the government additionally entered a new <a href="https://cointelegraph.com/news/nigerian-central-bank-hires-gluwa-enaira-credit-profiles">partnership</a> to experiment with the feasibility of rolling out a CBDC, the eNaira. In the United States, the Chamber of Digital Commerce even <a href="https://cointelegraph.com/news/biden-pressured-to-intervene-in-us-citizens-detention-by-nigeria">pressured</a> the White House to intervene in the situation, demanding that the American Binance official be released from custody.</p>
<p>This tense and ambiguous situation came to a head in a very unexpected way when Nadeem Anjarwalla, a dual British-Kenyan national and arrested Binance executive, <a href="https://www.bbc.com/news/world-africa-68656119">escaped</a> Nigerian custody with a âsmuggled passportâ and fled the country on March 25th. Although his family claimed that Anjarwallaâs exit from the country was entirely legal, Nigeria has asked INTERPOL to post an international arrest warrant for him. Apparently, Anjarwallaâs guards <a href="https://www.aljazeera.com/news/2024/3/25/binance-executive-detained-in-nigeria-in-crypto-case-escapes-custody">allowed</a> him to leave house arrest to visit a nearby mosque and attend worship services, where he disappeared. Not only have the guards been arrested pending an investigation, but the government has also formally <a href="https://www.coindesk.com/policy/2024/03/25/nigeria-charges-binance-with-tax-evasion-reports/">charged</a> Binance with tax evasion. Anjarwallaâs American colleague, Tigran Gambaryan, remains in federal custody and has been named as a defendant in the accusations.</p>
<p>These certainly seem like grim portents for the Nigerian Bitcoin space, to be sure. However, the possibility remains that the government is merely attempting to <a href="https://www.coindesk.com/consensus-magazine/2024/03/25/is-nigeria-strong-arming-binance/">strongarm</a> Binance specifically, as the company has already been swamped with legal problems. In addition to the firmâs troubles in Africa, it has also suffered major setbacks on three separate continents. The most famous of these is the US Department of Justiceâs <a href="https://www.coindesk.com/policy/2023/11/21/binance-to-settle-charges-with-us-doj-source/#:~:text=Binance%2C%20the%20world's%20largest%20crypto,obtained%20from%20a%20corporate%20defendant.">fine</a>: the company must pay $4.3 billion, and CEO Chengpeng Zhao was forced to resign, likely to face prison time. Binance.US was spun off to better accommodate American legal requirements, but even this subsidiary is <a href="https://cointelegraph.com/news/binance-mortal-blow-sec-lawsuits-law-decoded">mired</a> in a series of class-action suits and SEC battles that will probably kill it. It would hardly be the first time, as CommEX, Binanceâs successor in Russia after a similar exodus, just <a href="https://www.themoscowtimes.com/2024/03/25/binance-crypto-firms-successor-in-russia-announces-closure-a84614">closed</a> its doors on March 25th. The company was also <a href="https://www.coindesk.com/policy/2024/03/25/binance-blocked-by-philippines-securities-watchdog/">blocked</a> in the Philippines the same day, after the government accused Binance of operating without a license.</p>
<p>In other words, the Nigerian government may have simply picked now as the opportune time to strike at a beleaguered rival, one who has <a href="https://www.coindesk.com/policy/2023/06/10/binances-nigeria-unit-ordered-to-halt-illegal-operations-by-securities-watchdog/">long</a> been a target of securities watchdogs in the country. To be sure, there are several worrying signs of a possible Bitcoin crackdown, as a Nigerian court <a href="https://www.coindesk.com/policy/2024/03/19/nigerian-court-orders-binance-to-relinquish-data-of-all-nigerians-trading-on-its-platform-report/">ordered</a> Binance to hand over data on its largest traders, accompanied by rumors that street crypto traders were being targeted by police. The investigation into the eNaira, a possible CBDC to replace the demand for Bitcoin and other digital assets, certainly did not help matters. Nevertheless, there are still plenty of reasons to see a path forward.</p>
<p>For one thing, Paxfulâs former CEO and NoOnesâ current CEO, Ray Youssef, was publicly <a href="https://cointelegraph.com/news/nigerian-crypto-fee-hike-spurs-vc-interest-amid-p2p-regulatory-hurdles">enthusiastic</a> about his companyâs chances in Nigeria. Youssef suggested that Nigeria actually raise the registration fees for exchanges to operate in the country, calling the move an invitation to the âbig boysâ such as Coinbase or his own company operating in the Nigerian market. Youssef went on to state that the government has an interest in restricting these foreign conglomerates from acting as the main venue for P2P sales for fear of capital flight, and exchanges with zero or limited P2P functionality should be welcome to operate normally.</p>
<p>Nigerian consumers have a high preference for P2P as the ideal method for buying and selling Bitcoin, and the possibility that $26 billion can flow from Binanceâs P2P market to uncertain locations has shaken the government deeply. Nevertheless, the actual practice of P2P Bitcoin sales is alive and well in the Nigerian market without Binance as an intermediary; for example, International Womenâs Day 2024 in Nigeria was marked by large and well-attended <a href="https://bitcoinmagazine.com/culture/amidst-p2p-clampdown-nigeria-bitcoiners-empowers-women-with-bitcoin-education">seminars</a> focused on educating women from all walks of life on Bitcoin. Focused on demystifying the world of decentralized finance and empowering women, these seminars were sponsored by a wide variety of P2P channels, enthusiasts, and businesses in the Nigerian crypto scene.</p>
<p>From where weâre standing, it seems that the rumors of a broader crackdown on Bitcoin in Nigeria have been greatly exaggerated. Considering that the governmentâs feud with Binance is rapidly escalating towards an international manhunt, itâs easy to imagine that the government would be making similar attacks on other exchanges like Coinbase or even the Bitcoin world altogether if it had any great interest in doing so. Binance has been perceived as a scofflaw towards Nigerian regulations for some time now, and it seems that their simultaneous legal battles in many jurisdictions have presented an opportunity for Nigeria to join in. The spirit of Bitcoin, however, is alive and well, and Binanceâs competitors are more than willing to fill their niche in the market. Itâs anyoneâs guess as to how robust the Bitcoin industry in Nigeria will be five years from now, as the countryâs economy as a whole continues to develop. One thing seems certain, however: Itâll take a lot more than one fight to keep Bitcoin down.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-59175708100901311482024-03-26T12:10:00.001-07:002024-03-26T12:10:42.761-07:00Super Testnet Introduces Hedgehog: A Protocol For Asynchronous Layer 2 Bitcoin Payments<p>Today, a freelance developer focused on Bitcoin and the Lightning Network, <a href="https://x.com/super_testnet/status/1772647977892405739?s=20">Super Testnet</a>, <a href="https://stacker.news/items/481321">unveiled</a> his latest invention, Hedgehog, a protocol for asynchronous layer two bitcoin payments.</p>
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<p>"This is a protocol similar to the Lightning Network," Super Testnet stated. "And that it is a layer 2 for Bitcoin payments, only in this one, unlike the Lightning Network, the two parties don't have to both be online, it's asynchronous. One party can send the other money then they're offline."</p>
<p>One of the features of Hedgehog channels is its simplicity compared to lightning channels, according to the project's <a href="https://github.com/supertestnet/hedgehog">Github</a>. State updates in Hedgehog channels only require the sender to propose an update, which the recipient can then accept at their convenience. This asynchronous nature allows for more flexibility and efficiency in payment processing.</p>
<p>The protocol works by leveraging a primitive in Bitcoin script known as "revocable connectors." These connectors are built on two even more primitive components: revocable scripts and connector outputs. Revocable scripts allow either party to revoke a transaction after a certain period, adding an extra layer of security and control. Connector outputs allow you to construct a pre-signed transaction spending a separate UTXO alongside the connector output, allowing the transaction to be invalidated by spending the connector output by itself. </p>
<p>To illustrate how Hedgehog channels operate, consider a scenario where Alice opens a channel with Bob by sending a certain amount of bitcoin into a multisig address. Using the revocable connectors, Alice can then send off-chain payments to Bob while he is offline. These payments are embedded in a piece of text, similar to a cheque, and can be sent via email or other communication methods.</p>
<p>When Bob comes online, he has the option to accept or reject the payment. If he accepts, he can cosign and broadcast the transaction to update the channel balance. If he rejects, he can propose an alternative transaction for Alice to consider.</p>
<p>One of the potential problems that Hedgehog needs to solve is, for instance, if a party sends money to their counterparty they lose the ability to force close the channel because they do not have the other partyâs signature. The protocol provides a conditional revocation mechanism. This mechanism aims to allow the sender to revoke a previous state conditionally, giving both parties a window of time to override the transaction if needed.</p>
<p>Additionally, Hedgehog addresses the issue of funds being stuck in a multisig address if one party becomes permanently unavailable. By incorporating time-lock conditions into the script, the protocol can ensure that funds can still be accessed after a certain period, even if one party is unable to provide their signature.</p>
<p>Super Testnet posted that he has an idea for how to use Hedgehog channels to build a federated CoinPool that he named Burrow. Those interested in that can learn more about it <a href="https://gist.github.com/supertestnet/14addffae669058a9bb9df2e2608ff7f">here</a>.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-43980752814180537612024-03-26T11:10:00.001-07:002024-03-26T11:10:10.985-07:00Bitcoin: The Tree of Bytes<p>The blockchain truly is a marvelous piece of technology. A mechanism to timestamp the order of digital information without needing to depend on a centralized operator. A decentralized mechanism with no one in charge, that provides undeniably cryptographic guarantees around what data was added to the temporal record in what order. This property is the entire reason Bitcoin is useful as a form of digital money, without it there would be no way for the system to function at all without a centralized authority.</p>
<p>All of these guarantees are provided by three simple technical building blocks: private/public key cryptography, merkle trees, and hash algorithms. Every Bitcoin block is just some extra necessary data wrapped around the root of a merkle tree of all the transactions in it. The rest of the header includes data like the timestamp, difficulty target, block version, the hash of the previous block in the chain, and the random nonce used when hashing the head looking for enough leading 0s.</p>
<h2>Cryptographic Commitments, Publishing and Verification</h2>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjk2NzIxMjU1NzM3MzAw/merkle1.png" height="800" width="1067" /></figure>
<p>Miners donât actually hash the whole block, and they donât have to, because of how a merkle tree works. Each piece of data in a merkle tree is hashed, and then each pair of data units is hashed together upwards until you arrive at the single hash of the merkle root. Simply by mining over the header that includes that single hash, miners can prove beyond the shadow of a doubt all the transactions in the block were part of the block they mined, and that it pointed back to a single previous block with a specific set of prior transactions, and so on. In a similar fashion, when people sign Bitcoin transactions, they arenât signing over the actual transactionâs raw bytes, theyâre signing the hash of them. Theyâre the same thing in terms of cryptographic commitment.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjk2NzI5MDQwMzY1NTI0/merkle3.png" height="298" width="1200" /></figure>
<p>The way cryptographic commitments work in combination with proof-of-work are what guarantee we can have a linear view of what was cryptographically committed to in what order. This is the entire basis of Bitcoin, proof-of-work creating a material cost to adding to that chain, and using that to sequence all of the actual data (transactions) committed to in order to completely verify no funny business occurred. As a miner you canât âmineâ two different Bitcoin blocks at the same time, and you canât fake digital signatures or break hash functions.</p>
<p>The entire functioning of the Bitcoin network can be boiled down essentially to two things: committing to information, and publishing that information to be verified. Bitcoin provides two commitment guarantees in terms of data relevant to the protocol: that individual transactions were properly committed to by the correct signatures and other witness data, and that blocks bundling transactions have been committed to by an appropriate amount of work.</p>
<p>This is what gives value to Bitcoin as a network and system, the commitment guarantees it provides using cryptography and thermodynamics, and publishing them so everyone who wants to can verify those commitments. Without the soundness of its commitments, and the public circulation of those commitments, it would be useless as a trustless money.</p>
<p>Those properties of commitment, publishing, and verification are valuable far beyond the use case of money. The movement of money is by no means the only type of information that can gain value from a cryptographic and thermodynamic commitment to when it was created (or the earliest point it existed) and when its existence was publicized to the world. Jpegs have shown people value this for even pointlessly stupid arbitrary information, but there is information immensely more valuable than jpegs in this world.</p>
<h2>Density of Information</h2>
<p>You have to pay for blockspace when you transact on Bitcoin, and that blockspace is priced in bytes. For every byte of space you take up in that block you have to compete with every other person trying to use that blockspace to pay the going market rate, and anyone can always just pay more and push that rate higher. This gives denser information a competitive advantage in trying to get included in a block. If the density of information is very high, i.e. how many bytes of space you need is very small, you can use that blockspace while paying a lower fee in absolute terms than someone with less dense information.</p>
<p>The use of blockspace to transfer economic value is one of the densest forms of information that can be included in a block. This will always be the case, and despite all of the drama and rabble rousing about Bitcoin turning into Ethereum, this will ensure Bitcoinâs primary use case remains the transfer of economic value. It is simply the most competitive use of the system in terms of information density.</p>
<p>However, this does not mean that it will be the only use of Bitcoin. If Bitcoin truly does succeed, the reality is the current market frenzy and activity surrounding Ordinals and Inscription will die off. It will not be cost effective to engage in such activities as the cost of blockspace for lower net worth individuals, and as fees rise that dynamic will compound until the use-case is either priced out entirely or reserved to only immensely wealthy individuals. Maybe one day nation states will inscribe images or data to commemorate important historical events, but middle class degenerate gamblers wonât be inscribing jpegs like trading cards in the future.</p>
<p>They will have to either stop playing those games, or take their games somewhere else.</p>
<h2>There Is No Blocksize Limit</h2>
<p>Merkle trees are magical. They can be literally infinitely large, and all you need to prove that a piece of data is part of one is the root hash, and the other hashes in the interior of the tree all the way to the actual piece of data. Cryptographic magic. The only reason the size of merkle trees in a Bitcoin block are limited in size is because users need to validate the contents of the entire block to ensure every transaction inside it is valid. Verifiability of the commitments in a block are integral to Bitcoinâs functioning as a system.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjk2NzMzMDY2ODk2ODk0/merkle4.png" height="501" width="1200" /></figure>
<p>You can stick a hash inside of an individual Bitcoin transaction, which means because of the magic of merkle trees, <em><strong>there is no such thing as the blocksize limit when it comes to the Bitcoin blockchain committing to data outside of the scope of Bitcoin transactions themselves</strong></em>. The same way that the small blockheader commits to every transaction in a block with a single hash, a Bitcoin transaction itself can commit to a massive merkle tree made up of immense amounts of data. This has literally <a href="https://bitcoinmagazine.com/technical/opentimestamps-has-timestamped-entire-internet-archive-heres-how">been done before with the entire contents of Internet Archive</a>.</p>
<p>Earlier I said that transferring economic value is <em>one of</em> the densest forms of data that could utilize Bitcoin blockspace. One of, not <em>the</em> densest. That is because of general purpose timestamping. A single transaction, with a single hash embedded in it, can literally timestamp an <em>infinite</em> amount of data in a way that 100% proves it existed when that block was mined. It is impossible for any use case of blockspace to be denser in informational terms than this.</p>
<p>Because everything in this merkle tree a transaction commits to has nothing to do with Bitcoin transactions, or whether or not they are valid, it can completely ignore the Bitcoin blocksize limit. On the other hand, it also cannot depend on the Bitcoin network to actually propagate the published information itself, but that is not a critical problem in the digital age.</p>
<h2>Using The Trees</h2>
<p>Satoshi himself in the recently released emails with Martii Malmi <a href="https://x.com/pete_rizzo_/status/1761040097481208185?s=20">discussed the use of Bitcoin as a general purpose timestamping tool</a>. This is something many people have done for as long as Bitcoin existed. Old projects like Wall of Eternity would let you pay to stamp messages into the blockchain. People have announced weddings, the birth of children, as well as other much more childish things using OP_RETURN on the blockchain for over a decade. This combines both the commitment and publication functions into a single action, but one that is incredibly inefficient in its use of blockspace.</p>
<h3>Opentimestamps</h3>
<p><a href="https://opentimestamps.org/">Opentimestamps</a> (OTS) is the perfect example of a scalable mechanism to facilitate at least the commitment aspect of timestamping. The publication of the data (as well as its commitment in the form of a merkle proof) is left entirely on the user timestamping the information, but the actual timestamping commitment is handled by the OTS Calendar Server. As users submit documents or files to the server, it bundles them up into an unordered merkle tree. It continues aggregating all the hash commitments of individual users files into a single tree until it conducts a periodic on-chain Bitcoin transaction which includes the current root hash of the entire tree it is building.</p>
<p>As evidenced by the demonstration cited above, this can have <em>immense</em> value as a utility. Now that the entirety of the Internet Archive as of 2017 is timestamped using OTS, it is thermodynamically impossible to alter the contents of anything contained in that archive in a way that could not be detected. Centralized information stores such as the Internet Archive have historically functioned as what amounts to an oracle. They duplicate and copy the state of different pages or information and we trust them not to lie when they say âthis is what that information looked like at this date.â</p>
<p>With a proper Opentimestamps integration, they would never be a trusted entity in that way ever again. They would simply be a host that stores the information itself alongside an OTS merkle proof, and that itself would prove beyond the shadow of a doubt that the information they are showing you existed in that form at roughly the time they claimed it did. The historical state of arbitrary information secured thermodynamically by Bitcoin.</p>
<h3>Mainstay</h3>
<p>Anyone even remotely familiar with timestamping knows that OTS has one major problem: I can timestamp as many different conflicting things as I want to, and only show you one of them after the fact. For many use cases that boil down to needing to prove a piece of data existed at a certain time, this is a detail that doesnât matter, but for others it does.</p>
<p>If I needed to prove that a piece of data was signed off by someone, say a corporate document signed by an executiveâs private key, it doesnât matter if he signed other (even conflicting) things with that key at the same time. All Iâm trying to do is prove he signed one specific thing. OTS works fine for that. But imagine a situation where someone wants to attest to a file and prove that âofficiallyâ they have attested to only that file and not any others.</p>
<p>Mainstay is a variation of Opentimestamps that addresses this problem. Rather than a completely unordered merkle tree, itâs very specifically organized in such a way that every user has a specific âslotâ in the tree where they can commit to data. Now while this doesnât prevent people from commiting to other conflicting data in general, when using a Mainstay tree they can publicly use an identifiable slot as their âofficialâ commitment. Anyone verifying such commitments can then ignore or not treat as legitimate any commitment with a merkle proof located in any other part of the tree.</p>
<h3>Para-Consensus Systems</h3>
<p>The basic concept of Mainstay can be extended even further to create para-consensus systems piggybacking on top of Bitcoin, Stacks is probably the best known example. By committing the merkle root of arbitrary data in an ordered/identifiable way, and by publishing that information out of band somewhere else so it can be verified against arbitrary rules, a whole new consensus system can be built by anchoring itself into Bitcoinâs blockchain.</p>
<p>Bitcoin itself doesnât need to be aware of this in any way. Because of that fact, information that is consensus invalid to the para-consensus system can be committed to by Bitcoin and published out of band, but participants in that para-consensus system can simply ignore it and wait for the next commitment to valid data in their system. This can allow informational density of other economic assets to match that of arbitrary data timestamps.</p>
<p>This might not be desirable, but it is unstoppable.</p>
<h3>Other Uses</h3>
<p>While tokens like Stacks are rather pointless uses of extending Bitcoinâs thermodynamic commitments in my opinion, some âassetsâ that are not strictly monetary do actually have very sound use cases that could benefit from timestamping. Domain Names and namespaces in general are one. The entire way you interact with the web is steered by DNS, a centralized and trusted system. When you type in <a href="http://www.google.com">www.google.com</a> a hierarchy of servers is telling your computer what actual IP address to connect to. Those servers can arbitrarily redirect you anywhere, they can deny people access to a domain, they can revoke domains, they have total control over those âdirectionsâ everyoneâs computer listens to.</p>
<p>An open and decentralized DNS system piggybacking on top of Bitcoin can address those issues. Rather than an authority granting access to a domain, any person can independently register and commit to a ânameâ tied to a cryptographic key themselves. Software can find published commitments to such data, and on a basis of trusting the first entries to be the âownerâ of a domain, acquire directions to the correct server to connect to from a system that is open, decentralized, and cryptographically verifiable without a centralized authority.</p>
<h2>A Map of Space and Time</h2>
<p>Everyone fixates on the use of Bitcoin as money, and rightly so, it is the primary and core functionality of the protocol and network. The economic incentives its use as money creates are the core of what keeps it secure and functioning, it could not exist without that aspect of itself. It would collapse and fail without it.</p>
<p>But Bitcoin is so much more than <em>just</em> that money system. It is a distributed timestamping system with a decentralized network for publishing everything the system commits to. It is a thermodynamically guaranteed map of digital data in space and time. One that is <em><strong>infinitely</strong></em> extendable. The blocksize limit governs the maximum size of Bitcoin transactions that can be committed to in a single bundle at a time, but it has absolutely no power to restrict any other type of data that the blockchain can commit to.</p>
<p>Bitcoin is a thermodynamically driven blackhole in a digital era, and it was gobble up every byte of information into its merkle trees that in any way can benefit from the cryptographic guarantees that it can provide. Bitcoin is not just money, and no matter how many times people chant it is only money and nothing else, it will never be true.</p>
<p>Bitcoin is a digital monster, and it will eat everything. </p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-49652773508341594352024-03-26T07:10:00.001-07:002024-03-26T07:10:19.015-07:00Bitcoin: The Entropy Engine<h2>Introduction</h2>
<p>Names can be both liberating and confining. When mankind gives something a name, we mark it with a label that helps us discuss our shared environment and experience. At the same time, a label can obscure something in preconceived notions. Labels can make it more difficult for us collectively to understand what something is.</p>
<p>In 2008, a pseudonymous inventor named Satoshi Nakamoto released a white paper titled âBitcoin: A Peer-to-Peer Electronic Cash Systemâ<sup>1</sup>. The paper outlines a novel distributed network system, called Bitcoin, that acts as an immutable digital ledger. There are many ways to describe what the fundamental innovation here really was. For the context of this article, perhaps it is best to describe the innovation as the creation of a computer system that controls a database, which can only be added to or modified depending on the quantity of physical energy (in the form of electricity) supplied to it. Unlike standard computer systems, where linguistic logic coded by a programmer dictates the state of 0s and 1s, this machine changes when it is fed energy from the Earth.</p>
<p>Integrating physical energy into the operations of the computer network was a pivotal moment for the possibility of creating digitally native money. Nick Szabo, in his work âShelling Out: The Origins of Money,â provides an anthropological interpretation of how the use of money developed<sup>2</sup>. In trade, two potentially untrusting parties must find a way to trust one another. To do so, we can rely upon tokens of record that are governed by the laws of nature, which we all can trust. A commodity can be a helpful medium of exchange when it is scarce and hard to reproduce to the degree that people understand the extreme amount of energy and effort it would take to counterfeit one. Scarcity is how homo-sapiens detect the energy required to obtain a given object, giving it trust and validity as a unit of record. The greater the energy, the more desired and valuable it is in our endeavors to cooperate and trust one another. From this point of view, Bitcoin fits this description perfectly, it requires energy to produce and therefore is an immutable record that can be used as powerful money.</p>
<p>However, as this distributed system evolves, it has become evident that the Bitcoin network does more than simply produce a digital, yet scarce, asset called bitcoin that can be used as money. For this reason, it may be helpful to momentarily give Bitcoin another name to reanalyze the broader function of this machine. For now, let us call it an entropy engine instead.</p>
<h2>Entropy</h2>
<p>Entropy is a complicated word that can be articulated in many ways. To begin, consider the equation:</p>
<blockquote>
<p>S = kB x lnâŚ</p>
</blockquote>
<p>S, meaning entropy, equals Boltzmann constant (k) times the natural log of the number of particles (âŚ) contained within a system<sup>3</sup>. Entropy can be described as the quantity of available states a system can have. If there is a big container with many molecules, it will have many more possible configurations than a smaller container with fewer molecules. The more particles the container has, the more variations there are in how the molecules can be arranged. According to the second law of thermodynamics, total entropy in an isolated system cannot decrease, but can only increase. Therefore, because entropy always increases, all the molecules eventually find the most likely arrangement, which is them all being spread out equally. This is known as thermodynamic equilibrium, and the universe tends towards this. The continuous increase in entropy is a law of nature.</p>
<p>Due to entropyâs relationship with possible states, it is also related to randomness. Additionally, it is associated with heat loss. The second law of thermodynamics indicates that when one kind of energy is converted to another type of energy, there will inevitably be some heat loss. The conversion is never 100% efficient. Rub your hands together very quickly, and you will notice that the friction creates heat. This is you contributing to the increase in entropy of the universe.</p>
<p>This new computer system is an entropy engine because it produces both randomness and heat. To add new transactions to the blockchain, a computer running the software must make many guesses until it finds a hash value with a certain number of leading zeroes. The quicker the machine can produce more random guesses, the more likely the machine is to be rewarded with bitcoin. The more randomness the machine can create, the better it functions and the more heat it produces. This machine involves all things entropy.</p>
<p>The users of the machine also benefit from the entropy machine more if they can harness more entropy. The mathematics of entropy is foundational to the science of cryptography. Another way of interpreting the equation above, in terms of informational entropy, is that the more particles in a container represent the amount of information needed to understand the state of the system<sup>3</sup>. Put another way, the more possible states and complexity a system has, the more information one would need to gain an understanding of it. Consequently, more entropy represents more inherent uncertainty or surprise an event might have<sup>3</sup>. The entropy engine relies upon public-private key cryptography. A system user will have a public key where they receive bitcoin. At the same time, only they can send their bitcoin because they have the private key, which cannot be derived from the public key. The safe ownership of bitcoin relies upon an individual keeping their private key secret. Cryptographic schemes rely upon the assumption of highly random private keys<sup>3</sup>. In other words, the more randomness used to form a private key, the more secure one can protect their property on the network. Both the maintainers and users of the network utilize entropy for their benefit.</p>
<h2>Life is in Pursuit of Entropy</h2>
<p>Not only is this system an entropy engine from a technical point of view, but it can also be viewed as a driver of entropy from a societal point of view. The flow of human civilization can be reconciled with the observation that biological life facilitates the increase of entropy. Imagine a bathtub drain: once the drain plug is pulled, the water within the tub wants to flow down into the drain. Think of this as the universeâs tendency towards higher entropy. An orderly and sustained vortex will form at the drain to facilitate this transition expediently. Order develops to absorb and dissipate the energy, speeding up the process of generating more entropy more efficiently. Order, life, and all the complexity on Earth form to expedite the increase of entropy further as the sun transfers energy to the Earth. Plants grow to absorb sunlight and store the energy within themselves, and animals eat those plants to process the energy further, etc. Now consider the tell-tale sign of someone alive: their body is warm. Our body processes energy and dissipates some continuously as heat. Life forms in pursuit of entropy.</p>
<p>Our society moves forward when we learn to find more efficient ways to harness and dissipate energy on Earth. A classic discovery we take pride in was our ability to release the energy stored in wood into fire, producing heat. We then learned to release stored energy within coal and then oil; eventually, we harnessed energy from wind and sunlight and finally upgraded to releasing the energy of atoms themselves. We absorb energy (in the form of wood, coal, oil, sunlight, wind, etc.) only to dissipate it for our gain. In the meantime, our society prospers and experiences excellent technological leaps forward as we learn to harness more advanced forms of energy. As we use the energy, heat loss occurs, and entropy increases. We act as the vortex: order that expedites the process.</p>
<p>Humanityâs fundamental drive is to find and release pockets of stored energy. Interestingly, the entropy engine seems to provide an extra nudge, pushing humanity in this direction to a greater degree. Consider an undeveloped village with no electric infrastructure but near a river where a dam could be built. An ambitious entrepreneur may be interested in making a dam, but the capital expense is high. Additionally, it is not as if the nearby village will immediately purchase all modern electrical luxuries once the dam is built. At most, perhaps each home will gladly buy a lightbulb so their child can study school work after sundown. Though life-changing for the community, the revenue from one lightbulb a night per home is not enough to justify the capital expenditure of the dam. Before the invention of an entropy engine, many areas of the world would be without electricity for similar kinds of reasons. Now, an entropy engine operator is willing to purchase all unused electricity from the dam because cheap electricity leads to profit. The new customer provides a constant and complete excess inventory purchase of electricity for the dam. Suddenly, building a dam becomes economically viable. Before Satoshiâs invention, there were energy sources on Earth that humans did not yet have the financial means to harness. Suddenly, the pockets of energy become viable by inventing an entropy engine, and our harnessing of them multiplies.</p>
<p>Not only does the business model of an entropy engine operator make previously unaffordable energy infrastructure affordable, but it also helps incentivize the development of renewable energy over the usage of less desirable fossil fuels. Energy grids require flexibility due to the electricity demand. The supply of electrons sent to a city needs to equal the demand for electricity at that time. Of course, a cityâs demand for electricity will fluctuate throughout the day and year. An electrical grid needs to be able to dial up and down energy production in response. Currently, there are not enough batteries to store energy when it is not required. This challenges the development of renewable energy infrastructure, especially wind and solar, because nature decides when energy is produced, irrespective of the cityâs electrical needs. If energy is not used, it is curtailed and wasted. If not enough is being produced, the city is without power. One reason fossil fuels are so helpful for grid stabilization is that production can be easily changed immediately depending on electricity demand. Of course, this problem could be mitigated if enough renewables were developed that could constantly produce more energy than peak demand. However, this would leave the energy providers without a customer for their excess electricity most of the time, making it financially unviable. Entropy engine operators can then incentivize renewable energy development by acting as a flexible load response that provides shock-absorbing services while increasing profitability in exchange for cheap electrical costs during times of excess supply<sup>4</sup>. Whatever electricity is not sent to the city is purchased by the entropy engine operators, making the capital investment in renewable infrastructure more economically viable. The same goes for nuclear energy, as these systems also struggle to conduct demand response on their own<sup>4</sup>. Therefore, research has shown that entropy engine operators provide additional revenue sources to incentivize renewable energy production and a greener grid<sup>4,5</sup>.</p>
<h2>Entropy: The Cause of War, and Now Peace</h2>
<p>Human civilizationâs relationship with entropy and the entropy engine does not simply confine itself to how we are driven to harness, release, and use energy from a societal standpoint. It can also be looked at from a socio-political point of view. In a thesis titled <em>Softwar: A Novel Theory of Power Projection and the National Strategic Significance of Bitcoin</em> by Major Jason P. Lowery of the United States Space Force, a description of how energy organizes around the laws of entropy is used to explain the pattern of human behavior around warfare<sup>6</sup>. Power projection theory describes how life formed, per the second law of thermodynamics, by using energy (referred to as power) to sequester other energy (referred to as resources) away from the environment to be used for more personal gain. It is another way of describing how order was formed to facilitate the increase in entropy. This can be observed not only in the first prokaryotic cells that formed in the hydrothermal vents that exist in the fissures of the seafloor but also in the way animals behave in the wild. Major Lowry uses the illustration of wolves snarling their fangs at a would-be thief of their recently acquired game to broadcast that the cost of stealing the resources would be higher than the benefit gained from the food. Here, the wolf is projecting power to keep its resources. Following such reasoning, pack animals such as wolves must create power hierarchies within their communities so that the most powerful wolf, most capable of efficient power projection, is fed and allowed to reproduce so that the pack can have the most power projection capabilities possible to protect their resources. To do so, wolves must physically fight amongst themselves in a competition of dominance. This is an unfortunate requirement, as two wolves will fight until one wolf has their fangs on the jugular of the other to prove superiority<sup>6</sup>. Therefore, the physicality required to create power hierarchies can prove dangerous and fratricidal. Other animals, such as deer, solve this issue with the development of antlers which allows them to use their antlers as power projection weapons against other species but leads to safe competition within their species as the antlers simply tangle as they butt heads without the risk of mortal wounds. In this way, the deer developed a biological method of managing internal power hierarchies using physical power with a decreased risk of fratricide.</p>
<p>Major Lowry puts forth the idea that human beings, through language and storytelling, developed a form of abstract power projection in an attempt to organize resources without physical violence<sup>6</sup>. However, the universe tends toward increasing entropy, and physical energy is used to manage resource energy. Nature does not recognize the management of resources through any other means aside from physical energy. Therefore, human beings are stuck in a problematic cycle where we attempt to organize our societies and resources through abstract power projection, only to have them collapse under the weight of their hollow foundation through physical power projection. To our understandable discontent and frustration, war, civil war, and revolutions are constantly occurring as natureâs only proper mechanism of organizing resources. Though a bleak outlook on how humans must manage themselves, Major Lowry provides hope that the technological innovation of an entropy engine solves this crucial flaw in how our societies organize. The entropy engine is a means of managing resources using physical power. In other words, it acts as a technological antler allowing human beings to organize themselves following the laws of nature without the need for kinetic violence and fratricide. Rather than mutually assured destruction through nuclear warfare, the entropy engine promotes mutually assured protection as we all use the machine to protect our resources and each other simultaneously.</p>
<h2>Conclusion</h2>
<p>The operation of this distributed entropy engine relies upon the competitive production of entropy. Its users can secure their property most when using machines that produce the most entropy. It economically incentivizes, subsidizes, and makes possible the harnessing of previously untapped energy resources of the Earth. It also potentially reduces our need to fight wars in pursuit of resource acquisition because it allows us to compete over resources via other, more peaceful means. This entropy engine, Bitcoin, is accelerating human beings in fulfilling their cosmic purpose of facilitating energy flow in the universe. All while making society more resource-abundant, peaceful, and cooperative. If the second law of thermodynamics is inevitable, what does that make Bitcoin?</p>
<h3>References</h3>
<blockquote>
<p>1. Nakamoto S. Bitcoin: A Peer-to-Peer Electronic Cash System. Accessed November 16, 2021. www.bitcoin.org</p>
<p>2. Szabo N. Shelling Out: The Origins of Money. Satoshi Nakamoto Institute. Published 2002. Accessed April 19, 2023. https://nakamotoinstitute.org/shelling-out/</p>
<p>3. Zolfaghari B, Bibak K, Koshiba T. The Odyssey of Entropy: Cryptography. <em>Entropy</em>. 2022;24(2). doi:10.3390/e24020266</p>
<p>4. Prescott S, Rudd MA, Ignacio IbaĂąez J, Freier A. BitcoinâsBitcoinâs Carbon Footprint Revisited: Proof of Work Mining for Renewable Energy Expansion. <em>Challenges 2023, Vol 14, Page 35</em>. 2023;14(3):35. doi:10.3390/CHALLE14030035</p>
<p>5. Rhodes JD, Deetjen T, Smith C. Impacts of Large, Flexible Data Center Operations on the Future of ERCOT. Published online 2021.</p>
<p>6. Lowry J. <em>Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin: Lowery, Jason Paul: 9798371524188: Amazon.Com: Books</em>. Massachusetts Institute of Technology; 2023.</p>
</blockquote>
<p><em>This is a guest post by Sydney Bright. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-699755575398000452024-03-26T06:10:00.001-07:002024-03-26T06:10:53.173-07:00First Nation to Buy Bitcoin El Salvador Passes $400 Million in Holdings<p>El Salvador, the first country to make Bitcoin legal tender, and to adopt a Bitcoin investment strategy for its national treasury, has now accumulated over $400 million worth of Bitcoin.</p>
<p>President Nayib Bukele led the effort to pass a law making Bitcoin legal tender in 2021. Since then, the country has purchased Bitcoin through daily and periodic purchases announced by Bukele on X.</p>
<p>In addition to direct purchases, El Salvador also generates Bitcoin through a passport program, converts BTC to dollars for businesses, and mines Bitcoin, all of which demonstrates the country's commitment to building a circular Bitcoin economy.</p>
<p>Bukele recently revealed the government's Bitcoin address for the first time to the public. Bukele has <a href="https://x.com/nayibbukele/status/1768425845163503738?s=20">stated</a> that Bitcoin is held in a state-run "piggy bank" style cold storage vault. He also <a href="https://x.com/nayibbukele/status/1768797894977450413?s=20">mentioned</a> that they will be buying 1 Bitcoin every day until "Bitcoin becomes unaffordable with fiat currencies."</p>
<p>El Salvador has purchased over 5,700 BTC to date at an average price of around $42,700. With Bitcoin recently surging past $70,000, the country's holdings are up nearly $80 million.</p>
<p>The president believes Bitcoin will help boost El Salvador's economy through tourism, remittances, and foreign investment. Bitcoin's fixed supply also stands to appreciate against the U.S. dollar over time.</p>
<p>Bukele has frequently touted Bitcoin on X, stating," When Bitcoin's market price was low, [critics] wrote literally thousands of articles about our supposed losses." Now, with Bitcoin soaring, the investment is paying off.</p>
<p>While initially controversial, Bukele's Bitcoin play now looks prescient. If adoption continues accelerating globally, El Salvador's massive early investment could someday make it the world's first Bitcoin-rich nation.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-79233202043430277312024-03-25T14:10:00.001-07:002024-03-25T14:10:54.093-07:00South American Gold Miner Nilam Resources Enters Agreement to Acquire 24,800 Bitcoin<p><a href="http://www.southamericanmining.com/">Nilam Resources, Inc.</a>, a precious metal mining company with principal assets in Peru, has <a href="https://www.globenewswire.com/news-release/2024/03/25/2851986/0/en/Nilam-Resources-Enters-Letters-of-Intent-to-Acquire-24-800-Bitcoin.html">announced</a> it is entering into a Letter of Intent (LOI) with Xyberdata Ltd. to acquire 24,800 bitcoin. This agreement involves acquiring 100% of the common stock of a special purpose entity named MindWave, to be established in Mauritius, which will hold the BTC along with other assets.</p>
<blockquote class="twitter-tweet">
<p lang="en" dir="ltr" xml:lang="en">JUST IN: đľđŞ Gold mining company Nilam Resources to acquire 24,800 <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> worth $1.76 billion.</p>
â Bitcoin Magazine (@BitcoinMagazine) <a href="https://twitter.com/BitcoinMagazine/status/1772359661871587807?ref_src=twsrc%5Etfw">March 25, 2024</a></blockquote>
<script async="async" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>âNilam Resources, Inc. today announced that it has entered into a Letter of Intent (LOI) with Xyberdata Ltd to acquire 100% of the common stock of a special purpose entity, to be established under the name MindWave that will hold 24,800 Bitcoin,â the announcement stated. âNilam Resources, Inc., will issue a newly authorized Preferred Class of Series C Stock in in exchange for 24,800 Bitcoins at a discounted rate relative to current market prices.â</p>
<p>Pranjali More, CEO of Nilam Resources, Inc., expressed enthusiasm about the agreement, stating âThe Company and team have been working diligently over the last several months to finalize all agreements and due diligence necessary to proceed to a legally binding Letter of Intent (LOI).â With Bitcoin gaining recognition as the "Gold Standard" in digital transactions, per the announcement, this transaction aligns with Nilam Resources' vision of driving positive change in the digital economy.</p>
<p>The terms of the acquisition will be outlined in definitive agreements, with MindWave expected to become a subsidiary of Nilam Resources, Inc. Shareholders of MindWave will exchange their equity interest for a new class of Preferred Shares (Class C) issued by NILA, offering conversion rights upon listing on NASDAQ or other liquidity events.</p>
<p>âThis Letter of Intent (LOI) allows our team to work in unison with some of the best minds in Fintech,â said Mr. Nadan, Director of Xyberdata Ltd. âThe Xyberdata Ltd. team has a proven track record of strategic partnerships, acquisitions and continued support innovation for the industry.â</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-66571740482288836352024-03-25T12:10:00.001-07:002024-03-25T12:10:54.998-07:00AMIDST P2P CLAMPDOWN, NIGERIA BITCOINERS EMPOWERS WOMEN WITH BITCOIN EDUCATION<p>In the wake of <a href="https://www.msn.com/en-us/money/markets/binance-executives-arrested-in-nigeria-amid-p2p-trade-ban/ar-BB1j4aaL">ongoing peer-to-peer (P2P) clampdowns in Nigeria</a>, the country's Bitcoin community took a remarkable step towards empowerment by dedicating International Womenâs Day to educating and uplifting women through Bitcoin education. On March 16, 2024, hundreds of women from diverse backgrounds ranging from students and entrepreneurs to professionals and homemakers, united by a shared desire to learn and grow in the digital age, gathered and participated in a series of educational initiatives aimed at empowering women by demystifying Bitcoin and decentralized digital finance technologies. Each session provided attendees with invaluable insights from top tier female experts in different fields of life. Tochi Onyia, Ure Utah, and Ifeoluwa Adegoke opened the attendeesâ mindset to the unending opportunities awaiting them in finance and open source technology world, using their personal career journey as point of contact for young women towards exploring the intricacies of Bitcoin as a technology and its potential to transform their financial futures.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjc0MjQ3MDM0MDU0MTY0/image2.jpg" height="800" width="1200" /></figure>
<h2>Breaking Barriers</h2>
<p>Despite the regulatory challenges surrounding the Blockchain and Digital financial system in Nigeria, the organizers remained undeterred in their mission to empower women. By equipping them with knowledge and skills in Bitcoin, Open Source Tech and Business Analysis, they sought to break down barriers to financial inclusion and create opportunities for economic empowerment. The event hosted by the convener of Women In Bitcoin Club, sponsored by digital financial technology focused firms, Noones, DigiOats, BloccAfricaAfrica creative media and other indigenous P2P channels such as NickXchange proved to be a significant milestone in promoting financial inclusion and gender equality in Nigeriaâs digital economy space. These leading proponents of decentralized technology and financial innovation, showcased their unwavering commitment to driving positive change and fostering a culture of inclusion and empowerment. Their participation was instrumental in making the event a resounding success and reaching a wider audience of women across Nigeria.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjc0MjQ3MDM0MTE5OTYy/image3.jpg" height="800" width="1200" /></figure>
<h2>Looking Ahead</h2>
<p>As Nigeria Bitcoiners reflect on the success of this groundbreaking initiative, they remain steadfast in their commitment to advancing financial literacy and promoting equal access to economic opportunities for women. With continued support from stakeholders, and a favorable regulatory landscape, they are poised to expand their reach and make an even greater impact in the months and years to come. In a time of uncertainty and upheaval, these have demonstrated resilience and resolve in educators efforts to empower women through education and technology. As the world celebrates International Womenâs Day, letâs draw inspiration from their example and continue to work towards a future where all women have the knowledge, resources, and opportunities to thrive in the digital economy, specifically in Africa and the global south at scale.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1Mjc0MjQ3MDM0MDU0NDI2/image1.jpg" height="781" width="1200" /></figure>
<p><em>This is a guest post by Heritage Falodun. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-70580817657999041992024-03-25T10:10:00.001-07:002024-03-25T10:10:53.290-07:00London Stock Exchange To Launch Bitcoin ETN Market In May<p>The London Stock Exchange has <a href="https://www.lse.co.uk/rns/n0324-admission-of-bitcoin-and-ethereum-etns-0ru4pz13dx7so39.html">announced</a> that it will accept applications for the admission of Bitcoin Crypto Exchange-Traded Notes (ETNs) starting from April 8, 2024. This decision follows the Exchange's earlier <a href="https://bitcoinmagazine.com/markets/london-stock-exchange-to-accept-bitcoin-exchange-traded-note-applications">notice</a> on March 11, indicating its intention to allow the trading of Crypto ETNs in the second quarter of the year.</p>
<blockquote class="twitter-tweet">
<p lang="en" dir="ltr" xml:lang="en">JUST IN: đŹđ§ London Stock Exchange to launch market for <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> exchange traded notes on May 28. <a href="https://t.co/hEStU4xUrc">pic.twitter.com/hEStU4xUrc</a></p>
â Bitcoin Magazine (@BitcoinMagazine) <a href="https://twitter.com/BitcoinMagazine/status/1772300318535000299?ref_src=twsrc%5Etfw">March 25, 2024</a></blockquote>
<script async="async" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>Subject to approval by the Financial Conduct Authority (FCA) of the base prospectuses, the Exchange plans to commence trading of these ETNs on Tuesday, May 28, 2024. This move is aimed at ensuring maximum issuer participation on the first trading day and allowing issuers sufficient time to prepare their documentation and meet regulatory requirements.</p>
<p>"We have decided to launch the market in Crypto ETNs on 28 May 2024 to enable the maximum number of issuers to be present in the market on the first day of trading," the notice stated. "In choosing this date we have taken into consideration that we need to ensure that issuers meet the requirements for consideration detailed in the Crypto ETN factsheet and importantly, it will also enable those issuers planning on admitting securities on the launch date, time to prepare documentation to establish a Crypto ETN programme which will require a base prospectus to be approved by the FCA."</p>
<p>Issuers interested in listing securities on the Main Market on May 28 must submit the necessary information to the Exchange by April 15. This includes details on how the issuer and/or the ETN will meet the requirements outlined in the Crypto ETN <a href="https://docs.londonstockexchange.com/sites/default/files/documents/crypto_etn_admission_factsheet.pdf">factsheet</a> and a draft of the base prospectus highlighting relevant disclosures.</p>
<p>However, issuers failing to meet the specified requirements, submit their applications after April 15, or have their base prospectus unapproved by the FCA by midday on May 22, 2024, will not be eligible to participate in the first day of trading.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-35245184704944097252024-03-25T08:10:00.001-07:002024-03-25T08:10:51.549-07:00Bitcoin and Taxation: Government On A Bitcoin Standard<p>How will governments function in a world that has transitioned from fiat to hyperbitcoinization? This is a question that I have thought about recently, and I wanted to think through what happens to governments on a Bitcoin standard. The questions I have are the following: how will governments fund themselves? How do your taxes work in a digital landscape, and how will governments respond to this dilemma?</p>
<h3>How Will Governments Fund Themselves?</h3>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MjcwMDM0MjA4MDA3NDEw/image1.jpg" height="800" width="1067" /></figure>
<p>Most hardcore Bitcoiners probably could care less about what happens to the government on a Bitcoin standard. I would venture to say that they would want all governments to crash and burn. I sympathize with that point of view, but I am also a realist. The average person wants the government around because they have been conditioned to believe it brings a sense of order and protects its citizens. I think it is the opposite, but this isnât a majority view.</p>
<p>Governments of different sizes and configurations have existed for thousands of years and will likely still be around when hyperbitcoinization is realized. So how will governments fund themselves when the power to create money on a whim has been irrevocably taken away from them?</p>
<p>In the West, governments primarily tax income as a major source of revenue because they have the ability to surveil most transactions through payment rails controlled by the Federal Reserve, banks, and through the threat of force and imprisonment. This has worked for them for a long time, but this will no longer be possible on a Bitcoin standard.</p>
<p>The very nature of Bitcoin makes the tracking of the income of every economic participant virtually impossible and very time-intensive, especially when privacy tools such as coinjoins and lightning are thrown into the mix. You can start to understand why governments donât like Bitcoin, it takes away their power.</p>
<p>Without the power to wantonly tax individuals, governments will be forced to develop methods to generate revenue to sustain themselves. More on that later.</p>
<h3>The Bitcoin Economy Of The Future</h3>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MjcwMDM0NDc2NDQyNzM3/image3.jpg" height="800" width="1067" /></figure>
<p>Imagine a future where everyone buys and sells goods peer to peer using Bitcoin. This, by default, would be a tax-free economy. Currently, there is no line of code in the Bitcoin protocol that can calculate sales tax when you buy goods, and no Bitcoiner would even consider creating something like that unless they want to be tarred and feathered as simp for the government.</p>
<p>I donât even know if that is technically possible to do, to be honest. Nobody likes paying taxes and wouldnât shed a tear over not having to pay them anymore. This creates another dilemma for governments around the world. If they canât tax income and they canât effectively tax consumption, what alternatives do they have to sustain themselves?</p>
<p>There is no simple answer to this. I think our whole concept of what government is and how it relates to its people will have to radically shift from a top-down concept to a more decentralized customer service model. This is more in line with the libertarian worldview of what the state should look like, where governments are voluntarily funded by their citizens instead of being compelled to fund it through the barrel of a gun.</p>
<p>Under this model, governments will have to be much smaller than they are today as they would have to be mindful of revenues versus outlays, just like any business would. If the governments are good fiscal stewards of their Bitcoin treasuries, citizens will be far more likely to reward governments with continued support. This form of a signal of support has more influence than voting. The ability to withhold funding will make politicians more responsive to the people.</p>
<p>Elections could still be held as this wouldnât have to change. Political parties would have to show they are good stewards of capital, or the government wouldnât get voluntarily funded and would naturally fall from power in the next election. This is a world that I think we should be working towards, as it will make the world a safer place for everyone.</p>
<h3>How Will Governments Respond To This Emerging Challenge?</h3>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MjcwMDM0MjA4NDY2MDMz/image2.jpg" height="800" width="1199" /></figure>
<p>While this might sound like music to our ears, politicians hate the idea of Bitcoin or having to be responsive to the citizenry. They have it pretty good right now as it is. They get to tell people what to do, get good benefits, and get reelected even if they break their promisesâno wonder they never want to leave office.</p>
<p>In America, incumbents get reelected north of 90 percent. <a href="https://www.opensecrets.org/news/2023/10/incumbent-politicians-enjoy-record-reelection-in-aging-congress/">Did you know in the House of Representatives, the reelection of incumbents has never dipped below 85 percent?</a> So you only have 15 percent of being voted out in the next election. Who doesnât like those odds? This is why nothing changes. We get the same people in office year after year because they know how to play the game and grease the right palms, all thanks to the fiat money printer.</p>
<p>If you want to see all the BS the federal government spends on their deprecating fiat dollar, check out the <a href="https://www.cagw.org/">Citizens Against Government Waste</a> website. This will give you a good idea of the crap that is being funded in your name.</p>
<p>So, knowing this, do you think they will willingly give up all this power, prestige, and influence? I donât think so. They will employ various tricks to either capture Bitcoin for their benefit or make it so cumbersome that people wonât use it.</p>
<p>I fear that Bitcoiners have already fallen into one of their traps with the Bitcoin ETF. I sincerely believe this was a wrong move and can tremendously slow down the adoption of Bitcoin in the US. Sorry to say, but most people want quick and easy regarding anything in life, even Bitcoin.</p>
<p>Answer this question: Why would those with very little knowledge of Bitcoin learn the ins and outs of self-custody, and why is it important when they can âownâ Bitcoin in their retirement account? 9 out of 10 people are going to choose this option. As long as they see their retirement portfolio rise because of Bitcoin, they will gladly oblige to having large custodians like Blackrock hold their Bitcoin, not understanding how dangerous third-party custody really is to Bitcoin.</p>
<p>At least we have a chance with Bitcoin to improve the world. Let's hope people take the opportunity to achieve real freedom. </p>
<p><em>This is a guest post by Robert Hall. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-30308579283555725732024-03-22T09:10:00.001-07:002024-03-22T09:10:38.926-07:00The Bitcoin Company Launches Instant Cross-Border Payment API For Mexico and Brazil<p><a href="https://thebitcoincompany.com/">The Bitcoin Company</a> has unveiled its new Remittances API, allowing individuals and financial institutions to send instant payments to any bank account in Mexico and Brazil in under 1 second, according to a press release sent to Bitcoin Magazine. This API marks the company's expansion into international remittances, with plans to extend services to the USA, Canada, Europe, Asia, and Africa soon.</p>
<blockquote class="twitter-tweet">
<p lang="en" dir="ltr" xml:lang="en">We're excited to launch our new Remittances API powering instant, cross-border payments for any app đ<br />
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One easy integration to send Mexican Pesos đ˛đ˝ or Brazilian Real đ§đˇ to local bank accounts in under 1 secondâĄ<br />
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More currencies & countries coming soon!<a href="https://t.co/jiAeh1NhRF">https://t.co/jiAeh1NhRF</a> <a href="https://t.co/R63Z3mNnb3">pic.twitter.com/R63Z3mNnb3</a></p>
â The Bitcoin Company (@theBTCco) <a href="https://twitter.com/theBTCco/status/1771175816937812084?ref_src=twsrc%5Etfw">March 22, 2024</a></blockquote>
<script async="async" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>âDisrupting the remittance market is a key milestone in our roadmap to provide easy to use Bitcoin-native financial services and has always been a compelling application for the Bitcoin network," said Ben Price, Founder and CEO of The Bitcoin Company." With Bitcoin, payments can be cheap, instant, inclusive, and global."</p>
<p>By leveraging the Bitcoin network, The Bitcoin Company's Remittance API offers a cost-effective alternative to traditional banking rails like SWIFT, reducing international remittance costs significantly. The API communicates with local payment networks in Mexico (SPEI) and Brazil (Pix), ensuring funds are deposited instantly into recipients' bank accounts.</p>
<p>The remittance market in Mexico and Brazil has historically relied on costly services like Western Union and MoneyGram, which charge high fees. According to the World Bank, remittance payments to Mexico and Brazil cost 3.01% and 4.59%, respectively, with an average international remittance cost of 6.18%. The Bitcoin Company's API disrupts this landscape by providing low-cost, instant, and 24/7 cross-border payments.</p>
<p>"Cross-border payments as they exist today are broken," Price continued. "Traditional remittance providers like Western Union are taking advantage of the worldâs most desperate populations by charging exorbitantly high fees for sending/receiving money. Cross border payments are now trivial with our new Remittances API that leverages the Bitcoin network. Our plans include expanding to more regions and currencies to service both business and consumer payments. Weâre so happy to help enable other developers to turn on low-cost, cross-border, instant payments in their applications with a simple API integration."</p>
<p>This launch aligns with The Bitcoin Company's vision to provide easy-to-use, Bitcoin-native financial services and build developer-friendly infrastructure connecting Bitcoin with legacy financial systems. More information about the Remittance API can be found <a href="https://thebitcoincompany.com/remittances">here</a>.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-20847927998058060562024-03-22T07:11:00.001-07:002024-03-22T07:11:35.472-07:00The Dos and Donâts of Bitcoin Self-Custody<p>Bitcoin is a completely decentralized system, there is no ability to reverse payments, and there is no customer support line where you can call for help if you mess something up. When you take self-custody of your own Bitcoin, you and only you are responsible for the safety of your funds. Self-custody also means that no one can freeze your funds, and no one can stop you from making a payment you want to make. Itâs a double-edged sword: there are huge benefits to self-custody, but it also comes with responsibility.</p>
<p>If you make a mistake and send Bitcoin to the wrong address there is no undoing it. Then if someone can access your seed phrase (seed words), there is no customer support to help you, that person now has access to your money. If you lose your keys and your seed phrase backups, there is no recovery process to get your wallet back. Itâs very much like cash in that regard: once itâs gone, itâs gone.</p>
<p>People generally go through life with no existential anxiety over having small amounts of cash but protecting significant amounts of money presents a source of worry, and Bitcoin is no different.</p>
<h2>Custody and Crypto Wallets</h2>
<p>When it comes to managing your Bitcoin, there are multiple types of wallets you can use. However, not all of them offer you true ownership of your assets. Here's a breakdown of the types of wallets you will encounter and how they approach self-custody.</p>
<h3>Custodial Wallets</h3>
<p>Custodial wallets are generally offered by centralized exchanges, the same platforms that allow you to buy Bitcoin with fiat currency. These wallets work essentially just like a bank account. You do not actually have any control of your money. They can freeze your funds, lock and close your account, and deny you permission to make transactions or withdrawals with your own money. They do offer the potential to transact very cheaply with other users of the same wallet, but at the cost of giving control over your money to the custodian. They should never be used to store any significant amount of money, and any Bitcoin you purchase should be withdrawn to a non-custodial wallet as soon as possible.</p>
<h3>Non-Custodial Wallets</h3>
<p>Non-custodial wallets all offer true self-custody: only you have access to your assets. But even wallets that offer self-custody come with a range of trade-offs. They can also serve different purposes.</p>
<p>Software Wallets, also known as hot wallets, run on your mobile phone or your laptop computer. They do leave control over your funds in your own hands, but they manage and store the private keys on your device. This exposes them to the risk of compromise by hackers. You should only protect small amounts of money with a software wallet, what you reasonably expect to spend in a short time period.</p>
<p>A hardware wallet is a special device designed to keep your private keys as secure as possible. These devices are what you should use to store the bulk of your Bitcoin. They keep the private key offline and inaccessible to any threat from hackers, and allow signing transactions in a secure environment. A special note when using hardware wallets, the vast majority of them have a screen on the device that is used to display information about where a transaction is being sent before signing. <strong>Always double check the address and amounts shown by your device when signing to make sure the money is being sent to the correct place.</strong></p>
<h2>How to approach Self-Custody</h2>
<p>Here are some basic steps you can take to ensure you are interacting with your Bitcoin in a safe and secure manner:</p>
<h3>Test Your Backups</h3>
<p>The first thing you have to do when taking custody of your own funds is to <a href="https://bitcoinmagazine.com/sponsored/understanding-your-bitcoin-keys-bip39-seed-words">generate your seed words</a>, also known as a seed phrase. This is like the master key to all of the accounts you will create with that wallet.</p>
<p>When you first complete the wallet setup, your wallet will generate a random number called a seed, or entropy. From there, your wallet will translate this number into 12-24 words called a seed phrase, or seed words.</p>
<p>Any wallet that is properly designed to encourage user safety should have you verify and prove you wrote down the seed phrase by challenging you on some (or all) of the words in it. If you are managing significant sums of money, it is always safest to double-check.</p>
<p>To follow, you will need to generate an âaccountâ which will create your walletâs first receiving address, which looks like this: bc1q653jc5hxawj5lwxgm8tt73qzw6rurmc5d42qd2</p>
<p>It never hurts to be safe and double-check things. After youâve finished setting up your wallet, but before you start transacting, you can reset the wallet and re-initialize it. Instead of generating a new seed phrase, you can import the one you just backed up. If the first Bitcoin address is the same, you can be sure youâve correctly backed up your seed phrase.</p>
<h3>Send A Test Transaction</h3>
<p>When it comes to making your first withdrawal from an exchange it can be a bit nerve-wracking. Is this address correct? Did I make a mistake? One of the scariest things for many people about Bitcoin is the digital nature of it. Everyone has in their mind this image from a movie scene where someone teenage hacker compromises a government system to further the plot. Most people donât understand the first thing about how computers work, but they understand there are numerous ways they can be compromised or hacked.</p>
<p>I donât know about you, but when there is a risk I am aware of that could affect me and I donât understand how that risk exposes itself to me, I get worried. Just like verifying your seed phrase by recovering the backup before using the wallet, you can send coins to your wallet slowly. If someone were to compromise how you generated your wallet in the first place, they would be able to take any money you send to that wallet the instant you send it.</p>
<p>So just donât send all of your money at once. Send a small test transaction with a tiny percent of the Bitcoin you intend to take into self-custody. Make sure those funds actually show up in your wallet first. To really be sure, you can even make sure that you can spend those coins by sending them back to the next address in your wallet.</p>
<p>After making a test transaction and ensuring that you have the keys needed to spend money sent to that wallet, you can deposit the rest of your money to that wallet. After a small test deposit without seeing such a transaction occur that you didnât initiate, you can have much greater confidence that your wallet was set up securely.</p>
<h3>NEVER Create Digital Seed Phrase Backups</h3>
<p>Your seed phrase backup is your money. Whoever has access to your seed has full access to your funds. There is no customer support line to call, there are no chargebacks or insurance coverage for stolen funds in non-custodial Bitcoin wallets. If you mess this up, whatâs done is done.</p>
<p>Hardware wallets that you actually use to sign transactions are specifically designed to hold the private keys your seed generates securely. When you make a backup of your seed phrase it should <strong>strictly</strong> be on something analog; a piece of paper, a steel plate with punched letters, something physical and completely offline.</p>
<p>You should <strong>NEVER</strong> do something like take a screenshot or picture of your seed phrase on your phone, or keep a backup in a text document or Google Cloud or iCloud. Peopleâs computers and internet service accounts get hacked and compromised on a regular basis at very large scales.</p>
<p>Only keeping your keys stored on a physical medium like paper, and a secure device like a hardware wallet immensely lowers your risk of your coins being stolen through the compromise of your seed phrase. Your iCloud account can be hacked remotely from anywhere, whereas the seed phrase backup on steel in your safe requires someone to physically break into your safe.</p>
<h3>Multisig Requires Extra Backups!</h3>
<p>If you are using a multisig wallet, <em><strong>the seed phrase backups are not enough to recover your funds</strong></em>. The point of multisig is to increase your security by requiring more than one key to sign to spend your money. Typically, they will require a minimum threshold of devices that must sign each transaction. For example, it might require 2 out of 3 signatures. This ensures that someone compromising or you losing a key or two doesnât result in losing your funds, but it comes with a nuanced catch. You can lose some of the private keys in a multisig, but if you donât keep <strong>all</strong> of your public keys, you wonât be able to find your Bitcoin on the blockchain to spend in the future. This is due to how multisig wallets create the information necessary to process transactions.</p>
<p>When you make backups for a multisig wallet, each individual private key backup should also be accompanied by a backup of the public keys (wallets will call this an âxpubâ) for all of the wallet addresses involved in the multisig. This ensures that you can find your coins on-chain even if you lose access to one of the accounts.</p>
<h3>Never Talk About Your Stack</h3>
<p>Being involved in Bitcoin can be a very exciting experience, especially when the price is going up. This can also be a liability depending on who knows about your Bitcoin holdings. As was mentioned earlier, if someone can gain access to your seed phrase they gain access to your money. Bitcoin has the potential to become <strong>immensely</strong> valuable in the future.</p>
<p>Owning Bitcoin is not a fact that you should be parading around to the whole world and everyone you know. Obviously, if you are married it will be very difficult to keep a significant sum of Bitcoin secret from your spouse. If you have very close friends, it's something likely to come up or be observed by them over time.</p>
<p>But you donât have to go telling everyone you meet that you own Bitcoin. And you shouldnât. As Bitcoin has increased in value over the years, physical attacks on Bitcoiners in order to steal their money have become more and more common. The more people who know you hold Bitcoin, the greater your exposure to potential risks like that.</p>
<p><strong><em>Donât go blabbing your mouth off to everyone you meet about your Bitcoin stack</em>.</strong></p>
<h2>Wrapping Up</h2>
<p>Bitcoin can be, although it shouldnât be, an intimidating thing to take possession of. Itâs just like cash in a way, if you lose it no one can do anything about it. But in other ways, it's not quite like cash at all.</p>
<p>People are worried about holding large sums of cash because if you lose it or someone steals it, itâs gone for good. Bitcoin <em>can be backed up</em>. If you lose your Bitcoin, you can literally just magically get it back if you have a backup. Thatâs because your Bitcoin isnât in your wallet, your Bitcoin is stored on the blockchain. If you have a copy of your seed phrase you can regain access to all of your BTC no matter which wallet you use.</p>
<p>You canât just âback upâ physical cash. A xerox copy of cash isnât cash, and wonât be treated as such by anyone. But a Bitcoin word seed phrase restores your access to your Bitcoin instantly. That should be an <em>alleviation</em> of anxiety when comparing Bitcoin to something like cash.</p>
<p>Multisig wallets offer an option to defend against theft. When you have a safe full of cash at home, someone can simply break into your house and take all of it. With a multisig Bitcoin wallet, if you only have a single key at home with you a thief cannot take your Bitcoin by breaking in and taking the key you have at home. This is something that cash <em>cannot do</em>.</p>
<p>Larger amounts of cash are a large incentive for thieves to target you. But if they donât know you have a large amount of cash, they have no reason to target you. Just donât tell them about it. Bitcoin isnât a special variable here.</p>
<p>Bitcoin can be intimidating to self-custody because of the risks it shares in common with cash, but when you really take the time to learn what tools are available to help you self-custody it, it's not that intimidating. In many ways, it can be safer than cash to hold yourself.</p>
<p>So stop worrying, have a little patience, and slowly take the time to learn the basic things you can do to protect your stack yourself. After a little while you wonât even think twice about it. </p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-7152045817457843022024-03-21T16:10:00.001-07:002024-03-21T16:10:08.699-07:00Stratum Reference Implementation Launches SRI 1.0.0 To Enhance Bitcoin Mining<p>The Stratum Reference Implementation (SRI) team has unveiled SRI 1.0.0, a new milestone in their journey to decentralize and optimize bitcoin mining, according to a press release sent to Bitcoin Magazine. This latest release is now available for immediate testing and seamless integration.</p>
<p>Some key highlights of SRI 1.0.0 include:</p>
<ul>
<li>Miners can connect to SV2 pools without upgrading existing SV1 firmware through Translation Proxy or directly using an SV2 firmware device like BraiinsOS.</li>
<li>Miners have the flexibility to run their bitcoin nodes, construct templates, and declare them to the SV2 Pool.</li>
<li>The implementation of pool fallback functionality ensures continuity in mining activities even if a pool decides to censor transactions, thereby incentivizing pools to prioritize miners' interests.</li>
</ul>
<p>This new version is the culmination of enhancements in the Stratum V2 specification achieved through collaboration within the working group and rigorous testing with the interoperability suite to ensure seamless compatibility between implementations of the Stratum V2 protocol.</p>
<p>The release allows miners using SV1 or SV2 firmware to connect directly to an SV2 Pool or through a translation proxy. Miners can construct their block templates using a locally hosted Job Declaration Client and a patched version of Bitcoin Core Node, enabling them to send their templates to the Job Declarator Server operated by the SV2 Pool. Importantly, this update also allows independent third parties to run the node and JDC, expanding operational capabilities.</p>
<p>The newly implemented pool fallback feature ensures miners maintain mining activity by automatically switching to alternative pools in the event a pool rejects their templates. This mechanism serves as a strong incentive for pools to act in the miners' best interests, ensuring miners' hash power remains secure and competitive.</p>
<p>SRI's user-friendly pool setup and upcoming enhancements make it an attractive option for miners and pools seeking streamlined mining experiences. The project says it welcomes contributions and support from individuals and corporate entities interested in providing grants to help accelerate the development, research, and innovation in bitcoin mining technology.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-7448820442616432352024-03-21T09:10:00.003-07:002024-03-21T09:10:51.570-07:00Bitcoin's Surge to All Time High: What It Means for Your Investment Future<p>Bitcoin, the first and most popular cryptocurrency, has been making headlines with its recent surge to a new <a href="https://www.bloomberg.com/news/articles/2024-03-12/bitcoin-btc-hovers-near-record-high-as-crypto-draws-record-inflows?embedded-checkout=true">all-time high of over $72,000</a>. This remarkable price increase has sparked renewed interest in Bitcoin as an investment opportunity, leaving many wondering what this means for their financial future.</p>
<p>Investors may see this surge as a validation of Bitcoin's potential as a long-term store of value and may allocate more of their portfolio to cryptocurrencies. However, the rapid rise in price may also raise concerns about potential volatility and the sustainability of such gains, prompting investors to carefully evaluate the risks before making investment decisions.</p>
<h2>Understanding Market Dynamics and Risks</h2>
<p>While <a href="https://bitcoinmagazine.com/markets/official-bitcoin-reaches-new-all-time-high">Bitcoin has grown significantly</a> over the years due to various factors, including rising institutional adoption, increased investor interest, and greater acceptance by traditional financial organizations, it's still seen as a <a href="https://www.investopedia.com/articles/investing/052014/why-bitcoins-value-so-volatile.asp">highly volatile asset.</a> This level of vulnerability which can be affected by supply and demand, government regulation, and sensationalism, is not exclusive to Bitcoin. Itâs also evident in traditional investment avenues.</p>
<p>Investors should <a href="https://www.stockloansolutions.com/blog/b/5-interesting-facts-you-should-know-about-financial-markets">understand the financial markets</a> and take a well-considered approach to investing. No stock investment is a sure thing, and Bitcoin is no exception. However, with the right strategies, investors can capitalize on Bitcoin's potential for high returns while mitigating the risks associated with this market.</p>
<h2>Strategies for Incorporating Bitcoin into Wealth Preservation</h2>
<p>Despite the unpredictability of Bitcoin stock, many are attracted to it since it acts as a hedge against inflation. With traditional currencies, governments can print more money, leading to a loss in purchasing power. However, Bitcoin's finite supply makes it immune to inflation, contrasting with traditional currencies where governments can print more money, leading many to view Bitcoin as a hedge against inflation.</p>
<p>Here are some strategies for incorporating Bitcoin into your financial security:</p>
<h3>Diversify Your Investments</h3>
<p>Investors should diversify their portfolios and allocate a portion to Bitcoin and other cryptocurrencies. This will help mitigate risk and capitalize on Bitcoin's potential high returns. Stablecoins, which are cryptocurrencies tied to a stable asset like the US dollar, can be used as a buffer for Bitcoin's volatility.</p>
<h3>Take Calculated Risks</h3>
<p>To safeguard and increase wealth effectively, <a href="https://www.creditonebank.com/articles/why-true-wealth-preservation-requires-necessary-risks">investors must be willing to take calculated risks</a> for sustained growth and long-term profitability. These can include strategic savings, investing in a mix of asset classes, and incorporating Bitcoin into asset protection efforts. They must also be aware of scammers seeking to exploit the growing interest in cryptocurrencies and take measures to safeguard their investments against fraudulent schemes.</p>
<h3>Educate Yourself</h3>
<p>Before making any financial decisions, it is important to educate yourself on the market. This is especially true for Bitcoin, given its unique characteristics. Take the time to research the technology behind this cryptocurrency, its market trends, and its potential impact on traditional financial systems. Given its resilience, portability, and divisibility, it's also wise to explore <a href="https://bitcoinmagazine.com/culture/bitcoin-is-ultimate-wealth-preservation">Bitcoin's value</a> compared to gold, stocks, and other conventional investments, to make an educated decision that can help increase your monetary gains.</p>
<h3>Regulate Your Emotions</h3>
<p>It's essential to keep emotions in check and stick to a well-considered investment plan. Avoid making impulsive decisions based on market variations or FOMO (fear of missing out). This will help ensure a more rational and stable approach to incorporating Bitcoin into your wealth management strategy. The key is approaching Bitcoin as a long-term investment rather than trying to time the market.</p>
<h3>Use Dollar-Cost Averaging</h3>
<p><a href="https://www.investopedia.com/terms/d/dollarcostaveraging.asphttps://www.investopedia.com/terms/d/dollarcostaveraging.asp">Dollar-cost averaging</a> is a tactic where you invest a fixed amount at regular intervals, regardless of market fluctuations. This can aid in smoothing out the effects of market instability and potentially reduce vulnerabilities. The beauty of this approach is that it can be applied to Bitcoin and other cryptocurrencies, making it an effective way to incorporate them into your portfolio.</p>
<h3>Utilize Tax-Loss Harvesting</h3>
<p><a href="https://www.investopedia.com/terms/t/taxgainlossharvesting.asp">Tax-loss harvesting</a> is a technique where investors sell investments at a loss to compensate for any capital gains, resulting in lower taxes. Given Bitcoin's volatility, this strategy can be advantageous when incorporated into your portfolio. However, be mindful of the IRS guidelines and consult with a tax professional for guidance to prevent any legal issues.</p>
<h3>Stick to a Long-Term Plan</h3>
<p>Getting caught up in the hype and making short-term decisions based on Bitcoin's price fluctuations can be appealing. However, to effectively include Bitcoin in your financial portfolio, it's vital to stick to a long-term financial plan. This will help prevent emotional reactions to market changes and allow for a more strategic approach.</p>
<h2>Future Projections for Bitcoin</h2>
<p>Many experts believe <a href="https://www.forbes.com/advisor/investing/cryptocurrency/bitcoin-price-prediction-2024/">Bitcoin's surge</a> to over $72,000 is just the beginning of its potential growth. One projection by the CEO of Ark Invest estimates a future price range of over $1 million per Bitcoin by 2030. While no one can predict the exact trend of Bitcoin's value, it's clear that this cryptocurrency has established itself as a viable and valuable asset class.</p>
<p>Bitcoin's recent surge further solidifies its position as a legitimate investment option. With growing institutional acceptance and continued interest from investors, it's likely to see even more significant growth in the future. Understanding the risks and having a well-considered approach to incorporating Bitcoin into wealth preservation efforts can help investors capitalize on this potential.</p>
<p>As with any investment, thorough research and careful consideration are crucial to making informed decisions and maximizing returns. Monitor Bitcoin's future developments and consider including it in your investment strategy for long-term financial growth and stability. </p>
<p><em>This is a guest post by Miles O. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-25505723267389641212024-03-21T09:10:00.001-07:002024-03-21T09:10:50.796-07:00From Wall Street to Main Street: Are Bitcoin ETFs Signaling a New Era in Crypto?<p>Bitcoin and the rest of crypto went through a brutal cycle in the last two years. Dubbed "crypto winter," the unforgiving market crushed the hopes of many traders, startup founders, and investors.</p>
<p>Marked by scandals, regulatory uncertainty, and lots of FUD (fear, uncertainty, and doubt in crypto parlance), crypto winter brought down some of the industry's most significant projects and companies.</p>
<p>However, the US SECâs successive approvals of eleven spot BTC ETF applications on January 10, 2024, changed all perspectives, turning many bullish.</p>
<p>Itâs not just institutions that are optimistic about the development. Even smaller retail traders are excited about the new ETFs. If you are a retail trader sharing your strategies and showcasing a <a href="https://www.iconomi.com/crypto-portfolio-management">public crypto portfolio for your audience</a>, the rising interest in Bitcoin will likely increase your following and boost your profitability.</p>
<h2>New ETF Products Introduced</h2>
<p>Wall Street came on strong, with the <a href="https://www.marketwatch.com/story/bitcoin-etf-here-are-the-10-funds-set-to-debut-after-sec-decision-12fe591e">world's most prominent asset managers</a> like BlackRock, Fidelity, Valkyrie, VanEck, Franklin Templeton, ArkInvest/21 Shares, Grayscale, Bitwise, Invesco/Galaxy, and WisdomTree launching their Bitcoin ETFs with aggressive fanfare.</p>
<p>The multi-billion- and trillion-dollar institutions promoted and competed Bitcoin-based products in the open market for the first time.</p>
<p>The resulting billions of dollars in inflows broke ETF records and were a massive, unexpected win for Bitcoin. Allocations to US spot Bitcoin ETFs overwhelmed hundreds of millions in outflows to incumbent fund Grayscale Bitcoin Trust (GBTC), raking in over <a href="https://www.coindesk.com/markets/2024/02/19/bitcoin-etfs-see-record-24b-weekly-inflows-blackrocks-ibit-leads-coinshares/">$2.4 billion</a> in the first week.</p>
<p>BlackRock's IBIT and Fidelity's FBTC brought in $1.6 billion and $648 million as they rounded up their first week. In addition, the two trillion-dollar asset managers BlackRock and Fidelity and the other funds offering spot Bitcoin ETFs have started a Bitcoin accumulation race. Bitcoin's price surged at the ETF news, rising past $50,000 for the first time since late 2021.</p>
<p>Thus, Bitcoinâs watershed moment appears to have begun. But what does it imply for money, wealth, and investing? What does it mean for cryptocurrency? Will the lines between decentralized assets and traditional products finally blur? Here, we discuss whether the historic approval of Bitcoin ETFs will mark a defining transformation in crypto and finance.</p>
<h2>How Do Spot Bitcoin ETFs Work?</h2>
<p>Spot Bitcoin Exchange-traded Funds (ETFs) are financial products traded on public exchanges that track the performance of Bitcoin.</p>
<p>Unlike Bitcoin futures, which were approved years ago and have been traded on the Chicago Mercantile Exchange (CME), spot Bitcoin ETFs hold actual Bitcoin through a registered custodian.</p>
<p>An ETF buys BTC through authorized crypto exchanges or other Bitcoin holders. The Bitcoin is stored in a secure digital wallet using cold storage. Cold storage means the wallet is offline. In the case of spot ETFs, a designated custodian handles the crypto asset's cold storage and provides additional layers of security.</p>
<p>After secure storage is ensured, the ETF issues the corresponding shares. A share corresponds to Bitcoin or a specified unit of Bitcoin and must reflect the prevailing price. Shares are publicly traded on traditional stock exchanges. The ETF shares must follow the price of Bitcoin as closely as possible. ETFs must regularly rebalance their holdings, buying or selling their BTC as needed.</p>
<p>A spot ETF's price can depart from the underlying asset's value. To align the fund with the asset's real value and maintain the price, authorized participants (APs) are tasked to intervene. The process of creating and redeeming shares is done by the APs, which are typically large financial institutions.</p>
<p>The APs create or redeem shares based on market demand. Should ETF shares trade at a discount or premium, the APs redeem or create the ETF shares in large blocks. These measures arbitrage the difference so the share price aligns with the current Bitcoin price. <a href="https://www.forbes.com/advisor/investing/cryptocurrency/spot-bitcoin-etfs/">APs profit from the arbitrage</a> opportunity when the ETF price deviates higher or lower versus the underlying assetâs value.</p>
<p>On the investor and trader side, buying a spot Bitcoin ETF is similar to buying regular shares in any security or ETF. Hence, investors can gain exposure to BTC indirectly by buying shares without holding the cryptocurrency.</p>
<p>Efficiency and liquidity in the market are maintained by market makers who keep offering to buy or sell shares of the ETF. Market maker activity is critical to Bitcoin ETF stability. They ensure that investors can easily buy or sell the asset whenever necessary.</p>
<h2>Spot Bitcoin ETFs: A Game-changer for crypto?</h2>
<p>Bitcoin and the rest of crypto have come a long way since the early days when there were barely any exchanges to trade them.</p>
<p>However, digital assets have struggled to break through to the mainstream because of numerous regulatory challenges that heightened in the past few years. Negative statements from regulators and banks dampened sentiment and caused Bitcoin and the rest of crypto to flounder.</p>
<p>Spot Bitcoin ETFs have been through a challenging decade-long journey as well. The Winklevoss twins filed the first spot Bitcoin ETF, the Winklevoss Bitcoin Trust ETF, in 2013. It was rejected by the US SEC twice over risk-related concerns in what was once a nascent crypto industry.</p>
<p>Several followed since the Winklevoss ETF application, and all were greeted with a dozen rejections on the grounds of inadequate investor protection. The Clayton era of regulation, referring to the period when SEC Chair Jay Clayton was in charge, marked the lowest point for Bitcoin ETFs.</p>
<p>In the summer of 2018, the SEC rejected nine Bitcoin ETF applications in a single day.</p>
<p>Years later, Bitcoin and crypto scored an unlikely legal win when Grayscale fought the SECâs rejection of the Grayscale Bitcoin Trust (GBTC) application to convert to an ETF. A federal appeals court ruled that the SEC was mistaken in its rejection of Grayscaleâs application, noting that the surveillance arrangements on the approved Bitcoin futures ETFs would suffice for spot Bitcoin ETFs.</p>
<p>As a result of this landmark win, the Securities and Exchange Commission could no longer use the same argument to reject future Bitcoin ETF applications of a similar nature. Under pressure, the new SEC Chair Gary Gensler issued a formal statement on January 10, 2024, approving the trading of several new spot Bitcoin ETP shares.</p>
<p>The unexpectedly triumphant arc of Bitcoin ETFs has ushered in optimism in the market. The approved spot Bitcoin ETFs, whose issuers include the largest asset manager in the US and the world, have potentially opened the floodgates for a new audience of retail investors and institutionsâan audience with little or no experience in buying and selling cryptocurrency directly.</p>
<h2>Impact of Spot Bitcoin ETFs</h2>
<p>Weâve had a few weeks to observe the market response to spot Bitcoin ETFs. The approved ETFs have demonstrated tremendous inflows and record-breaking numbers.</p>
<h3>The âNew Nineâ Bitcoin ETFs: Early success</h3>
<p>The newly approved spot Bitcoin ETFs are popularly called the "new nine." Trading volumes for the new nine ETFs notched a new daily record.</p>
<p>As BTC surged to $54,938 on February 26, trading volumes for all nine ETFs topped $2.4 billion. According to data from Eric Balchunas, a Bloomberg ETF analyst, the <a href="https://cointelegraph.com/news/new-nine-spot-bitcoin-etf-volumes-reach-new-high">total volume on February 26</a> beat the prior record of $2.2 billion on January 11, the first trading day. These figures exclude the volume from Grayscaleâs GBTC, a converted bitcoin ETF product.</p>
<p>BlackRock's spot Bitcoin ETF IBIT recorded its biggest trading day so far. Nasdaq data showed that over <a href="https://decrypt.co/219071/blackrock-bitcoin-etf-record-trading-volume">$1.3 billion in IBIT shares</a> were traded, exceeding its previous record of $1 billion when it debuted on January 10.</p>
<p>IBIT took the most volume out of all the ETFs. Fidelityâs FBTC placed second with $576 million in inflows. ARK 21 Shares (ARKB) recorded $276 million in inflows, while the Bitwise (BTB) spot Bitcoin ETF tallied $81 million.</p>
<h3>New institutional interest</h3>
<p>The exchange-traded funds have dramatically catalyzed new institutional interest in crypto. The US SEC's approval provides a favorable signal for large institutions and market participants waiting for more familiar access to the digital asset class outside of direct buys through crypto exchanges, which carry inherent custody and volatility risks.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTc4NTM3OTgyODMwMjEy/image2.jpg" height="797" width="1200" /></figure>
<p><em>Photo by</em> <a href="https://unsplash.com/@bylolo?utm_content=creditCopyText&utm_medium=referral&utm_source=unsplash"><em>lo lo</em></a> <em>on</em> <a href="https://unsplash.com/photos/black-and-white-street-sign-CeVj8lPBJSc?utm_content=creditCopyText&utm_medium=referral&utm_source=unsplash"><em>Unsplash</em></a></p>
<p>Institutional fund managers could start adding Bitcoin ETFs to their investment funds.</p>
<p>Moreover, retirement planners can include them in employer-sponsored 401(k)s. US investors can now hold crypto in their brokerage accountsâsomething impossible before.</p>
<h3>Interest among retail investors</h3>
<p>Where institutions go, retail follows. The assurance of investor protection and the wide acceptance of Bitcoin ETFs will encourage retail to participate. Mass retail now has a relatively safe way to gain exposure to crypto through a regular brokerage account.</p>
<p>Bitcoin ETFs will inevitably bring crypto exposure to a more diverse set of holders with varying sizes and experiences in the market. Access to Bitcoin today is as simple as purchasing an ETF from a regulated asset manager. In addition, Bitcoin could start turning up in mainstream portfolios.</p>
<h3>New credibility and status for crypto</h3>
<p>The new kind of ETF could increase the distribution in the US and boost the credibility of crypto as an asset class, according to Kevin de Patoul, CEO of Keyrock, a crypto liquidity provider, in an <a href="https://www.cnbc.com/2024/01/11/heres-what-a-bitcoin-etf-actually-means-for-investors.html#:~:text=%22This%20ETF%20has%20two%20main,liquidity%20provider%20Keyrock%2C%20told%20CNBC.">interview with CNBC</a>.</p>
<p>The idea of a US spot Bitcoin ETF significantly changes the public perception of Bitcoin. It eliminates doubts about Bitcoin's legitimacy and erases misconceptions about its infamous reputation as a tool to aid crime. This application has been proven to be a minor percentage of its overall use.</p>
<p>Hence, the US SEC's approval lent credibility and status primarily through regulatory certainty. Crypto is on its way to becoming a formal asset class, widely traded on any public exchange like other familiar investment vehicles.</p>
<h3>More crypto ETPs to follow</h3>
<p>The ability to hold Bitcoin in mainstream portfolios green-lights portfolio diversification into the crypto asset. Many expected significant capital inflows into the market and were satisfied.</p>
<p>A spot Ethereum ETF may not be far behind. <a href="https://www.theblock.co/post/278672/valkyrie-cio-anticipates-spot-ethereum-etf-approval-will-take-1-2-years">Valkyrie CIO Steven McClurg</a> expects a spot Ethereum ETF approval within a year or two. If a spot Ethereum ETF is eventually launched, it could mark another boost for the status of crypto assets.</p>
<h3>ETF effect on BTC and crypto prices</h3>
<p>The record-breaking response to the bitcoin ETFs and Bitcoin's price surge indicates the market's current sentiment. Both have continued to spur bullishness among investors and institutions.</p>
<p>The uptick in demand, coupled with diminishing supply, could cause an acceleration in price. As of this writing, BTC rose to <a href="https://coinmarketcap.com/currencies/bitcoin/">above $59,000</a>.</p>
<p>Then, there is the question of history repeating itself. Experts point out how the total market cap of gold exploded after the first gold ETF was launched in 2004. Bitcoin, being digital gold, could follow the same path.</p>
<p>These days, Bitcoin ETF issuers have been buying approximately 10 to 12 times the amount of BTC produced daily. This has led to a 2 percent price increase or roughly $1,000 daily. Many experts agree that the demand from ETF issuers is the primary reason for the significant daily uptick.</p>
<p>An analysis by crypto startup founder, expert, and <a href="https://cryptopotato.com/this-is-how-bitcoin-etf-inflows-are-affecting-btcs-price-movement/">Bitcoin investor Mark van der Chijs</a> found that the price jumps occurred around the settlement period before the opening of the US market.</p>
<p>The exponential nature of the demand has been pressing holders to sell their holdings to fill the ETF orders. These sales command higher prices as the current holders or users do not believe BTC is peaking.</p>
<p>The higher prices trigger FOMO (fear of missing out) among traders and ETF investors. The FOMO leads to higher demand, triggering a further increase in prices.</p>
<p>Many experts agree this market is uncharted territory. However, Van der Chijs is sticking to his prediction of $1,000 increases on average per trading day over the coming weeks.</p>
<h3>Incoming supply shock?</h3>
<p>At least two factors could contribute to a drastic increase in price and Bitcoin supply shock over the next three months: continued high demand for ETF shares and the Bitcoin halving event in April.</p>
<p>After the upcoming halving, miners' block rewards will be cut in half. As a result, the rate of BTC daily production will decrease.</p>
<p>At the moment, approximately 900 BTC is being created daily. After the halving event, this number will drop to 450 BTC. This will further dwindle the supply and lead to a discrepancy in supply and demand. The production slash could lead to higher BTC prices as investors of all levels and ETF issuers scramble to increase holdings.</p>
<p>There is a risk of ETFs failing too soon. Most financial advisors, therefore, allow the sale of shares 90 days past launch or after 90 days of trading. As the ETFs started trading on January 11, the 90-day period should commence by early May, further pushing BTCâs price upward.</p>
<p>It is possible to have a black swan event, seeing BTC break its previous record of $69,000 and achieve a new all-time high before the halving. Chijs predicts $100,000 BTC in the coming two to three months.</p>
<h3>Impact on the broader financial ecosystem</h3>
<p>Some have noted that big banks were notably absent during the ETF action. Banks can participate in the ETF ecosystem but need the US SEC to redefine crypto assets.</p>
<p>In a stunning move, a trade group coalition making up the Banking Policy Institute asked the SEC to modify the rules around crypto asset custody, allowing them to act as custodians, as is the regular practice for most ETPs. Bitcoin proponents would not have imagined such interest back in the day, but here we are.</p>
<h3>Increased competition: Fee wars</h3>
<p>Despite significant Grayscale-related outflows in the first few days, ETFs stabilized to massive net-positive inflows. Expect competition among Bitcoin ETFs for features and fees. Grayscale Bitcoin Trust (GBTC) is the most expensiveâoffering 1.5 percent in fees. Bitwise opts not to charge fees for the first six months and then caps them at 0.2 percent afterward.</p>
<h2>A New Era Merging Wall Street, Crypto, and Main Street</h2>
<p>The triumphant launch of spot Bitcoin ETFs broke all expectations and models. Early on, ETF issuers were able to bridge Wall Street, crypto, and Main Street by creating a familiar and easily accessible investment product.</p>
<p>The early success of ETFs has numerous implications for the status of digital assets, the demand around Bitcoin, the dynamism of crypto trading, the total crypto market cap, and how people build mainstream portfolios from now on.</p>
<p>Spot Bitcoin ETFs are a crucial milestone in the maturity of Bitcoin and crypto as an asset class. They officially begin significant institutional involvement with trillion-dollar players competing for dominance. Demand is expected to increase as the funds accumulate Bitcoin at rates exceeding daily production.</p>
<p>Despite the promising data and optimistic projections, we remain in uncharted territory. Corrections are inevitable, and black swan events could happen.</p>
<p>Wall Street has brought crypto to Main Street, but this development's full impact and transformation are still unfolding.</p>
<p>Navigating the landscape requires a keen understanding of market dynamics, careful risk management, and keeping a well-informed perspective as events unfold at unprecedented speed. </p>
<p><em>This is a guest post by Ivan Serrano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-48446954453934556632024-03-20T10:10:00.001-07:002024-03-20T10:10:31.355-07:00KYC, Bitcoin, and the failed hopes of AML policies: Tracking funds on-chain<p>The cornerstone of the modern approach to money laundering is to prevent illicit funds from entering the financial system. The rationale is understandable: if criminals wonât be able to use their money, they will have to eventually stop whatever they are doing and go get a 9 to 5 job.</p>
<p>However, after 20 years of ever tighter (and ever more expensive) AML regulations, the levels of organized crime, tax evasion, or drug use do not show any signs of decrease. At the same time, the basic right to privacy is being unceremoniously violated on an everyday basis, with each financial operation, no matter how tiny, being subject to extensive verifications and tons of paperwork. Check Part 1 of this story for details and numbers.</p>
<p>This prompts a question: should we reconsider our approach to the AML strategy?</p>
<p>Two years ago, a fintech author David G.W. Birch wrote an <a href="https://www.forbes.com/sites/davidbirch/2021/05/03/im-anti-the-anti-money-laundering--rules/?sh=3f17483e3111">article</a> for Forbes, reflecting on the main principle of AML â gatekeeping. The key thought could be resumed as âinstead of trying to prevent criminals from getting into the system, we let them in and monitor what they are up to.â</p>
<p>Indeed, why do we erect expensive AML gates and force the bad guys to turn to hardly traceable cash or works of art, while we can simply let them in and follow the money to hunt them down? To do so, we can use both the existing reporting system within traditional finance and the on-chain analytics within the blockchain. However, while the former is more or less understandable, the latter is still a mystery for most people. Whatâs more, politicians and bankers regularly accuse crypto of being a tool for criminals, tax evaders, and all sorts of Satan worshipers, further exacerbating the misunderstanding.</p>
<p>To shed more light on this matter, we need to better understand how on-chain analytics works. It is not an obvious task though: blockchain analysis methods are often proprietary and analytics companies sharing them could risk losing their business edge. However, some of them, like Chainalysis, publish rather detailed documentation, while the Luxembourgish firm Scorechain agreed to share some details of their trade for this story. Combining this data can give us a good idea of the potential and limitations of on-chain analytics.</p>
<h2>How does on-chain analytics work?</h2>
<p>The blockchain is transparent and auditable by anyone. However, not everyone is capable of drawing meaningful conclusions from the myriads of datasets it is composed of. Gathering data, identifying the entities, and putting the conclusions into a readable format is the specialty of on-chain analytic firms.</p>
<p>It all starts with getting a copy of the ledger, i.e. synchronizing the internal software with the blockchains.</p>
<p>Then, a tedious stage of mapping begins. How can we know that this address belongs to an exchange, and this one â to a darknet marketplace? Analysts employ all their creativity and resourcefulness to try and de-pseudonymize the blockchain as much as they can. Any technique is good as long as it works: collecting open-source data from law enforcement, scraping websites, navigating Twitter-X and other social media, acquiring data from specialized blockchain explorers like Etherscan, following the trace of stolen funds upon requests from attorneys⌠Some services are identified by interacting with them, i.e. sending funds to centralized exchanges to identify their addresses. To reduce the errors, the data is often cross-checked with different sources.</p>
<p>Once the addresses are identified to the best of oneâs ability, one can see a bit clearer in the maze of transaction hashes. Yet, the picture is still far from complete. If for account-based blockchains like Ethereum identifying an address allows tracking its funds in a rather straightforward manner, for UTXO blockchains like Bitcoin, the situation is much less obvious.</p>
<p>Indeed, unlike Ethereum, which keeps track of addresses, Bitcoin blockchain keeps track of the unspent transaction outputs (UTXO). Each transaction always sends all the coins associated with an address. If a person wishes to spend only a part of their coins, the unspent part, also known as change, is assigned to a newly created address controlled by the sender.</p>
<p>It is the job of on-chain analytics firms to make sense of these movements and determine clusters of UTXO associated with the same entity.</p>
<h2>Can on-chain analytics be trusted?</h2>
<p>On-chain analytics is not an exact science. Both the mapping and the clustering of UTXO rely on experience and a carefully calibrated set of heuristics each company has developed for itself.</p>
<p>This issue was highlighted last July in the court hearing involving Chainalysis, which had provided its forensic expertise in the US v Sterlingov case. The firmâs representative <a href="https://www.courtlistener.com/docket/59988850/149/1/united-states-v-sterlingov/">admitted</a> that not only its methods were not peer-reviewed or otherwise scientifically validated, but also the firm did not keep track of its false positives. In Chainalysis defense, the first point is understandable: the methods that each firm uses to analyze the blockchain are closely guarded trade secrets. However, the issue of false positives must be tackled better, especially if it could end up sending someone to jail.</p>
<p>Scorechain uses a different approach, erring on the side of caution and only choosing the methods that do not generate false positives in the clustering process, such as the multi-input heuristics (assumption that in a single transaction all input addresses come from one entity). Unlike Chainalysis, they do not use any change heuristics, which produce a lot of false positives. In some cases, their team can manually track UTXOs if a human operator has enough reasons to do so, but overall, this approach tolerates blind spots, counting on the additional information in the future that would fill them in.</p>
<p>The very notion of heuristics â i.e. strategies that employ a practical but not necessarily scientifically proven approach to problem-solving â implies that it cannot guarantee 100% reliability. It is the outcome that measures its effectiveness. The FBI stating that Chainalysisâ methods are âgenerally reliableâ could serve as proof of quality, but it would be better if all on-chain analytics firms could start measuring and sharing their rates of false positives and false negatives.</p>
<h2>Seeing through the fog</h2>
<p>There are ways of obfuscating the trace of funds or making them more difficult to find. Crypto hackers and scammers are known to use all kinds of techniques: chain hopping, privacy blockchains, mixersâŚ</p>
<p>Some of them, like swapping or bridging assets, can be traced by on-chain analytics firms. Others, like the privacy chain Monero, or various mixers and tumblers, often canât. There were, however, <a href="https://www.forbes.com/sites/laurashin/2022/02/22/exclusive-austrian-programmer-and-ex-crypto-ceo-likely-stole-11-billion-of-ether/?sh=24fc27b47f58">instances</a> when Chainalysis claimed to de-mix transactions passed through a mixer, and most recently Finnish authorities <a href="https://www.mtvuutiset.fi/artikkeli/vastaamo-jutussa-iso-paljastus-krp-jaljitti-jaljittamattomana-pidettya-kryptovaluuttaa/8864046#gs.46q5e9">announced</a> that they have tracked Monero transactions as part of an investigation.</p>
<p>In any case, the very fact of having used these masking techniques is very much visible and can serve as a red flag for any AML purposes. The US Treasury adding last year the smart contract address of Tornado Cash mixer to the OFAC list is one such example. Now, when the coinsâ history is traced down to this mixer, the funds are suspected of belonging to illicit actors. This is not great news for privacy advocates, but rather reassuring for crypto AML.</p>
<p>One might ask whatâs the point of flagging the mixed coins and tracing them across blockchains if we donât have a concrete person to pin them to, like in the banking system? Luckily, criminals have to interact with the non-criminal world, and the tainted money sooner or later ends up either at goods or service providers, or at a bank account, and this is where law enforcement can identify the actual persons. This is how the FBI got its biggest-ever <a href="https://time.com/6146749/cryptocurrency-laundering-bitfinex-hack/">seizure of $4.5 billion worth of Bitcoin</a> (in 2022 prices) following the Bitfinex hack. This also works in reverse: if law enforcement gets access to a criminalâs private keys, they can move up the blockchain history to identify the addresses that had interacted with it at some point. This is how the London Metropolitan Police uncovered a whole drug dealing network from one single arrest (source: Chainalysisâ Crypto Crime 2023 report).</p>
<p>Crime has existed since the dawn of humanity, and will probably accompany it till its end, using ever-evolving camouflaging techniques. Luckily, crime detection methods follow suit, and it happens that the blockchain is an ideal environment for deploying digital forensics tools. After all, it is transparent and accessible to everyone (which by the way cannot be said about the banking sector).</p>
<p>One can argue that current on-chain analysis methods need to be improved â and that point holds true. However, it is clear that even in this imperfect form it is already an efficient tool for tracking bad guys on-chain. Perhaps, then, itâs time to reconsider our approach to AML and let the criminals into the blockchain?</p>
<p><em>A special thank you to the Scorechain team for sharing their knowledge.</em></p>
<p><em>This is a guest post by</em> <em>Marie Poteriaieva</em><em>. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-36424869621310775612024-03-20T08:11:00.001-07:002024-03-20T08:11:06.380-07:00Impending Halving Creates Chaos and Opportunity in Bitcoin Market<p><strong><em>The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox,</em></strong> <strong><em><a href="https://bmpro.substack.com/">subscribe now</a>.</em></strong></p>
<figure><a href="https://bmpro.substack.com/"><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjAxMjU3OTE4Njk0MTcyMTYx/mtg5njayntyzmtmymjm2ode4.jpg" height="246" width="1200" /></a></figure>
<p>As we get closer and closer to the impending Bitcoin halving, the combined pressures of wildly increasing demand and shrinking supply have created an unusual market, turning a historically positive omen into an explosive opportunity for profit.</p>
<p>The Bitcoin ETF approval has changed the face of Bitcoin as we know it. Since the SEC made its fateful decision in January, the resultant developments have caused worldwide upheaval; billions have flown into these new investment opportunities, and regulators in many countries are considering the role of Bitcoin in the financial establishment. Despite some initial setbacks, the market has comfortably <a href="https://bmpro.substack.com/p/bitcoin-hits-new-heights-between">hit</a> new all-time highs, and the price has stayed in a very impressive range even despite fluctuations.</p>
<p>Nevertheless, we are in a very unique situation that can impact the market in unpredictable ways. Bitcoinâs next halving is set to arrive in April, and this will be the <a href="https://blockworks.co/news/history-of-bitcoin-halvings">first time</a> in its entire history that the halving will coincide with an all-time high for price. Although there have been a great deal of differences between each of the major halvings, a trend has been generally noticeable: even if there are huge steady gains, it is in the ballpark of a year to 18 months before Bitcoin breaks all records with a true price spike. One year out from the halving in June 2016, Bitcoin had more than doubled; yet a few months later, the growth was closer to 30x.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTUzNTQyMzQ2OTA5MjQ4/53a2cfbf-f838-4aa8-a623-cf0fdca404e2_1024x588.jpg" height="689" width="1200" />
<figcaption><em><a href="https://blockworks.co/news/history-of-bitcoin-halvings">Source</a></em></figcaption>
</figure>
<p>There is plenty of optimism from substantial industry players, such as Standard Charteredâs bold <a href="https://bitcoinmagazine.com/business/150000-standard-chartered-bitcoin-price-forecast-2024">prediction</a> that Bitcoinâs value will more than double to $150k before the year is over. However, their analysis of the situation is not mostly based on halving trends but on the rampaging success of the Bitcoin ETF, and that success has also thrown us a curveball. As community <a href="https://old.reddit.com/r/Bitcoin/comments/1bgxnpz/interesting_numbers_halving_next_month/">discussion</a> has been quick to point out, these major ETF issuers have been pouring billions into bitcoin, buying at <a href="https://www.coindesk.com/markets/2024/03/10/blackrocks-spot-etf-nears-200k-bitcoin-passing-michael-saylors-microstrategy/">astounding</a> rates and amassing some of the worldâs largest Bitcoin supplies practically overnight. If they collectively purchase more than even the worldwide community, how will they react when the spigot of new coins shuts to a trickle?</p>
<p>In other words, we are headed into a <a href="https://www.businessinsider.com/bitcoin-halving-cryptocurrency-markets-investors-etf-spot-btc-supply-demand-2024-3">situation</a> where demand is at an all-time high and there is insufficient supply to meet it. <em>Business Insider</em> called the upcoming halving a âmomentous eventâ, considering that the ETF had made âpermanent changes to Bitcoinâs underlying infrastructure." Coinshares <a href="https://theblock.co/post/283062/bitcoin-positive-demand-shock-registered-investment-advisors">echoed</a> these sentiments with the warning of a positive demand shock, as Head of Research James Butterfill claimed that âThe launch of multiple spot bitcoin ETFs on January 11 has led to an average daily demand of 4500 bitcoins (trading days only), while only an average of 921 new bitcoin were minted per day.â And thatâs only considering the pre-halving mining rates. The ETF issuers are already relying on secondhand Bitcoin sales to fill up their coffers, and this trend seems certain to increase in the immediate future.</p>
<p>Isnât this a good thing, though? Positive demand shocks, as a rule, are <a href="https://www.investopedia.com/ask/answers/060115/what-are-some-common-examples-demand-shock.asp#toc-positive-demand-shocks">generally</a> associated with jumps in price. Additionally, even though shocks like this in critical commodities like oil can lead to inflation, Bitcoin is not yet an essential component of the entire world economy. Itâs unlikely that the same drawbacks will apply just yet. In other words, the answer is generally yes, but the situation can still cause alarming trends. For example, the night of March 18 saw a truly bewildering <a href="https://www.coindesk.com/markets/2024/03/19/bitcoin-flash-crashed-to-89k-on-bitmex/">development</a>: coasting at highs around $70k, Bitcoinâs value on BitMEX crashed below $9k in the blink of an eye. The price recovered quickly and was, in any event, isolated to this one exchange, but itâs still an unprecedented development.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTUzNTQ5MDU3Nzk1NjQ4/93957319-512b-456d-a3de-7547515ec771_1600x877.jpg" height="658" width="1200" />
<figcaption><em><a href="https://www.coindesk.com/markets/2024/03/19/bitcoin-flash-crashed-to-89k-on-bitmex/">Source</a></em></figcaption>
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<p>BitMEX announced that the culprit of this negative price spike was a series of large sell orders in the middle of the night, and that they were investigating the activity. Several anonymous whales in particular have emerged as the likely candidates for these sales. We still have no idea who exactly they are or who was buying bitcoins at such a prodigious rate, but itâs only an example of how major selloffs can torpedo market confidence. In any event, this one episode is only a particularly sharp example of a general <a href="https://cointelegraph.com/news/bitcoin-traders-60k-btc-price-support-futures-gap">trend</a>; âconstantâ spot selling as Bitcoinâs price receives a bloody nose. The market hit lows of $62k Tuesday afternoon, while it was nearly at $72k on the morning of the previous Friday.</p>
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<p>Traders have nevertheless remained totally optimistic that these price dips are nothing more than the âbear trapâ associated with the pre-halving environment, and they arenât the only ones. Prominent executives including Binance CEO Richard Teng and Crypto.com CEO Kris Marszalek have <a href="https://cointelegraph.com/news/bitcoin-entering-pre-halving-danger-zone-binance-crypto-ceos-bullish">endorsed</a> the viewpoint that these kinds of price dips are a perfectly natural and temporary component of a scheduled halving. There is a clearly observable trend of substantial price dips, from 20-40%, in the weeks immediately prior to the most recent halvings. And yet, the price bounced back quickly and completely, and went on to new all-time heights.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTUzNTYxNjc0MjYxODUz/b628cfbd-a80f-4a48-b9bc-73c361c8b980_1600x1129.jpg" height="800" width="1133" />
<figcaption><em><a href="https://cointelegraph.com/news/bitcoin-entering-pre-halving-danger-zone-binance-crypto-ceos-bullish">Source</a></em></figcaption>
</figure>
<p>In other words, some of the recent and sudden price dives are fully explainable using data from Bitcoinâs history. The relevant questions for us, then, are whether Bitcoinâs future will follow the same line. The fact of the matter is that all the available signs point to an optimistic long-term forecast. A positive demand shock caused by ETF acquisitions and the halving may very well make it more difficult for an average consumer to buy bitcoin, but how will that difficulty manifest? Higher prices. Besides, a selling point of the ETF is that plenty of average consumers will use it to seek exposure to bitcoinâs profits, rather than direct custody. This alone will encourage ETF issuers to keep their buying pressure high. Itâs impossible to say how long this market situation will continue or what it will mean for bitcoinâs use as an actual currency, but thereâs nothing in the current situation to suggest that bitcoin wonât keep growing.</p>
<p>Is it any wonder, then, that the community is gearing up to <a href="https://www.bitcoinhalving.com/">welcome</a> the halving with such bated breath? Prominent industry figures are taking great care to prepare âThe Biggest Celebration in Bitcoinâ with live coverage and meetup events in 7 countries (and counting), and the halving isnât even expected for another month. Itâs very possible that 2024 will be remembered as the year that Bitcoin truly became enmeshed in the global financial infrastructure, if stunning regulatory victories in January turn to unprecedented growth by December. Really, the major significant concern is whether or not Bitcoin will see diminished usage as a currency when its worth in fiat is so valuable. Nevertheless, the signs from right now seem quite clear: Bitcoin is set to blaze a trail into the future.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-87990914548127422462024-03-20T07:10:00.001-07:002024-03-20T07:10:32.827-07:00Random Access Markets: The Free Market Of Information<p><strong><em>This article is featured in Bitcoin Magazineâs</em> <em>âThe Inscription Issueâ. Click</em> <em><a href="https://store.bitcoinmagazine.com/collections/magazines/products/bitcoin-magazine-annual-subscription">here</a></em> to get your Annual Bitcoin Magazine Subscription.</strong></p>
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<h2>The Value Of Bits</h2>
<p>Data is the most liquid commodity market in the world. In the smartphone era, unless extreme precautions are taken, everywhere you go, everything you say, and everything you consume is quantifiable among the infinite spectrum of the information goods markets. Information goods, being inherently nonphysical bits of data, can be conceptualized, crafted, produced, or manufactured, disseminated, and consumed exclusively as digital entities. The internet, along with other digital technologies for computation and communication, serves as a comprehensive e-commerce infrastructure, facilitating the entire life cycle of designing, producing, distributing, and consuming a wide array of information goods. The seamless transition of existing information goods from traditional formats to digital formats is easily achievable, not to mention the collection of media formats completely infeasible in the analog world.</p>
<p>A preliminary examination of products within the information goods industry reveals that, while they all exist as pure information products and are uniformly impacted by technological advancements, their respective markets undergo distinct economic transformation processes. These variations in market evolution are inherently tied to differences in product characteristics, production methods, distribution channels, and consumption patterns. Notably, the separation of value creation and revenue processes introduces opportunistic scenarios, potentially leaving established market players with unprofitable customer bases and costly yet diminishing value-creation processes.</p>
<p>Simultaneously, novel organizational architectures may emerge in response to evolving technological conditions, effectively creating and destroying traditional information good markets overnight. The value chains, originally conceived under the assumptions of the traditional information goods economy, undergo radical redesigns as new strategies and tooling materialize in response to the transformative influence of digital production, distribution, and consumption on conventional value propositions for data. For example, mass surveillance was never practical when creating even a single photo meant hours of labor within a specialized photo development room with specific chemical and lightning conditions. Now that there is a camera on every corner, a microphone in every pocket, a ledger entry for every financial transaction, and the means to transmit said data essentially for free across the planet, the market conditions for mass surveillance have unsurprisingly given rise to mass surveillance as a service.</p>
<p>An entirely new industry of âlocation firmsâ has grown, with <em>The Markup</em> having demarcated nearly 50 companies selling location data as a service in a 2021 article titled âThereâs a Multibillion-Dollar Market for Your Phoneâs Location Dataâ by Keegan and Ng. One such firm, Near, is self-described as curating âone of the worldâs largest sources of intelligence on People and Placesâ, having gathered data representing nearly two billion people across 44 countries. According to a <em>Grand View Research</em> report titled âLocation Intelligence Market Size And Share Report, 2030â, the global location intelligence data market cap was worth an estimated â$16.09 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 15.6% from 2023 to 2030â. The market cap of this new information goods industry is mainly âdriven by the growing penetration of smart devices and increasing investments in IoT [internet of things] and network services as it facilitates smarter applications and better network connectivityâ, giving credence to the idea that technological advancement front-runs network growth which front-runs entirely new forms of e-commerce markets. This, of course, was accelerated by the COVID-19 pandemic, in which government policies resulted in âthe increased adoption of location intelligence solutions to manage the changing business scenario as it helps businesses to analyze, map, and share data in terms of the location of their customersâ, under the guise of user and societal health.</p>
<p>Within any information goods market, there are only two possible outcomes for market participants: distributing the acquired data or keeping it for yourself.</p>
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<h2>The Modern Information Goods Market</h2>
<p>In the fall of 2021, China launched the Shanghai Data Exchange (SDE) in an attempt to create a state-owned monopoly on a novel speculative commodities market for data scraped from one of the most digitally surveilled populations on the planet. The SDE offered 20 data products at launch, including customer flight information from China Eastern Airlines, as well as data from telecommunications network operators such as China Unicom, China Telecom, and China Mobile. Notably, one of the first known trades made at the SDE was the Commercial Bank of China purchasing data from the state-owned Shanghai Municipal Electric Power Company under the guise of improving their financial services and product offerings.</p>
<p>Shortly before the founding of this data exchange, Huang Qifan, the former mayor of Chongqing, was quoted saying that âthe state should monopolize the rights to regulate data and run data exchangesâ, while also suggesting that the CCP should be highly selective in setting up data exchanges. âLike stock exchanges, Beijing, Shanghai and Shenzhen can have one, but a general provincial capital city or a municipal city should not have it.â</p>
<p>While the current information goods market has led to such innovations such as speculation on the purchasing of troves of user data, the modern data market was started in earnest at the end of the 1970s, exemplified in the formation of Oracle Corporation in 1977, named after the CIAâs âProject Oracleâ, which featured eventual Oracle Corporation co-founders Larry Ellison, Robert Miner, and Ed Oates. The CIA was their first customer, and in 2002, nearly $2.5 billion worth of contracts came from selling software to federal, state, and local governments, accounting for nearly a quarter of their total revenue. Only a few months after September 11, 2001, Ellison penned an op-ed for <em>The</em> <em>New York Times</em> titled âA Single National Security Databaseâ in which the opening paragraph reads âThe single greatest step we Americans could take to make life tougher for terrorists would be to ensure that all the information in myriad government databases was copied into a single, comprehensive national security databaseâ. Ellison was quoted in Jeffrey Rosenâs book <em>The Naked Crowd</em> as saying âThe Oracle database is used to keep track of basically everything. The information about your banks, your checking balance, your savings balance, is stored in an Oracle database. Your airline reservation is stored in an Oracle database. What books you bought on Amazon is stored in an Oracle database. Your profile on Yahoo! is stored in an Oracle databaseâ. Rosen made note of a discussion with David Carney, a former top-three employee at the CIA, who, after 32 years of service at the agency, left to join Oracle just two months after 9/11 to lead its Information Assurance Center:</p>
<p>"How do you say this without sounding callous?" [Carney] asked. "In some ways, 9/11 made business a bit easier. Previous to 9/11 you pretty much had to hype the threat and the problem." Carney said that the summer before the attacks, leaders in the public and private sectors wouldn't sit still for a briefing. Then his face brightened. "Now they clamor for it!"</p>
<p>This relationship has continued for 20 years, and in November 2022, the CIA awarded its Commercial Cloud Enterprise contract to five American companies â Amazon Web Services, Microsoft, Google, IBM, and Oracle. While the CIA did not disclose the exact value of the contract, documents released in 2019 suggested it could be âtens of billionsâ of dollars over the next 15 years. Unfortunately, this is far from the only data market integration of the private sector, government agencies, and the intelligence community, perhaps best exemplified by data broker LexisNexis.</p>
<p>LexisNexis was founded in 1970, and is, as of 2006, the worldâs largest electronic database for legal and public-records-related information. According to their own website, LexisNexis describes themselves as delivering âa comprehensive suite of solutions to arm government agencies with superior data, technology and analytics to support mission successâ. LexisNexis consists of nine board members: CEO Haywood Talcove; Dr. Richard Tubb, the longest serving White House physician in U.S. history; Stacia Hylton, former Deputy Director of the U.S. Marshal Service; Brian Stafford, former Director of the U.S. Secret Service; Lee Rivas, CEO for the public sector and health care business units of LexisNexis Risk Solutions; Howard Safir, former NYPD Commissioner and Associate Director of Operations for the U.S. Marshals Service; Floyd Clarke, former Director of the FBI; Henry Udow, Chief Legal Officer and Company Secretary for the RELX Group; and lastly Alan Wade, retired Chief Information Officer for the CIA.</p>
<p>While Wade was still employed by the CIA, he founded Chiliad with Christine Maxwell, sister of Ghislaine Maxwell, and daughter of Robert Maxwell. Christine Maxwell is considered âan early internet pioneerâ, having founded Magellan in 1993, one of the premier search engines on the internet. After selling Magellan to Excite, she reinvested her substantial windfall into another big data search technology company: the aforementioned Chiliad. According to a 2020 report by OYE.NEWS, Chiliad made use of âon-demand, massively scalable, intelligent mining of structured and unstructured data through the use of natural language search technologiesâ, with the firmâs proprietary software being âbehind the data search technology used by the FBIâs counterterrorism data warehouseâ.</p>
<p>As recently as November 2023, the Wade-connected LexisNexis was given a $16-million, five-year contract with the U.S. Customs and Border Protection âfor access to a powerful suite of surveillance toolsâ, according to available public records, providing access to âsocial media monitoring, web data such as email addresses and IP address locations, real-time jail booking data, facial recognition services, and cell phone geolocation data analysis toolsâ. Unfortunately, this is far from the only government agency to utilize LexisNexisâ data brokerage with the aims of circumnavigating constitutional law and civil liberties in regards to surveillance.</p>
<p>In the fall of 2020, LexisNexis was forced to settle for over $5 million after a class action lawsuit alleged the broker sold Department of Motor Vehicle data to U.S. law firms, who were then free to use it for their own business purposes. "Defendants websites allow the purchase of crash reports by report date, location, or driver name and payment by credit card, prepaid bulk accounts or monthly accountsâ, the complaint reads. "Purchasers are not required to establish any permissible use provided in the DPPA to obtain access to Plaintiffs' and Class Members' MVRsâ. In the summer of 2022, a Freedom of Information Act request revealed a $22 million contract between Immigration and Customs Enforcement and LexisNexis. Sejal Zota, a director at Just Futures Law and a practicing attorney working on the lawsuit, made note that LexisNexis makes it possible for ICE to "instantly access sensitive personal data â all without warrants, subpoenas, any privacy safeguards or any show of reasonablenessâ.</p>
<p>In the aforementioned complaint from 2022, the use of LexisNexisâ Accurint product allows "law enforcement officers [to] surveil and track people based on information these officers would not, in many cases, otherwise be able to obtain without a subpoena, court order, or other legal processâŚenabling a massive surveillance state with files on almost every adult U.S. consumerâ.</p>
<h2>A Series Of Tubes</h2>
<p>In 2013, it came to the publicâs attention that the National Security Agency had covertly breached the primary communication links connecting Yahoo and Google data centers worldwide. This information was based on documents published by WikiLeaks, originally obtained from former NSA contractor Edward Snowden, and corroborated by interviews of government officials.</p>
<p>As per a classified report dated January 9, 2013, the NSA transmits millions of records daily from internal Yahoo and Google networks to data repositories at the agency's Fort Meade, Maryland headquarters. In the preceding month, field collectors processed and returned 181,280,466 new records, encompassing "metadata" revealing details about the senders and recipients of emails, along with time stamps, as well as the actual content, including text, audio, and video data.</p>
<p>The primary tool employed by the NSA to exploit these data links is a project named MUSCULAR, carried out in collaboration with the British Government Communications Headquarters (GCHQ). Operating from undisclosed interception points, the NSA and GCHQ copy entire data streams through fiber-optic cables connecting the data centers of major Silicon Valley corporations.</p>
<p>This becomes particularly perplexing when considering that, as revealed by a classified document acquired by <em>The Washington Post</em> in 2013, both the NSA and the FBI were already actively tapping into the central servers of nine prominent U.S. internet companies. This covert operation involved extracting audio and video chats, photographs, emails, documents, and connection logs, providing analysts with the means to monitor foreign targets. The method of extraction, as outlined in the document, involves direct collection from the servers of major U.S. service providers: Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, and Apple.</p>
<p>During the same period, the newspaper <em>The Guardian</em> reported that GCHQ â the British counterpart to the NSA â was clandestinely gathering intelligence from these internet companies through a collaborative effort with the NSA. According to documents obtained by <em>The Guardian</em>, the PRISM program seemingly allows GCHQ to bypass the formal legal procedures required in Britain to request personal materials such as emails, photos, and videos, from internet companies based outside the country.</p>
<p>PRISM emerged in 2007 as a successor to President George W. Bush's secret program of warrantless domestic surveillance, following revelations from the news media, lawsuits, and interventions by the Foreign Intelligence Surveillance Court. Congress responded with the Protect America Act in 2007 and the FISA Amendments Act of 2008, providing legal immunity to private companies cooperating voluntarily with U.S. intelligence collection. Microsoft became PRISM's inaugural partner, marking the beginning of years of extensive data collection beneath the surface of a heated national discourse on surveillance and privacy.</p>
<p>In a June 2013 statement, then-Director of National Intelligence James R. Clapper said âinformation collected under this program is among the most important and valuable foreign intelligence information we collect, and is used to protect our nation from a wide variety of threats. The unauthorized disclosure of information about this important and entirely legal program is reprehensible and risks important protections for the security of Americansâ.</p>
<p>So why the need for collection directly from fiber optic cables if these private companies <em>themselves</em> are already providing data to the national intelligence community? Upon further inquiry into the aforementioned data brokers to the NSA and CIA, it would appear that a vast majority of the new submarine fiber optic cables â essential infrastructure to the actualization of the internet as a global data market â are being built out by these same private companies. These inconspicuous cables weave across the global ocean floor, transporting 95-99% of international data through bundles of fiber-optic strands scarcely thicker than a standard garden hose. In total, the active network comprises over 1,100,000 kilometers of submarine cables.</p>
<p>Traditionally, these cables have been owned by a consortium of private companies, primarily telecom providers. However, a notable shift has emerged. In 2016, a significant surge in submarine cable development began, and notably, this time, the purchasers are content providers â particularly the data brokers Meta/Facebook, Google, Microsoft, and Amazon. Of note is Google, having acquired over 100,000 kilometers of submarine cables. With the completion of the Curie Cable in 2019, Google's ownership of submarine cables globally stands at 1.4%, as measured by length. When factoring in cables with shared ownership, Google's overall share increases to approximately 8.5%. Facebook is shortly behind with 92,000 kilometers, with Amazon at 30,000, and Microsoft with around 6,500 kilometers from the partially owned MAREA cable.</p>
<p>There is a notable revival in the undersea cable sector, primarily fueled by investments from Facebook and Google, accounting for around 80% of 2018-2020 investments in transatlantic connections â a significant increase from the less than 20% they accounted for in the preceding three years through 2017, as reported by TeleGeography. This wave of digital giants has fundamentally transformed the dynamics of the industry. Unlike traditional practices where phone companies established dedicated ventures for cable construction, often connecting England to the U.S. for voice calls and limited data traffic, these internet companies now wield considerable influence. They can dictate the cable landing locations, strategically placing them near their data centers, and have the flexibility to modify the line structures â typically costing around $200 million for a transatlantic link â without waiting for partner approvals. These technology behemoths aim to capitalize on the increasing demand for rapid data transfers essential for various applications, including streaming movies, social messaging, and even telemedicine.<br />
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<p>The last time we saw such an explosion of activity in building out essential internet infrastructure was during the dot-com boom of the 1990s, in which phone companies spent over $20 billion to install fiber-optic lines beneath the oceans, immediately before the massive proliferation of personal computers, home internet modems, and peer-to-peer data networks.</p>
<h2>Data Laundering</h2>
<p>The birthing of new compression technologies in the form of digital media formats itself would not have given rise to the panopticon we currently operate under without the ability to obfuscate mass uploading and downloading of this newly created data via the ISP rails of both public and private sector infrastructure companies. There is likely no accident that the creation of these tools, networks, and algorithms were created under the influence of national intelligence agencies right before the turn of the millennium, the rise of broadband internet, and the sweeping unconstitutional spying on citizens made legal via the Patriot Act in the aftermath of the events on September 11, 2001.</p>
<p>Only 15 years old, Sean Parker, the eventual founder of Napster and first president of Facebook â a former DARPA project titled LifeLog â caught the gaze of the FBI for his hacking exploits, ending in state-appointed community serÂvice. One year later, Parker was recruited by the CIA after winning a Virginia state computer science fair by developing an early internet crawling application. Instead of continuing his studies, he interned for a D.C. startup, FreeLoader, and eventually UUNet, an internet service provider. âI wasnât going to school,â Parker told <em>Forbes</em>. âI was technically in a co-op program but in truth was just going to work.â Parker made nearly six figures his senior year of high school, eventually starting the peer-to-peer music-sharing site that became Napster in 1999. While working on Napster, Parker met investor Ron Conway, who has backed every Parker product since, having also previously backed PayPal, Google, and Twitter, among others. Napster has been credited as one of the fastest-growing businesses of all time, and its influence on information goods and data markets in the internet age cannot be overstated.</p>
<p>In a study conducted between April 2000 and November 2001 by Sandvine titled âPeer-to-peer File Sharing: The Impact of File Sharing on Service Provider Networksâ, network measurements revealed a notable shift in bandwidth consumption patterns due to the launch of new peer-to-peer tooling, as well as new compression algorithms such as .MP3. Specifically, the percentage of network bandwidth attributed to Napster traffic saw an increase from 23% to 30%, whereas web-related traffic experienced a slight decrease from 20% to 19%. By 2002, observations indicated that file-sharing traffic was consuming a substantial portion, up to 60%, of internet service providers' bandwidth. The creation of new information good markets comes downstream of new technological capabilities, with implications on the scope and scale of current data stream proliferation, clearly noticeable within the domination of internet user activity belonging to peer-to-peer network communications.</p>
<p>Of course, peer-to-peer technology did not cease to advance after Napster, and the invention of âswarmsâ, a style of downloading and uploading essential to the development of Bram Cohenâs BitTorrent, were invented for eDonkey2000 by Jed McCaleb â the eventual founder of Mt.Gox, Ripple Labs, and the Stellar Foundation. The proliferation of advanced packet exchange over the internet has led to entirely new types of information good markets, essentially boiling down to three main axioms; public and permanent data, selectively private data, and coveted but difficult-to-obtain data.</p>
<figure><a href="https://inscriptionissue.bitcoinmagazine.com/random-access-markets"><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTUzMzI4NjcyMzUxODA4/mark3.jpg" height="791" width="1200" /></a>
<figcaption><em>Click the image above to download a PDF of the article. </em></figcaption>
</figure>
<h2>Bitcoin-native Data Markets</h2>
<h3>Parent/Child Recursive Inscriptions</h3>
<p>While publishing directly to Bitcoin is hardly a new phenomenon, the popularization of Ord â released by Bitcoin developer Casey Rodarmor in 2022 â has led to a massive increase in interest and activity in Bitcoin-native publishing. While certainly some of this can be attributed to a newly formed artistic culture siphoning away activity and value from Ethereum â and other alternative businesses making erroneous claims of blockchain-native publishing â the majority of this volume comes downstream from the construction of these inscription transactions that use the SegWit discount via specially authored Taproot script, and the awareness of the immutability, durability, and availability of data offered solely by the Bitcoin blockchain. The SegWit discount was specifically created to incentivize the consolidation of unspent transaction outputs and limit the creation of excessive change in the UTXO set, but as for its implications on Bitcoin-native publishing, it has essentially created a substantial 75% markdown on the cost of bits within a block that are stuffed with arbitrary data within an inscription. This is far from a non-factor in the creation of a sustainable information goods market.</p>
<p>Taking this one step further, the implementation of a self-referential inscription mechanism allows users to string data publishing across multiple Bitcoin blocks, limiting the costs from fitting a file into a single block auction. This implies both the ability to inscribe files beyond 4 MB, as well as the utility to reference previously inscribed material, such as executable software, code for generative art, or the image assets themselves. In the case of the recent Project Spartacus, recursive inscriptions that use what is known as a parent inscription were used in order to allow essentially a crowdfunding mechanism in order to publicly source the satoshis needed to publish the Afghan War logs onto the Bitcoin blockchain forever. This solves for the need of public and permanent publishing of known and available data by a pseudonymous set of users, but requires certain data availability during the minting process itself, which opens the door to centralized pressure points and potential censoring of inscription transactions within a public mint by nefarious mining pools.</p>
<h3>Precursive Inscriptions</h3>
<p>With the advent of Bitcoin-native inscriptions, the possibility of immutable, durable, and censorship-reduced publishing has come to fruition. The current iteration of inscription technology allows for users to post their data via a permanent but publicly propagated Bitcoin transaction. However, this reality has led to yet-to-be confirmed inscription transactions and their associated data being noticed while within the mempool itself. This issue can be mitigated by introducing encryption within the inscription process, leaving encrypted but otherwise innocuous data to be propagated by Bitcoin nodes and eventually published by Bitcoin miners, but with no ability to be censored due to content. This also removes the ability for inscriptions meant for speculation to be front-run by malicious collectors who pull inscription data from the mempool and rebroadcast it at an increased fee rate in order to be confirmed sooner.</p>
<p>Precursive inscriptions aim to create the private, encrypted publishing of data spread out over multiple Bitcoin blocks that can be published at a whim via a recursive publishing transaction containing the private key to decrypt the previously inscribed data. For instance, a collective of whistleblowers could discreetly upload data to the Bitcoin blockchain, unbeknownst to miners or node runners, while deferring its publication until a preferred moment. Since the data will be encrypted during its initial inscribing phase, and since the data will be seemingly uncorrelated until it is recursively associated by the publishing transaction, a user can continually resign and propagate the time-locked parent inscription for extended durations of time. If the user cannot sign a further time-locked publishing transaction due to incarceration, the propagated publishing transaction will be confirmed after the time-lock period ends, thus giving the publisher a dead manâs switch mechanism.</p>
<p>The specially authored precursive inscription process presented in this article offers a novel approach to secure and censorship-resistant data publishing within the Bitcoin blockchain. By leveraging the inherent characteristics of the Bitcoin network, such as its decentralized and immutable nature, the method described here addresses several key challenges in the field of information goods, data inscription, and dissemination. The primary objective of precursive inscriptions is to enhance the security and privacy of data stored on the Bitcoin blockchain, while also mitigating the risk of premature disclosure. One of the most significant advantages of this approach is its ability to ensure that the content remains concealed until the user decides to reveal it. This process not only provides data security but also maintains data integrity and permanence within the Bitcoin blockchain.</p>
<p>This leads us to the third and final fork of the information good data markets needed for the modern age; setting the price for wanted but currently unobtained bits.</p>
<h3>ReQuest</h3>
<p>ReQuest aims to create a novel data market allowing users to issue bounties for coveted data, seeking the secure and immutable storage of specific information on the Bitcoin blockchain. The primary bounty serves a dual role by covering publishing costs and rewarding those who successfully fulfill the request. Additionally, the protocol allows for the increase of bounties through contributions from other users, increasing the chances of successful fulfillment. Following an inscription submission, users who initiated the bounty can participate in a social validation process to verify the accuracy of the inscribed data.</p>
<p>Implementing this concept involves a combination of social vetting to ensure data accuracy, evaluating contributions to the bounty, and adhering to specific contractual parameters measured in byte size. The bounty fulfillment process requires eligible fulfillers to submit their inscription transaction hash or a live magnet link for consideration. In cases where the desired data is available but not natively published on Bitcoin â or widely known but currently unavailable, such as a renowned .STL file or a software client update â the protocol offers an alternative method to social consensus for fulfillment, involving hashing the file and verifying the resulting SHA-256 output, which provides a foolproof means of meeting the bounty's requirements. The collaborative nature of these bounties, coupled with their ability to encompass various data types, ensures that ReQuest's model can effectively address a broad spectrum of information needs in the market.</p>
<p>For ReQuest bounties involving large file sizes unsuitable for direct inscription on the Bitcoin blockchain, an alternative architecture known as Durabit has been proposed, in which a BitTorrent magnet link is inscribed and its seeding is maintained through a Bitcoin-native, time-locked incentive structure.</p>
<h3>Durabit</h3>
<p>Durabit aims to incentivize durable, large data distribution in the information age. Through time-locked Bitcoin transactions and the use of magnet links published directly within Bitcoin blocks, Durabit encourages active long-term seeding while even helping to offset initial operational costs. As the bounty escalates, it becomes increasingly attractive for users to participate, creating a self-sustaining incentive structure for content distribution. The Durabit protocol escalates the bounty payouts to provide a sustained incentive for data seeding. This is done not by increasing rewards in satoshi terms, but rather by increasing the epoch length between payouts exponentially, leveraging the assumed long-term price increase due to deflationary economic policy in order to keep initial distribution costs low. Durabit has the potential to architect a specific type of information goods market via monetized file sharing and further integrate Bitcoin into the decades-long, peer-to-peer revolution.</p>
<p>These novel information good markets actualized by new Bitcon-native tooling can potentially reframe the fight for publishing, finding, and upholding data as the public square continues to erode.</p>
<h2>Increasing The Cost Of Conspiracy</h2>
<p>The information war is fought on two fronts; the architecture that incentivizes durable and immutable public data publishing, and the disincentivization of the large-scale gathering of personal data â often sold back to us in the form of specialized commercial content or surveilled by intelligence to aid in targeted propaganda, psychological operations, and the restriction of dissident narratives and publishers. The conveniences offered by walled garden apps and the private-sector-in-name-only networks are presented in order to access troves of metadata from real users. While user metrics can be inflated, the data gleaned from these bots are completely useless to data harvesting commercial applications such as Language Learning Models (LLMs) and current applicable AI interfaces.</p>
<p>There are two axioms in which these algorithms necessitate verifiable data; the authenticity of the modelâs code itself, and the selected input it inevitably parses. As for the protocol itself, in order to ensure replicability of desired features and mitigate any harmful adversarial functionality, techniques such as hashing previously audited code upon publishing state updates could be utilized. Dealing with the input of these LLMsâ learning fodder is seemingly also two-pronged; cryptographic sovereignty over that data which is actually valuable to the open market, and the active jamming of signal fidelity with data-chaff. It is perhaps not realistic to expect your everyday person to run noise-generating APIs that constantly feed the farmed, public datasets with heaps of lossy data, causing a data-driven feedback on these self-learning algorithms. But by creating alternative data structures and markets, built to the qualities of the specific âinformation goodâ, we can perhaps incentivize â at least subsidize â the perceived economic cost of everyday people giving up their convenience. The trend of deflation of publishing costs via digital and the interconnectivity of the internet has made it all the more essential for everyday people to at least take back control of their own metadata.</p>
<p>It is not simply data that is the new commodity of the digital age, but <em>your</em> data: where you have been, what you have purchased, who you talk to, and the many manipulated whys that can be triangulated from the aforementioned wheres, whats, and whos. By mitigating the access to this data via obfuscation methods such as using VPNs, transacting with private payment tools, and choosing hardware powered by certain open source software, users can meaningfully increase the cost needed for data harvesting by the intelligence community and its private sector compatriots. The information age requires engaged participants, incentivized by the structures upholding and distributing the worldâs data â their data â on the last remaining alcoves of the public square, as well as encouraged and active retention of our own information.</p>
<p>Most of the time, a random, large number represented in bits is of little value to a prospective buyer. And yet Bitcoinâs store-of-value property is derived entirely from users being able to publicly and immutably publish a signature to the blockchain, possible only from the successful keeping of a private key secret. A baselayer Bitcoin transaction fee is priced not by the amount of value transferred, but by how many bytes of space is required in a specific block to articulate all its spend restrictions, represented in sat/vbyte. Bitcoin is a database that manages to incentivize users replicating its ledger, communicating its state updates, and utilizing large swaths of energy to randomize its consensus model.</p>
<p>Every ten minutes, on average, another 4 MB auction.</p>
<p>If you want information to be free, give it a free market. </p>
<p><strong><em>This article is featured in Bitcoin Magazineâs</em> <em>âThe Inscription Issueâ. Click</em> <em><a href="https://store.bitcoinmagazine.com/collections/magazines/products/bitcoin-magazine-annual-subscription">here</a></em> to get your Annual Bitcoin Magazine Subscription.</strong></p>
<p><strong><em>Click <a href="https://inscriptionissue.bitcoinmagazine.com/random-access-markets">here</a> to download a PDF of this article.</em></strong></p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-48549828199009922742024-03-19T06:11:00.005-07:002024-03-19T06:11:14.905-07:00Palladium and Botanix Labs Launches Bitcoin-native Stablecoin on Bitcoinâs First EVM Layer 2<p><a href="https://palladiumlabs.org/">Palladium</a> and <a href="https://botanixlabs.xyz/en/home">Botanix Labs</a> have announced the launch of a new stablecoin, PUSD, on Bitcoin's first EVM-equivalent Layer 2 network, according to a press release sent to Bitcoin Magazine.</p>
<p>The PUSD stablecoin, developed by Palladium Labs, boasts a unique feature of being over-collateralized by 110%, a strategic measure aimed at enhancing its resilience against potential risks inherent in DeFi infrastructure. Importantly, the stablecoin's algorithmic monetary policy attempts to remain immune to governance changes or manipulation by administrator keys, aiming to ensure its integrity and reliability.</p>
<p>âTo realize the true value of decentralized finance, crypto needs to break free from infrastructure that is susceptible to exploits and manipulation,â stated Palladium Labs CEO Akash Gaurav. âAt Palladium, we designed this stablecoin for resilience and reliability. By leveraging the unique capabilities of the Botanix EVM, we can radically increase the security and reliability of stablecoin access for millions of people using Bitcoin.â</p>
<p>Operating on the Botanix EVM, which has been in development since early 2023, Palladium leverages the capabilities of this platform to enhance the security and accessibility of stablecoin transactions for Bitcoin users. The Botanix EVM's underlying sidechain protocol, known as the Spiderchain, plays a pivotal role in safeguarding funds transferred from the Bitcoin base layer to the EVM network.</p>
<p>âThe importance of native stablecoins to the technological renaissance happening on Bitcoin cannot be overstated,â said Willem Schroe, inventor of the Spiderchain and co-founder of Botanix Labs. âWe are thrilled to support the Palladium team in launching their over-collateralized stablecoin on our EVM network.â</p>
<p>With the launch of PUSD on Bitcoin's first EVM Layer 2 network, Palladium and Botanix Labs aim to meet the growing demand for secure and efficient DeFi solutions, seeking to pave the way for a new era of financial innovation on the Bitcoin blockchain.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-78087562482625020572024-03-19T06:11:00.003-07:002024-03-19T06:11:14.099-07:00Luxor and Bitnomial Launch First Ever Bitcoin Hashrate Futures<p><a href="https://www.luxor.tech/">Luxor Technology Corporation</a> (Luxor) and <a href="https://bitnomial.com/">Bitnomial, Inc.</a> have announced the launch of the first US exchange-traded Hashrate Futures, according to a press release sent to Bitcoin Magazine. Set to debut on Bitnomialâs derivatives exchange by the end of this month, these futures contracts are specifically tailored to cater to Bitcoin miners and institutional investors alike.</p>
<p>âHashrate has one of the highest volatilities of major commodities, and the April 2024 Bitcoin Halving will exacerbate this volatility,â said Luxorâs Head of Derivatives, Matt Williams. âBitcoin miners need additional methods to mitigate this price risk to ensure the longevity of their businesses. Exchange-traded hashrate futures will allow them to quickly move in and out of hedging positions to de-risk their revenue streams, and the revenue certainty should improve their credit profile with lenders, which will lower their cost of securing capital.â</p>
<p>With the impending <a href="https://bitcoinmagazine.com/industry-events/bitcoins-biggest-event-kraken-and-bitcoin-magazine-host-the-2024-bitcoin-halving-livestream-event">2024 Bitcoin Halving</a> in mind, the Hashrate Futures aim to provide miners with a tool to hedge their future revenue streams while offering investors access to a tradable derivative tracking Bitcoin mining hashrate. The contracts, denominated in 1 petahash (PH) units and with monthly durations, will reference Luxorâs Bitcoin Hashprice Index for settlement, effectively tracking the value of the underlying commodity, i.e., hashrate.</p>
<p>Accessible to those with Futures Commission Merchant (FCM) accounts connected to the Bitnomial exchange, the Hashrate Futures is the latest addition to Luxorâs suite of hashrate financial products. </p>
<p>âAs we approach the Bitcoin halving and witness the unprecedented demand for spot Bitcoin ETFs surpassing the available mined supply, Bitnomial stands as a pivotal bridge in the crypto ecosystem." stated Bitnomial Founder and CEO, Luke Hoersten. âOur listed hashrate and physically delivered bitcoin futures and options empower miners to navigate this evolving landscape seamlessly. Through Bitnomial, miners can efficiently trade hashrate-bitcoin futures spreads, gaining invaluable bitcoin-denominated hashrate exposure while effectively hedging and delivering mined bitcoin directly to consumers via a federally regulated exchange. This convergence of innovation and regulation solidifies Bitnomial's commitment to fostering a robust and accessible marketplace for all participants in the crypto space.â</p>
<p>As part of Bitnomialâs Bitcoin Product Complex, these physically backed contracts intend to provide a unique opportunity for market participants, with growing interest evidenced by record-high volumes and open interest during Q4 of 2023.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-24757917205532270072024-03-19T06:11:00.001-07:002024-03-19T06:11:13.313-07:00Michael Saylor's MicroStrategy Acquired an Additional 9,245 BTC<p>MicroStrategy has continued expanding its bitcoin holdings, announcing the purchase of approximately 9,245 bitcoins for around $623 million in cash today.</p>
<p>According to the company's <a href="https://www.microstrategy.com/press/microstrategy-acquires-additional-9-245-btc-and-now-holds-214-246-btc_03-19-2024">new press release</a>, it acquired the bitcoin between March 11 and 18, using proceeds from its recent convertible senior notes offering and excess company cash. The average purchase price was approximately $67,382 per bitcoin.</p>
<p>This latest acquisition comes just after <a href="https://www.microstrategy.com/press/microstrategy-completes-603-million-offering-of-0875-convertible-senior-notes-due-2031_03-19-2024">MicroStrategy raised $603.75 million</a> through a private offering of 0.875% convertible senior notes due in 2031. The company upsized the planned offering from $500 million after seeing strong demand.</p>
<p>With the new 9,245 BTC purchase, MicroStrategy now holds an aggregate total of approximately 214,246 bitcoins acquired at an average price of $35,160 per bitcoin. The company has spent $7.53 billion to accumulate its Bitcoin treasury reserves.</p>
<p>Led by CEO Michael Saylor, MicroStrategy continues to aggressively execute its bitcoin strategy even amid Bitcoin market volatility. </p>
<p>The company aims to hold Bitcoin as its primary corporate treasury asset, taking on debt and issuing equity to raise funds for further accumulation. MicroStrategy now own more than 1% of Bitcoin total supply.</p>
<p>While sceptics argue that bitcoin-backed loans introduce balance sheet risk, Saylor remains staunchly confident in bitcoin's long-term trajectory. With its latest buy enabled by the upsized note offering, MicroStrategy is doubling down on its Bitcoin play.</p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-49150067618589499872024-03-19T04:10:00.001-07:002024-03-19T04:10:07.989-07:00Japan's $1.5 Trillion Pension Fund Explores Diversifying Into Bitcoin<p>Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund managing over $1.5 trillion in assets, has <a href="https://www.gpif.go.jp/en/info/20240319_RFI_E.pdf">announced</a> it will explore diversifying a portion of its portfolio into Bitcoin.</p>
<p>According to the announcement, the GPIF will solicit information on illiquid alternative assets like Bitcoin, gold, forests, and farmland as part of its diversification efforts. While not currently invested in these assets, the move signals that the mega-fund is actively researching options beyond stocks and bonds.</p>
<p>The GPIF stated it seeks "basic knowledge about the assets targeted for information provision" and wants to understand "how overseas pension funds incorporate them into their portfolios."</p>
<p>As a large steward of Japanese pensions, the GPIF has been actively honing the sophistication of its investment strategies. In recent years, it has allocated to a more diverse set of assets, including real estate, infrastructure, and private equity.</p>
<p>Bitcoin represents the most high-profile asset being researched. While risky and volatile, BTC is increasingly viewed as an inflation hedge like gold. The GPIF emphasized its announcement does not guarantee future investment, however, the implications of Japanese pension funds buying Bitcoin would be industry-shaking.</p>
<p>The exploration comes as Japan passed new laws enabling investment funds to hold Bitcoin directly. It indicates a broader move towards legitimizing Bitcoin within the world's third-largest economy.</p>
<p>The GPIF manages pensions for over 67 million Japanese citizens. Currently, 97% of its holdings are domestic and foreign bonds and stocks. Diversification beyond traditional assets would be a major shift for such an influential institutional investor.</p>
<p>With over $1.5 trillion at its disposal, even a tiny allocation to Bitcoin by GPIF could significantly impact prices and further legitimize Bitcoin. </p>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3086322013624372150.post-52692267696446063332024-03-18T09:11:00.001-07:002024-03-18T09:11:22.844-07:00El Salvador Moves Bitcoin Reserves to Cold Storage Vault<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTA5MDA5NzEwMDY1Mjg0/image2.png" height="773" width="1200" /></figure>
<p>On March 14, 2024, El Salvadorâs president-elect, Nayib Bukele, unveiled a historic bold maneuver that echoed across the Bitcoin world: <a href="https://twitter.com/nayibbukele/status/1768425845163503738">El Salvador confirmed the transfer of a substantial portion of its Bitcoin holdings into cold storage</a>, securely kept within a vault in its national borders. This strategic decision marks a pivotal juncture in El Salvador's Bitcoin journey since the introduction of the Bitcoin Law, which has drawn both admiration and skepticism worldwide.</p>
<p>Amidst a cacophony of critiques ranging from allegations of human rights violations to inadequate modern infrastructure, El Salvador has stood committed, weathering storms of disapproval from traditional finance stalwarts and even fervent Bitcoin maximalists on Twitter (X) Spaces. The veil of ambiguity surrounding the size of El Salvador's Bitcoin reserves, a point of contention and criticism for many, has now been decisively lifted, ushering in a new era of transparency and confidence in the nation's commitment to fostering a thriving Bitcoin-friendly ecosystem.</p>
<p>With this groundbreaking move, Salvadorans and Bitcoin enthusiasts worldwide have the ability to audit El Salvador's Bitcoin reserves and can see all inbound and outbound transactions. This audacious step wasn't mandated but was taken willingly, embodying El Salvador's commitment to its citizens' trust and the global Bitcoin community's ethos of openness. Unsurprisingly, shortly after Bukele announced <a href="https://mempool.space/address/32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo">El Salvadorâs Bitcoin address</a>, Bitcoiners began to <a href="https://twitter.com/Crypto_Mags/status/1768478266762150214">send donations to the wallet</a>, with nearly 6 Million Sats in transactions as of this writing. To date, plebs can track El Salvadorâs <a href="https://mempool.space/tx/c3d23497dcf67f5d179ef2f1d43d61b5d746007a70a09797aef95332f82f8543">daily 1 bitcoin DCA purchases</a>. In this historic moment, El Salvador not only charts a new course in financial governance but also silences its critics by setting a precedent of leading by example in responsibly disclosing and managing its modest but modern sovereign Bitcoin wealth reserves.</p>
<p>With 5,689 Bitcoinsâvalued at $385,111,456 USD as of this writingâEl Salvador has secured its digital wealth and aptly navigated the treacherous waters of international politics. The decision to shift its Bitcoin holdings from <a href="https://www.forbes.com/sites/jonathanponciano/2021/09/07/el-salvador-taps-billionaire-backed-bitcoin-unicorn-in-the-cryptocurrencys-historic-legal-tender-debut/?sh=138d59264fac">Bitgo</a>, an American custodian, to a vault within its sovereign borders wasn't just a public relations masterstroke; it was a strategic imperative. Given the strained relations between the American government and El Salvador over the Bitcoin Law, the mounting holdings under Bitgo's custody risked becoming entangled in potential sanctions and regulatory quagmires. This decisive action safeguards El Salvador's financial autonomy and showcases a shrewd understanding of the intricacies of the American regulatory landscape.</p>
<figure><img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MjA1MTA4ODY5MzE4MzIxOTE2/image1.png" height="800" width="897" /></figure>
<p>While the disclosure of the reserves has garnered widespread approval, there may have been compelling and strategic reasons behind the nation's initial reluctance to divulge its complete holdings. Nayib Bukele's affirmation that only a <a href="https://twitter.com/nayibbukele/status/1768425845163503738">âbig chunkâ</a> of the total Bitcoin reserves has been transferred to cold storage underscores a nuanced understanding of the countryâs strategic financial management. In the complex realm of nation-states navigating the uncharted waters of a Bitcoin Standard, maintaining a degree of opacity can be a prudent strategy. El Salvador, in its quest to carve a distinct path in the world, has tactically kept some cards close to its chest, waiting for the opportune moment to unveil its Bitcoin wealth in a calculated move. This wise approach reflects a careful balancing act between transparency and strategic advantage in the dynamic landscape of geopolitics.</p>
<p>Bukele shed light on El Salvador's Bitcoin holdings in <a href="https://twitter.com/nayibbukele/status/1767323587071947195">earlier tweets</a>, surpassing their earlier acquisition strategies and dollar-cost averaging efforts. Contrary to speculations circulating on social media, Bukele revealed a multifaceted approach that had propelled the nation's Bitcoin reserves. Beyond mere purchases, El Salvador's innovative visa program, profits from Bitcoin-to-dollar exchanges held in escrow, revenue from government services, and mining endeavors have collectively contributed to a handsome Bitcoin treasury. This revelation further dispels misconceptions propagated by armchair quarterbacks and highlights El Salvador's innovative courage in leveraging diverse avenues to bolster its growing Bitcoin wealth.</p>
<p>Disclosing El Salvador's Bitcoin reserves represents a significant stride toward transparency and accountability for its citizens. Yet, it's crucial to recognize that there will always be a segment of critics who demand more and complain about every detail in an attempt to find fault. However, it's essential to remember that these measures are not solely aimed at appeasing detractors. Instead, they serve as a foundational step in creating a positive business environment where Bitcoiners can confidently establish their ventures, knowing that the country is dedicated to their success.</p>
<p>The ultimate goal for Bukele and El Salvador extends beyond merely silencing critics; it's about transforming the nation into a prosperous hub of opportunity for Salvadorans. In a stroke of genius, El Salvador has built its own digital Fort Knox, with the exceptional feature that citizens can verify the existence of the funds. The Salvadoran government aims to nurture a culture of trust and investment in the country's future by rewarding proof-of-work and low-time preference. This vision encompasses building a new El Salvador where citizens can thrive, seize opportunities at home, and contribute to the nation's growth, rather than seeking elusive promises abroad. As El Salvador continues its journey toward economic empowerment and progress, these strategic moves serve as foundational pillars for a brighter and more prosperous future.</p>
<p><em>This is a guest post by Jaime Garcia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.</em></p>
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Unknownnoreply@blogger.com0