Category: Crypto

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On a recent episode of the Coinage podcast, guest SEC Commissioner Hester Peirce said that she is open to reconsidering in-kind redemptions for spot bitcoin ETFs.

(For those who aren’t familiar with the term “in-kind redemption,” it refers to the ability to withdraw the bitcoin you’ve purchased via an ETF into your own custody. In essence, it turns a bitcoin IOU into the real thing.)

BREAKING: SEC Commissioner Hester Peirce previews new pro-crypto changes coming to the SEC

ETF in-kind redemptions and ability for ETF issuers to begin staking likely done “early on”

Both ETFs now have more than $100B in AUM pic.twitter.com/g3jtbuBeWU

— Coinage (@coinage_media) December 20, 2024

This makes my heart happy, as bitcoin wasn’t designed to exist trapped within the wrappers of the old system. It was built to set us free from that system.

If Peirce can work with the incoming SEC Chair, Paul Atkins, to facilitate the approval of in-kind redemptions then the spot bitcoin ETFs can serve as some of the biggest on-ramps to Bitcoin, as Bitwise co-founder Hong Kim put it, as opposed to simply existing as speculation vehicles.

Bitcoin was born to exist in the wild. It wasn’t born to exist in a Wall Street zoo.

In-kind redemptions would allow the bitcoin currently trapped within the zoo the ability to return to its natural habitat.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin’s price is down over 10% from its all-time high and its critics are taking victory laps this week as bitcoin has plummeted all the way back to… $97,000.

It is still practically almost $100,000 for a single bitcoin. It is crazy to me to think that the “dip” is back to just under that important milestone, and really shows how far this asset has come over the last 15, going on 16 years.

Year-to-date, bitcoin is up over 128%. And by historical trends, it is entering into its third year of rising in price before having a large correction. So this tells me that bitcoin isn’t done pumping yet, it’s just taking a breather before its next leg up.

#Bitcoin should continue pumping through next year, based on historical trends 👀

How high will BTC rise in 2025? 🚀 pic.twitter.com/VFX6jNgvvP

— Bitcoin Magazine (@BitcoinMagazine) December 13, 2024

HODLing bitcoin can be scary at times for new Bitcoiners. This asset is volatile both ways – which is great when it’s pumping but it makes people rethink their lives when it’s dumping. If you are new and bought the local top of $108,000 and are panicking, take it from me, someone who has been in Bitcoin for almost eight years now – you’re going to be fine.

This is a healthy pull back and the only thing you should be worried about is stacking more bitcoin today than you had yesterday.

It is more important to learn the fundamentals of Bitcoin and understand this new asset class than to worry about what the price of bitcoin does on a day to day basis. Bitcoin is a wild beast and will have downturns just as hard as it swings up. This volatility, even the downturns, are a good thing for many reasons – it creates opportunities. Especially for new bitcoiners to take advantage of stacking bitcoin at cheaper prices than when they originally got in.

Whenever you’re in doubt, it’s always important to zoom out and see the trajectory that bitcoin is on. Bitcoin has two possible scenarios it will experience:

1.) Bitcoin will fail and go to $0.

2.) Bitcoin will succeed and reach a price range in the millions and beyond.

I think Bitcoin has proven itself that it will not fail, so option number 1 here is not on the table. Meaning option number 2 is what is more likely to happen.

And if option number 2 is going to happen, then well, you should stack more bitcoin on every downturn.

When in doubt, zoom out.

HODL ✊ pic.twitter.com/mr61ppIn3Y

— Nikolaus Hoffman (@NikolausHoff) December 20, 2024

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Recently, the notion of a Strategic Bitcoin Reserve has begun to animate Bitcoiners. Trump has advocated for holding a stockpile of seized Bitcoins, but certain proposals have gone further. Now, draft legislation like Senator Lummis’ BITCOIN Act proposes that the US government acquire 1m BTC over five years.

Among Bitcoin enthusiasts, the notion of a Strategic Reserve is almost a foregone conclusion. But I don’t think it’s likely, nor do I think it’s a good idea.

Allow me to explain.

Are we talking about a stockpile, a sovereign wealth fund, or a reserve?

First, there’s the notion of a “stockpile” of Bitcoins. Trump committed to this in his pre-election speech in Nashville, saying “I am announcing that if I am elected, it will be the policy of my administration, United States of America, to keep 100% of all the bitcoin the US government currently holds or acquires into the future. […] This will serve in effect as the core of the strategic national bitcoin stockpile.”

This isn’t what I’m talking about at all. (In fact, I’m strongly supportive of the stockpile idea). I’m talking about the US government actually acquiring additional Bitcoins. Proposals range from acquiring ~800,000 BTC (BPI), to 1 million BTC (Lummis), to 4 million BTC (RFK Jr).

Senator Lummis, Michael Saylor, and the Bitcoin Policy Institute (among many others) have been talking about a “Strategic Bitcoin Reserve.”

Under Senator Lummis’ framework, the US Government would acquire 1 million BTC over a five year period, and hold them for at least 20 years. The stated logic of the reserve is to “strengthen the financial condition of the United States, providing a hedge against economic uncertainty and monetary instability.” Lummis’ bill specifically says that the SBR would “strengthen the position of the dollar,” and compares it to the role of gold in prior monetary eras.

It’s important to distinguish these proposals from the notion of acquiring Bitcoin in a sovereign wealth fund, as George Selgin does. As far as I can tell, none of the main advocates for the SBR are treating it as an asset in a state investment portfolio – they are explicitly connecting Bitcoin to the dollar, and suggesting that Bitcoin will actually strengthen the dollar. This means that they envision a monetary system where Bitcoin plays some kind of active role – for now, playing the same role as FX reserves, but perhaps in the future, as the actual basis for a new commodity standard, like Bretton Woods I. (For those who think I’m exaggerating, you simply have to read the words written by the advocates of the SBR itself.)

To be clear, I’m not contradicting the notion of simply holding on to existing seized Bitcoin (which I think is the policy Trump will ultimately settle on), nor am I even against the notion of putting Bitcoin in a sovereign wealth fund (although the US doesn’t have one). I’m instead arguing against the idea of creating a “strategic” reserve of Bitcoins and giving it any sort of monetary role.

A Bitcoin Reserve would undermine, not support, the dollar

My main, and most important point, is that a Bitcoin reserve would not bolster the dollar. Unlike other countries, the US issues the global reserve currency. Other nations can toy around with acquiring Bitcoin, and indeed a few are.

It might make sense, if you are Russia or Iran, to consider an un-seizable asset in your FX reserves, especially after the US confiscated Russia’s treasuries in 2022. But the US does not need to hedge its exposure to the dollar, because it itself issues the dollar.

Acquiring Bitcoins and assigning them a monetary role—whether as FX reserves or something more significant—would imply the US is losing confidence in the current dollar-based system.

The US government explicitly signaling a move away from the inconvertible fiat standard would throw the system into chaos. Right now, the dollar is “backed” by America’s role as the steward of global trade, the robustness of the US economy, the solvency of the US Government, the ability of the US to project hard and soft power, the depth of US securities markets, and the ubiquity of the dollar in global trade and finance.

If the US government were to make an abrupt shift and say “we’re reconsidering this whole Washington Consensus thing,” markets would start to wonder what it is exactly that the government knows. Are they planning a default? Are they going to disband the Bretton Woods institutions? Are they projecting enormous deficits and sky-high rates?

To be clear, I don’t think the government is considering any of these things, but I do think bond traders would be immediately concerned.

“But we’re not talking about moving to some kind of neo-gold standard, with the dollar being a weight of Bitcoin. We’re just talking about buying some Bitcoin and putting it on the US balance sheet,” you might protest.

This isn’t the way markets would see it. If Bitcoin on the balance sheet serves only as a symbol, it would be an extraordinarily expensive one. One million Bitcoins would cost $100 billion at current prices – and naturally, if the US government was known to be a price-insensitive buyer, the US could end up acquiring the coins at $1,000,000 per coin – spending $1T on the reserve. This is an incredibly meaningful expense which should be spent on other things.

I would suspect that the market would treat the Bitcoin purchases not as symbolic, but rather as the first step in a process of returning to a new commodity standard for the dollar with Bitcoin, rather than gold, as the backing.

Austin Campbell says that this would “accelerate the demise of the dollar, as it would signal to the world that the US does not intend to manage its fiscal house well and will likely re-denominate in BTC at some point.”

Let’s say the probability of a Lummis-style SBR actually started to converge to 1. You would know, because financial markets would enter a meltdown. Interest rates would spike dramatically as investors in US debt would start to wonder if the US was considering a hard break with Bretton Woods II.

The cost of capital for everyone on the planet would rise sharply. Inflation would likely ramp up. A massive redistribution of wealth would occur, as financial markets tumbled, and Bitcoin skyrocketed.

Put another way, the US considering a near term abandonment of the current, relatively stable monetary system and replacing it with a monetary standard not based on gold, but a highly volatile, emerging asset, would cause utter panic among its creditors.

In my view, if we even got close to a Lummis-style reserve, markets would anticipatorily start to go berserk, and Trump would be forced to withdraw the policy.

While BSR advocates may claim not to be advocating a full neo-gold standard with Bitcoin as the basis, their stated intentions (again, simply read their proposals) are aggressive enough that they would seriously spook the Treasury markets if the reserve came anywhere near to being a reality.

An SBR would be politically imprudent

It’s obvious to me that any piece of legislation proposing a Strategic Bitcoin Reserve would be a complete non-starter in Congress. I’m speaking from first-hand experience having visited a number of pro-crypto members of Congress in Washington mere weeks ago. Congress is finely poised, with the Republicans having a slim majority. They couldn’t jam something through on a partisan basis, nor is it clear to me that the Republicans would even vote as a single bloc on this anyway.

Proponents of the reserve insist that the executive can find the funds for a reserve without passing a law. Certainly, there are ways in which the executive could spend money without prior authorization from Congress. Bitcoiners have proposed a variety of methods. But these completely miss the point. A Bitcoin reserve imposed by executive fiat would be imposed undemocratically, and would likely be undone in subsequent administrations if not voted on by Congress.

Think of it like this. The executive could decide unilaterally to wage a costly foreign war and find ways to appropriate the cash through various esoteric schemes. But such an undertaking would be incredibly unpopular, as the people would rightly consider it highly undemocratic. The balance of power in our Republic specifies that the President acts, but Congress authorizes (and appropriates). We don’t have a tyrant in charge.

Because Congress controls the purse strings, American citizens are effectively consulted for major spending decisions.

Put another way, in a household, the husband may not mind if his wife uses his credit card for incidental purchases. But if she decides to buy a new car, or a house, he would certainly prefer to be consulted. Of course, mechanically, she might be able to buy a car with her husband’s credit card if the limit is high enough. But that misses the point. She should consult her husband for a major decision like that. The President should consult Congress (and by extension, the American people) for any major outlay. And a Bitcoin reserve would certainly fall into that category.

“But Trump has a mandate,” you might say. But this isn’t true. He doesn’t have a mandate to spend hundreds of billions of dollars on a Strategic Bitcoin Reserve. He didn’t campaign on this. It didn’t come up in the debates or meaningfully in the press.

He talked about a Bitcoin stockpile (as in, holding existing seized Bitcoins) in his speech in Nashville, not the additional purchase of Bitcoins for the government. Trump trying to find an end-around around Congress for the purpose of spending government funds on Bitcoin would be supremely politically unpopular. It would exhaust most of his finite political capital. And Trump has an agenda that’s far broader than just Bitcoin stuff. I expect that this political logic will eventually become clear to him, even if he is momentarily excited by the notion of a reserve.

The other problem with forcing through Bitcoin purchases by executive order (assuming this is even doable) is that something that is easily done is easily undone. If such a policy were unpopular – and I believe it would be – a future Democratic administration would undoubtedly sell off the reserve immediately, causing chaos in Bitcoin markets.

What Bitcoiners should want is a democratic consensus that a Bitcoin reserve or stockpile is a good idea, and to effectuate this policy through bipartisan legislation, or even a constitutional amendment. Generally, meaningful monetary changes are done through legislation, like the 1934 Gold Reserve Act, or the Gold Clause Resolution in 1977 following Nixon’s suspension of Bretton Woods I.

Bitcoiners should want a Bitcoin Reserve to be enduring, rather than a flash in the pan. An executive-order based policy done by fiat by the new Trump admin would not last.

US Government purchases of Bitcoin would massively alienate the general public

Without a doubt, an SBR policy would be seen as a massive wealth transfer from US taxpayers to already wealthy Bitcoiners. This would be massively regressive and unpopular. Bitcoiners are a relatively small group. The Fed found in 2022 that only 8 percent of US adults hold any crypto as an investment, with wealthier individuals being over-represented in that cohort.

Even if the SBR was funded in a kind of fiscally “neutral” way (for instance, by revaluing gold to its market rate, and selling off some of the gold), it would still be seen as an undeserved handout for Bitcoiners. Those funds could be used for anything – and they would be appropriated to Bitcoiners.

A major monetary change which benefits a tiny group of Americans would turn everyone who doesn’t hold Bitcoin against the Bitcoiners. And I doubt many Americans would see the logic of the SBR, since there is no apparent crisis with the US dollar at present.

Attitudes might be different in ten or twenty years if de-dollarization accelerates, the US enters some kind of default situation, rates skyrocket, many other countries start to adopt Bitcoin as a reserve asset. But that’s not the world we live in today.

If you recall, student loan forgiveness was fairly unpopular because it was seen as a bailout for middle and upper class Americans who had the means to go to college and get worthless liberal arts degrees. (Interestingly, Elizabeth Warren proposed a unilateral outlay of $640 billion without Congressional approval to extinguish student loans back in 2019/20. I doubt Bitcoiners would want to open that particular Overton window.)

Biden’s student loan forgiveness plan would have benefited around 43 million Americans, a larger group than Bitcoin holders. The furore over a Bitcoin reserve would be far worse.

Right now, the financial world is warming up to Bitcoin, due to gradual and organic adoption. A reserve would pit ordinary Americans against Bitcoiners, which would seriously complicate the trajectory of Bitcoin’s adoption.

A Bitcoin reserve has no “strategic” purpose

The actual term SBR is puzzling, specifically the “strategic” component. The US government holds a number of commodities for genuinely strategic purposes. Most importantly, the Strategic Petroleum Reserve is a means to stabilize oil markets.

Biden, to his credit, actually sold a lot of our oil off during high prices and bought it back later, turning a profit. We also hold or have held in reserve quantities of heating oil, gas, grain, dairy products, rare minerals like cobalt, titanium, tungsten, helium, and medical equipment.

The common thread is that these commodities have some kind of instrumental use, with the government having an interest in maintaining them for emergencies, or market stabilization.

Bitcoin by contrast has no industrial use. The US government does not “need” Bitcoin to trade at any specific price level. It makes no difference to the government if Bitcoin trades at $1 or $1 million. Bitcoin also doesn’t generate cash flows, so a reserve would not help with paying interest on the debt in the future.

The only “strategic” purpose Bitcoin could serve would be equivalent to that served by the US government’s existing reserve assets, such as gold and foreign currency – which is to say, none. As George Selgin painstakingly explains, the US actually has modest FX reserves, relatively speaking, compared with other developed nations. This is because the dollar is a truly free-floating currency and the US does not manage the peg at all. The roughly 8130 tons of gold the US holds have had no relevant use whatsoever since 1971. They are purely vestigial and just held for tradition’s sake. The last major interventions to manage the exchange rate of the dollar came in the 1980s.

Bitcoiners discussing the Bitcoin reserve idea tend to vastly overrate the role of gold in the dollar system. Ultimately, the US government’s balance sheet scarcely matters when it comes to the ubiquity of the dollar system.

The things that really support the dollar are:

US GDP growth, creating tax liabilities which can only be extinguished in dollarsThe credibility and stability of the US government and monetary policyUS capital markets being the most attractive and liquid in the world, making them a sink for global investment (in dollars)The network effects that come from dollar dominance in trade settlement, commodity markets, FX markets, and debt marketsAmerica’s continued role as the global hegemon and guarantor of global trade and security

Gold – and Bitcoin – are simply not relevant in the American monetary equation today. Perhaps they will one day have a role to play, but the current inconvertible standard is not based in any way on commodity reserves.

There’s no argument for an SBR which uniquely specifies Bitcoin

Why a reserve of Bitcoins? Why not something else? Bitcoiners have yet to provide a compelling answer. Bitcoin is worth a lot (~$2 trillion), is globally liquid, and is held by many individuals, you might say. Well, Bitcoin isn’t unique in this regard. Is there an argument you could make in support of a Bitcoin reserve that would also not apply to, say, Apple or NVIDIA stock?

“Well,” you might say, “these are claims on the cashflows of companies, and not bearer assets. Bitcoin is special, because it cannot be seized or interfered with.” Presumably, though, the US is not at risk of having the assets and IP of Apple or NVIDIA confiscated by itself. This would be an argument against another nation acquiring a reserve of the equity of a US-based company. But we’re talking about the US government.

There’s also no argument for a reserve of Bitcoin which does not include gold. If you want to remonetize a hard asset and use it as the basis for your currency system, gold is the obvious choice. If we want to “get ahead” of other nations in terms of reserve assets (a common argument made in favor of the SBR), gold is perfect, since we own more of it than anyone else. Simply re-monetize gold (re-price it from its official price to its current market price), and we are already ahead.

Gold is also a “bearer” asset, in that ownership is not a claim on anything other than simple possession of bars and ingots. If Bitcoiners are successful in persuading the US government that we should exit the Bretton Woods II standard, and move back to a pre-1971 commodity based standard, gold would genuinely be a better choice. It has a longer track record, more people own it (so remonetizing it would alienate fewer people), it’s worth about nine times more than Bitcoin, it has much lower volatility, and we already own it, so monetizing it would be far cheaper (if not free).

If you disfavor gold because it’s not a “high growth” asset like Bitcoin, then you could consider fast-growing (and productive) assets like NVIDIA, Apple, or Microsoft equity. If we’re considering what commodities the US might invest in for strategic purposes, my first choice would be AI datacenters or chip manufacturing. Those serve an obvious strategic purpose and would also be economically productive. However, we are then getting into discussions of using Treasury or Fed resources for “industrial policy”.

Most conservatives and libertarians are suspicious of top-down government apportionment of resources in this manner, preferring to let the private sector sort it out. I wasn’t a fan of Biden’s massive infrastructure spending, which I felt was extremely wasteful, and for that reason I don’t support further incursion into the private sector by the government, especially not via naked dollar issuance.

Typically, the US government doesn’t really intervene in markets with its monetary tools beyond setting rates; its role is setting the rules of the road and keeping the system stable, not aggressively deploying government funds into commodities for day trading. (This is why many were skeptical of Biden’s releases from the strategic petroleum reserve.) We are a markets-based capitalist economy, not a centrally planned one. It’s not the government’s job to manage a commodity hedge fund.

This is left to the private sector, with the government only stepping in when there’s some immediate strategic necessity to bolster reserves of a specific vital commodity. At the end of the day, the US government still benefits if the US private sector makes investments in commodities and assets that appreciate, via capital gains taxes.

I would trust the fund managers and capital allocators to do this rather than bureaucrats.

There’s no argument for acquiring an SBR today

Why create a reserve of Bitcoin today? What’s special about the present moment that makes a Bitcoin reserve an imperative right now? Nothing in particular. The dollar isn’t collapsing – in fact it’s thriving. The DXY has been rallying for the last 15 years or so – to the possible detriment of US manufacturing, and foreign countries with dollar liabilities.

The US is growing its GDP relative to the rest of the world, especially Europe, which is in slow decline, and China, which is dealing with a serious economic crisis for the first time since Deng. American equities are trouncing the rest of the world, with the US stock market accounting for ~50% of the global total. There’s nothing to indicate these trends won’t continue.

“But the dollar is falling relative to hard assets, like gold,” you might say. “And its purchasing power is falling, as evidenced by the relatively high and variable inflation regime we find ourselves in.” But there’s no apparent crisis in the dollar.

Rates are a bit higher than they’ve been in the last decade, but no one is panicking about the US government’s solvency. The dollar’s share of global FX reserves has fallen a bit in the last couple decades, but there’s no real crisis there either. The dollar is still utterly dominant globally, with no likely challenger evident anywhere. Neither the moribund Euro nor the (managed) Renminbi have the ability or the ambition to challenge the Dollar as the global reserve asset of choice.

The only reason the SBR is being discussed seriously today is due to Trump’s election victory. Bitcoiners have latched on to this for political expediency reasons in the hope that he might not only usher in more favorable regulation, but actually become a buyer of Bitcoin at the state level.

But Bitcoin is not anywhere near sufficiently large or liquid to make any kind of dent in the US’ reserve portfolio, and it certainly isn’t ready to be a monetary good like gold under the gold standard. It’s only worth ~$2 trillion today, compared to gold’s ~$17 trillion. Bitcoin is still extremely volatile, and clearly unsuitable to be a unit of account (if we were to graduate to some kind of Bitcoin-denominated dollar system).

Bitcoiners should simply be more patient. Bitcoin has done tremendously well over its short 15 years of life and is becoming a global monetary asset of consequence. It has undergone a full institutionalization with the ETF being a final major ratification.

Over time, its volatility will temper (and its market cap and liquidity will grow), and it will become a more suitable asset for governments to consider in their portfolios. But as of right now, it doesn’t have a meaningful role to play in America’s monetary system.

Careful what you wish for

The truth is, there’s no urgency to establish any sort of reserve. The US has nothing to lose by simply waiting. If Bitcoin continues to monetize and ultimately challenges gold, and other nations adopt Bitcoin as part of their sovereign wealth funds, or even start to “back” their currencies with it, the US has plenty of time to act.

US institutions, investors, and individuals hold more Bitcoin than anyone else. The US Government has ample means to acquire Bitcoin at any point along the journey, should they decide that they really covet it.

They could acquire Bitcoin via open market purchases. More likely, in my opinion, they would go for the much cheaper option of setting a price cap, banning private ownership, and forcing conversion of US-held Bitcoins, as they did with gold in 1933.

They could also simply expropriate the Bitcoins held on domestic platforms – US-based custodians are the biggest by far. They could nationalize miners. They could hike capital gains taxes and insist they be paid in-kind. They could arrest individuals known to hold a lot of Bitcoin and expropriate their funds. They could put resources into developing quantum computing good enough to steal the ~4m coins that are quantum vulnerable.

“Wait… not like that.” But that’s the trouble. You don’t get to decide the manner in which the US government acquires Bitcoins. If you are successful at persuading them of the virtues of Bitcoin, and they really set their heart on a reserve, they’ll do it through whatever means are most politically expedient.

This is not necessarily consistent with what is best for American bitcoiners. If it’s a choice between buying 1 million BTC at $1 million/coin (for $1 trillion dollars), or simply confiscating 1 million coins through some other method, they will go for the more efficient method.

If not Bitcoin, how should we shore up the dollar?

The long-term solvency of the US government is certainly a concern. Debt to GDP is near the top of the historical range at 120%. Interest costs as a share of GDP are at a 60-year high and going higher. Federal net outlays as a share of GDP are at the top end of the range over the last century, exceeded only by the level during and after WWII.

While the deficit has declined from its highs during Covid, it’s still elevated, and gives us very little breathing room if a recession hits. The reckless spending of the last four years (and frankly, there was bipartisan consensus on this) led to a burst of inflation, which we are still dealing with.

The dollar’s share of global FX reserves has declined from 70% to 60% over the last quarter century (though no other individual currency has gained meaningful share). And certain buyers of the debt are now leery of purchasing US Treasuries, after the US confiscated Russia’s reserves in 2022.

All of this points to a potential long-term issue with the dollar, although no crisis seems to be imminent. This might change if we experience a recession and the government finds itself unable to engage in massive stimulus spending, given that rates are already fairly high, and we are running a significant deficit.

If it were up to me, I would do the following:

Increase GDP growth through any means possible. This means allowing for cheaper energy, fostering high growth industries like AI, and generally unshackling the private sector

Slashing the size of government expenditures, which are far more wasteful than equivalent capital deployed in private markets, to reduce the deficit

Limit political intervention into dollar markets, as in, realize that the sanctions-making power of the dollar trades off against its international usefulness

Allow inflation to run hot for a while to reduce the debt load in real terms

The good news is that incoming Treasury Secretary Scott Bessent’s 3-3-3 plan basically does this. No Bitcoin needed. 

This is a guest post by Nic Carter. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

If the above statement offends you, you might not have read the Bitcoin source code.

Follow Rizzo on X.

https://x.com/pete_rizzo_/

Of course, I’m sure you’ve heard that there are 21 million bitcoin – and this is true, the Bitcoin protocol allows for only “21 million bitcoin” to be created, yet these larger denominations can be subdivided into 100 million sub-units each.

Call them whatever you want, there are only 2.1 quadrillion monetary units in the protocol.

This dollars and cents differential has long been the subject of debate – in the time of Satoshi, Bitcoin’s creator, the dual conventions, Bitcoin having both a bulk denomination, and a smaller unit, was not much of a concern. There were questions about whether the software would work at all, and bitcoin were so worthless, selling them in bulk was the only rational option.

Rehashing this debate is BIP 21Q, a proposal to the Bitcoin users authored by John Carvalho, founder of Synonym, creator of the Pubky social media platform, and a tenured contributor whose work dates back to the days of the influential Bitcoin-assets collective.

In short, the BIP proposes that network actors – the various wallets and exchanges – change how Bitcoin denominations are displayed, with the smallest unit of the protocol renamed “bitcoins,” as opposed to “satoshis,” as they have been commonly called.

Here are the specifics of the BIP:

Redefinition of the Unit:

Internally, the smallest indivisible unit remains unchanged.Historically, 1 BTC = 100,000,000 base units. Under this proposal, “1 bitcoin” equals that smallest unit.What was previously referred to as “1 BTC” now corresponds to 100 million bitcoins under the new definition.

Terminology:

The informal terms “satoshi” or “sat” are deprecated.All references, interfaces, and documentation SHOULD refer to the base integer unit simply as “bitcoin.”

Display and Formatting:

Applications SHOULD present values as whole integers without decimals.Example:Old display: 0.00010000 BTCNew display: 10000 BTC (or ₿10000)

Unsurprisingly, the debate around the BIP has been hostile. For one, it’s not a technical BIP, though this is not a requirement of the BIP process. Suffice to say, it’s perhaps the most general BIP that has been proposed under the BIP process to date, as it mainly deals with market conventions and user onboarding logic, not any changes to the software rules.

However, I have to say, I find the proposal compelling. Nik Hoffman, our News Editor, does not, preferring to stick to the market affirmative.

Yet, I think the proposal raises relevant questions: why should new users be forced to compute their Bitcoin balances using only decimals? Surely this has the adverse side effect of making commerce difficult – it’s simply antithetical to how people think and act today.

Also, in terms of savings, at an $100,000 BTC price, it isn’t exactly compelling to think you could be spending a whole year earning 1 BTC, though that may be.

Indeed, there have been various debates for all kinds of units – mBTC, uBTC – that play around with the dollars and cents convention, but Carvalho here is wisely skipping to the end, preferring just to rip the band-aid off. $1 would buy 1,000 bitcoins under his proposal.

What’s to like here, and I argued this during a Lugano debate on the topic in 2023, is that it keeps both the larger BTC denomination and the smaller unit, now bitcoins. They are both important, and serve different functions.

My argument then was that having a larger denomination like BTC (100 million bitcoins) is important. If there was no “BTC unit,” the press and financial media would be faced to reckon that “1 bitcoin” is still worth less than 1 cent. 

How much mainstream coverage and interest do we think there would be? I’d bet not very much.

In this way, BIP 21Q is a best-of-both-worlds approach.

The financial world, press, and media can continue championing the meteoric rise in value of “BTC,” while everyday users can get rid of decimals and complex calculations, trading the only real Bitcoin unit guaranteed to exist in perpetuity. 

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

With Bitcoin now making six-figure territory feel normal and higher prices a seeming inevitability, the analysis of key on-chain data provides valuable insights into the underlying health of the market. By understanding these metrics, investors can better anticipate price movements and prepare for potential market peaks or even any upcoming retracements.

Terminal Price

The Terminal Price metric, which incorporates the Coin Days Destroyed (CDD) while factoring in Bitcoin’s supply, has historically been a reliable indicator for predicting Bitcoin cycle peaks. Coin Days Destroyed measures the velocity of coins being transferred, considering both the holding duration and the quantity of Bitcoin moved.

Figure 1: Bitcoin Terminal Price has surpassed $185,000.

View Live Chart 🔍

Currently, the terminal price has surpassed $185,000 and is likely to rise toward $200,000 as the cycle progresses. With Bitcoin already breaking $100,000, this suggests we may still have several months of positive price action ahead.

Puell Multiple

The Puell Multiple evaluates daily miner revenue (in USD) relative to its 365-day moving average. After the halving event, miners experienced a sharp drop in revenue, creating a period of consolidation.

Figure 2: Puell Multiple has climbed above 1.00.

View Live Chart 🔍

Now, the Puell Multiple has climbed back above 1, signaling a return to profitability for miners. Historically, surpassing this threshold has indicated the later stages of a bull cycle, often marked by exponential price rallies. A similar pattern was observed during all previous bull runs.

MVRV Z-Score

The MVRV Z-Score measures the market value relative to the realized value (average cost basis of Bitcoin holders). Standardized into a Z-Score to account for the asset’s volatility, it’s been highly accurate in identifying cycle peaks and bottoms.

Figure 3: MVRV-Z Score still considerably below where previous peaks have occurred.

View Live Chart 🔍

Currently, Bitcoin’s MVRV Z-Score remains below the overheated red zone with a value of around 3.00, signaling that there’s still room for growth. While diminishing peaks have been a trend in recent cycles, the Z-Score suggests that the market is far from reaching a euphoric top.

Active Address Sentiment

This metric tracks the 28-day percentage change in active network addresses alongside the price change over the same period. When price growth outpaces network activity, it suggests the market may be short-term overbought, as the positive price action may not be sustainable given network utilization.

Figure 4: AASI indicated overheated conditions above $100,000.

View Live Chart 🔍

Recent data shows a slight cooling after Bitcoin’s rapid climb from $50,000 to $100,000, indicating a healthy consolidation period. This pause is likely setting the stage for sustained long-term growth and does not indicate we should be medium to long-term bearish.

Spent Output Profit Ratio

The Spent Output Profit Ratio (SOPR) measures realized profits from Bitcoin transactions. Recent data shows an uptick in profit-taking, potentially indicating we are entering the latter stages of the cycle.

Figure 5: Large SOPR clusters of profit taking.

View Live Chart 🔍

One caveat to consider is the growing use of Bitcoin ETFs and derivative products. Investors may be shifting from self-custody to ETFs for ease of use and tax advantages, which could influence SOPR values.

Value Days Destroyed

Value Days Destroyed (VDD) Multiple expands on CDD by weighting larger, long-term holders. When this metric enters the overheated red zone, it often signals major price peaks as the market’s largest and most experienced participants begin cashing out.

Figure 6: VDD is warm but not too hot.

View Live Chart 🔍

While Bitcoin’s current VDD levels indicate a slightly overheated market, history suggests it could sustain this range for months before a peak. For example, in 2017, VDD indicated overbought conditions nearly a year before the cycle’s top.

Conclusion

Taken together, these metrics suggest that Bitcoin is entering the latter stages of its bull market. While some indicators point to short-term cooling or slight overextension, most highlight substantial remaining upside throughout 2025. Key resistance levels for this cycle may emerge between $150,000 and $200,000, with metrics like SOPR and VDD providing clearer signals as we approach the peak.

For a more in-depth look into this topic, check out a recent YouTube video here: What’s Happening On-chain: Bitcoin Update

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

According to Whale Alert, the average profit per BTC is at an all-time high of $67,088, at the time of writing.

“The Potential Profit per Token graph shows the potential profit that holders could make per token if they sold at a specific time,” Whale Alert’s website explains. Whale Alert has further calculations on this metric that can be found here.

To put this in perspective, this is more than the average American salary in 2024, which is $62,027. Imagine watching your savings grow and outperform your own yearly salary just for owning one bitcoin.

Every day, you trade hours of your life at work in exchange for money ( fiat for most). You consistently work harder and harder for that currency that is always depreciating in purchasing power, causing you to work longer hours to make up for it.

But bitcoin flips that dynamic on its head. With bitcoin, you are working (trading your time in exchange for money) and then watching that money grow in value as opposed to losing value.

People can then utilize that extra purchasing power bitcoin affords them to buy a home or car, afford university tuition, work less and/or spend more time with their family, etc. Your options for how you want to spend your time and money open up a lot more as a result of buying and holding bitcoin, and, to me, that is true financial freedom.

This is just another reason why using bitcoin as a savings vehicle is so important. It allows people become financially free and secure their future.

And this is just the beginning. Over time, bitcoin is poised to rise even higher than its current $100,000 price tag, giving investors the opportunity to increase their purchasing power even further and to therefore let them have more time to follow their passions and interests.

And all you have to do is bitcoin consistently, secure it, and HODL. Even if you aren’t holding a whole bitcoin, you’re still benefitting the dynamic of its improving your purchasing power over time and the more you can add to your stack, the more this will be the case.

Every person on the planet can now create their own bitcoin reserve, watch it grow, and choose how they want to spend the time they’ve freed up for themselves.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

As a condition of a new IMF loan package, President Bukele of El Salvador has had to concede three aspects of the Bitcoin Law passed in 2021:

A legal tender mandate requiring businesses to accept BitcoinShutting down Chivo, the state run wallet and on/off ramp serviceNo longer accepting tax payments in bitcoin

Ultimately everything except the last one is a positive change. Legal tender laws are ultimately coercive, and in my opinion shouldn’t exist. Chivo was a buggy mess, and alternatives exist such as Blink. The only negative (arguably), is the state no longer accepting bitcoin for tax payments.

People are losing their minds on Twitter over these changes, framing things as Bukele selling out, showing himself not to be a Bitcoiner, etc. There is a lot of people demonstrating an attitude that shows they feel misled, or betrayed.

Well here is a wake up call. Bukele was never going to be first and foremost a champion of Bitcoin above all else. He is the leader of a nation of around six million people. That was always going to be his first priority. If it wasn’t, he would be a terrible leader.

El Salvador is a country plagued by poverty, previously by violent organized crime. It was the murder capital of the world. Infrastructure was decaying and dysfunctional, people could not participate in the economy without paying protection money to violent gangs like MS-13. Massive amounts of the population had moved abroad to escape these things.

Bitcoin is nothing but a tool, one among many, for Bukele to deal with these problems. And that’s all it should be to the leader of a nation. Bukele’s reason for being in power isn’t to pump our bags, or to advance the cause of Bitcoin, it is to help the Salvadoran people.

When Bitcoin isn’t the best way to do that, he should acknowledge that. When deprioritizing Bitcoin is what is in the best interest of his people, he should do that. Regardless of how you feel about governments, or nation states, that is the job of a leader. To look after the best interests of his people.

That is what he is doing here, and anyone who would expect him to do otherwise is deluded and narcissistic. Bukele is not the President of Bitcoin, he is the President of El Salvador. The Salvadoran people are who he is accountable to, not a bunch of clowns on the internet. 

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

On Wednesday, December 19, 2024, Foundation announced the release of its newest device, the Passport Prime.

Introducing Passport Prime – Your Personal Security Platform!

We’re thrilled to present Passport Prime, the world’s first personal security platform designed to secure your Bitcoin and your entire digital life.

Think: A Swiss Army Knife for your online security. pic.twitter.com/3HH2eG7vhU

— FOUNDATION (@FOUNDATIONdvcs) December 18, 2024

The device offers a broad range of features that not only help users secure the keys to their bitcoin but other digital information, as well.

Features

For starters, the Passport Prime offers the same bitcoin wallet capabilities as the company’s second generation Passport device, including multisig functionality and temporary seed phrases.

Beyond Bitcoin-related security, the Passport Prime also helps you to store other sensitive digital data.

Its 2FA Codes app lets users store 2FA codes offline, while its Security Keys app serves as a replacement for Yubikeys and allows users to create multiple security keys for use with NFC or USB.

What is more, the device offers an encrypted flash drive. Users can store up to 50 GB of data on the device. And as a means to keep your data private, the Airlock feature in the File Browser app lets users only access selected files when the device is plugged into a phone or computer.

The device also has its own custom operating system — KeyOS — which enables apps to run in their own sandboxes while the OS manages permissions.

Pushing The Hardware Wallet Industry Forward

Earlier this year, Foundation’s co-founder and CEO told Bitcoin Magazine he was looking to create the iPhone of Bitcoin hardware. The Passport Prime is the closest Foundation has come to this ideal yet.

“The hardware wallet industry has been coasting for years, failing to deliver any meaningful innovation and unable to respond to digital assets’ rapidly evolving utility and use cases,” said Zach Herbert, co-founder and CEO of Foundation in a press release.

“Wallets have become crypto’s weakest link: they are difficult to onboard to, complex to use, and increasingly insecure for a range of modern blockchain transactions,” he added.

“Passport Prime is the first device of its kind, a Personal Security Platform that’s fit for the future decentralized economy, making it simple to safeguard all your private keys in one offline device, and sign every kind of transaction or contract with complete peace of mind.”

Third-Party Apps Welcome

By approximately mid-2025, developers will be able to build third-party apps that will run on KeyOS. In other words, developers will be able to list their own apps in Foundation’s App Catalogue.

The first of these third-party apps will be produced by Cake Wallet and will enable users to more privately transact using Bitcoin, Monero and other cryptocurrencies.

Dynamic, Yet Simple and Secure

Foundation claims that setting up and using the Passport Prime will be easy, despite its various functionalities.

Users can set the device up using Envoy, Foundation’s native app that provides guidance for the set up process and that connects to the device via QuantamLink Bluetooth.

QuantamLink Bluetooth is enabled by a dedicated Bluetooth chip embedded in the Passport Prime that can only send and receive messages that are already encrypted using quantum-resistance technology.

Users can also back up their seed via a 2-of-3 Shamir Secret Sharing configuration splits the seed into three pieces — two stored on physical cards and one stored in the Envoy mobile app.

Details

The device will retail for $299 and ship by Q2 2025.

The device comes in two different colors — Arctic Copper and Midnight Bronze — and it’s both completely open-source and manufactured in the United States.

Learn more about the product here.

Vancouver’s Mayor, Ken Sim, is a genuine Bitcoin enthusiast who’s doing his part to get Vancouver’s city council as well as its citizens to see what he sees when it comes to Bitcoin.

And his efforts are starting to bear fruit.

On December 11, 2024, the Vancouver City Council greenlit a motion Mayor Sim prepared to start making Vancouver a more Bitcoin-friendly city.

The motion directs city staff to explore the ideas of Vancouver establishing a strategic bitcoin reserve as well as accepting taxes and city fees in bitcoin.

In my conversation with Mayor Sim, we discussed the passing of this motion as well as some of his deeper philosophical thoughts about Bitcoin.

We also touched on what Bitcoin adoption in Vancouver would look like in a perfect world, his own journey down the proverbial Bitcoin rabbit hole and why Bitcoin can bring financial hope to the citizens of Vancouver at a point in time when many are struggling to make ends meet.

The Vancouver City Council recently passed your motion to make Vancouver a more Bitcoin-friendly city.

On a personal level, though, if you could wave a magic wand and enable whatever level of Bitcoin adoption you see fit in Vancouver, what would that look like?

I’ve got to give you a caveat here. These are my own personal views. We have a pretty incredible team at the City of Vancouver, and they’ve been tasked to explore. So, it’s not as if I can really influence the team and tell them “You have to do this and that.”

In a perfect world, the first thing we would do is add to a strategic reserve. The second thing would be allowing people to transact with bitcoin without triggering capital gains tax events and to accept payments in the form of bitcoin. Tax regulation across not just Canada, but in the U.S. and a lot of other jurisdictions, still hasn’t caught up, so every time you transact with bitcoin, there’s a capital gains tax fee, which is very cumbersome.

The third thing is that we start the conversation and we bust the myths around narratives like Bitcoin is bad for the environment. That’s all hogwash, right? Bitcoin is actually going to help us save the environment.

Plus, it provides us with an immutable record and it actually adds to a level of transparency we’ve never seen in the history of humankind. Having that incorporated into our systems would be great.

You spoke about this process of educating people about Bitcoin on Natalie Brunell’s show. You said you “shower them with love and then you hit them with facts.” Can you give an example of what this looks like?

There’s a lot of resistance with Bitcoin, especially as it pertains to its perceived effects on the environment. People hear this narrative that it’s bad for the environment, and it’s like, “Well, wait a second…”

I’m an environmentalist, and I know that if you force organizations across the planet to do stuff that they aren’t incentivized to do, nothing’s going to happen. Whereas if you incentivize them — if you build in a reward system — it’s amazing.

So, what do we know? Well, we flare natural gas as a by-product of oil production, and if we actually capture that and repurpose it for Bitcoin mining, it is actually good for the environment. Same with capturing methane that seeps from the ground.

Also, with alternative or green energy sources, be it wind power or solar power, where the economics often don’t pan out to build these projects, you provide someone with a guaranteed customer in the form of Bitcoin miners, and the economics work and these things get built. So, it’s net positive for the environment.

There’s also this false narrative that nefarious things happen with Bitcoin. That’s garbage, right? Cash is untraceable. With Bitcoin, we’re talking about an immutable record where you can see every single transaction since the beginning of time and you can catch people at the on and off ramps.

Some of the narratives are actually the complete opposite of reality, and so we have to counter these narratives.

Based on my experience, it’s easy to teach someone something, while it’s a lot harder for people to unlearn, and we are in the process of helping people unlearn what they’ve learned.

You have referred to Bitcoin as the greatest invention in human history. Could you expand on that?

Our money is broken. People can’t use it to store their energy into the future. We’re on this rinse and repeat cycle. In Ray Dalio’s book The Changing World Order, he talks about the rise and fall of the Dutch empire, the rise and fall of the British empire, the rise and, as he puts it, fall of the U.S. empire. If you agree with Dalio’s perspective, the point is that the money’s broken.

We do not have a reserve currency that’s ever lasted. We keep repeating history. But Bitcoin changes all that. As we all know, you can’t mess with it, and you can’t manipulate it. It’s a game-changer and when we finally get onto the bitcoin standard — I think it’s a matter of when, not if — it’s going to change how humans interact with each other and how nation states evolve.

You just cited one of Ray Dalio’s books, and I’ve heard you discuss how you’ve also read books like The Bitcoin Standard and Layered Money. You’re also a friend of Jeff Booth’s. With all the reading you’ve done and the conversations you’ve had with Jeff, did you end up having a lightbulb moment with Bitcoin or was it more of a gradual learning process?

Well, I had the opposite of the lightbulb moment when my son Mitchell came up to me and said “Dad, I want to buy bitcoin.” And I was like, “You touch that shit, and I’m going to punch you in the throat.” Obviously, I wasn’t going to do that.

Then, I started seeing more of it and had conversations with Jeff. So, I started to look into it, read a bunch about it and went to a couple of conferences. My journey was very similar to a lot of other people’s. I was completely against it and then I warmed up to it and eventually became an evangelist.

I can’t point to any one point where it was like, “Wow, there you go” and I went 180 degrees the other way. I do remember though, I made my first $500 purchase of bitcoin on November the 14th, 2020. The reason it took me so long was I had to learn how to use the app on which I bought the bitcoin. It was all clunky — just a pain in the butt.

But I remember that day, because when I finally bought it I thought, “Did I miss out?” I think I bought it at like 16 or 17 grand and it had run from like seven or eight grand the month before. I was like, “Did I miss it?” I remember Jeff saying, “No, you’re still super early; we’re all still super early.”

You’ve talked about how unaffordable housing in Vancouver is. Does bitcoin fix this?

Yes. Let me give you an example. We have a small studio rental up in Whistler (a town north of Vancouver). When we bought it, it would have cost 17.2 bitcoin. That’s about four years ago. In terms of dollars, the property is up 36%, but in terms of bitcoin, it’s down something like 85%. As of today, it costs like 3.3 bitcoin to buy it.

By the way, I’m not giving investment advice. I’m just talking about a theoretical, if this plays out how it could. If at some point in the not so distant future, you’ll be able to buy a house in Vancouver for a bitcoin, what that means is you can literally buy a house for about US$106,000 or about CA$150,000 if you bought a bitcoin today.

I’m not telling people to take out a loan to buy bitcoin — very far from it. Go seek financial advice. But if you believe bitcoin’s price will continue to appreciate, you can literally buy a house for CA$150,000 in the near future by buying a bitcoin right now.

You’ve brought Bitcoin, a taboo subject, into the fold as Mayor of Vancouver, and you’ve said that doing so might lead to your not getting re-elected. Have you ever considered that the opposite might be true, that maybe by embracing Bitcoin the people of Vancouver will want to re-elect you?

I’m not too concerned about that. I have no desire to be a premier or prime minister. I’m not a politician, even though I’m sitting in this role, which I really honor, value and take very seriously. But the goal was never to be popular. The goal was never to get re-elected. The goal was to do what I believed is right for the future of the City of Vancouver.

And so I couldn’t sit back any longer and ignore this because I truly believe that this sets the city up for the next hundred years. Am I right? We don’t know, but we have a pretty good feeling, and I truly believe in it.

I think voters, residents — it doesn’t matter what side of the political spectrum you sit on — are sick of politicians who do stuff just to get re-elected. They want people to do what they believe is right, and I believe this is right. If we don’t get re-elected because of it, I can personally hold my head up high and say, “You know what? We stuck to our values and we did what’s right.” If it works out, great. I actually think it’s going to work out, though.

It seems like a progressive city like Vancouver — the first city in Canada to have a Bitcoin ATM — should be in favor of Bitcoin. However, the previous mayor tried to ban Bitcoin ATMs in the city. Was there a reaction from the Vancouver community when the mayor did this?

I didn’t follow it too closely at the time, so I don’t know. I can’t comment on it. What I can comment on is we do have a lot of politicians who will make policy up based on virtue signaling as opposed to data. We’re a data driven administration, and we care about the future prosperity of our city.

I think the distinction here is we choose to have the most impact — we’re more concerned about the steak than the sizzle. If someone can make an argument on why this is a bad idea based on data, we’ll listen to it. We might have it wrong, but I can tell you no one has been able to attack our Bitcoin stance with data.

Bitcoin can be kind of difficult to use technically. So, let’s say, in a perfect world, maybe Bitcoin becomes legal tender in Vancouver at some point, or if there’s just greater adoption of it, do you worry about the technical difficulties associated with using Bitcoin? Would the Vancouver city government ever get involved in educating its Vancouver residents about Bitcoin?

It’s not one of the core services we provide as a city, so I don’t see us going down the educational rabbit hole. We’ll leave it up to other experts.

If the industry makes Bitcoin simpler to use, so many more groups and individuals will just hop on the bandwagon. And you know it’s coming because there are a lot of people working on this right now.

I’m not an expert, but when I, when I hear about some of the things that are happening on Layer 2s and the Lightning Network, I see a future where this is seamless. When people go into a Walgreens and they buy a candy bar, they won’t think about how they’re paying with Bitcoin. All the plumbing underneath will happen without them knowing, and it’s going to revolutionize the planet.

You’ve done a handful of interviews on this topic thus far. Is there anything that we in the media haven’t asked you yet that you’d like to discuss or point out?

Yes, I’d like to make a general call out and not just for the city of Vancouver. It’s for every single city and province and state and jurisdiction and canton, and country on the planet.

We have to get the education out there, which is still a hard challenge. Some people in the media have made the comment that what we’re doing right now is more virtue signaling, because we have the hope of making this happen. This is incorrect, though.

We need Bitcoin supporters to start pumping the true narrative of why bitcoin is a sound financial asset. It’s the best performing asset in the last 16 years on the planet. And we’re not traders, so if you’re not looking to day trade, all of the volatility doesn’t matter.

We need to start getting that narrative out, but not from me, from the community. We need to let our elected officials know this because they’re not going to do anything until people hit them with data and tell our politicians that they want this.

We’re doing this because we believe in it. We want to get ahead of it. We want to set up the city for the next 100 years, and that’s why we’re willing to take political risk to do this. But we need help. So, if your audience can help us push that narrative with our provincial government and in their jurisdictions, as well, that would be great.

If people come onboard and see how bitcoin can reduce some of the financial stress in their lives, do you think Vancouver transforms into a pro-Bitcoin city relatively quickly?

Yes.

I go back to my sister-in-law, who if she watches the video she’s gonna punch me in the face. About 13 years ago, she was afraid of getting an iPhone. She didn’t understand the technology. It was a mental block.

Then, she jumped on the bandwagon like everyone else, because all her buddies had iPhones. It’s ridiculous now to think that people were afraid of iPhones, right?

Will Bitcoin give us hope? Absolutely.

I go back to the City of Vancouver and why this is so important. The City of Vancouver exists in the same conditions as everyone else does. While people can’t afford a home or they’re struggling with groceries, we have a budget.

We have to hire police officers, firefighters, engineers, and we’re living in an environment where our currency is getting debased and we can’t increase taxes at a rate that keeps up with that. We don’t want to cut services, and so Bitcoin gives us hope where we can fix our financial state, our balance sheet.

And that will actually help us run this city for the next hundred years. I think when people understand Bitcoin and they start to adopt it, they will have hope, as well, because they will realize their purchasing power is going up, which is a great thing.

Follow Aaron on Nostr or X.

The IMF yesterday announced they have reached a $1.4 billion loan deal with El Salvador. In return, the Central American country that in 2021 made bitcoin legal tender had to remove some of its pro-Bitcoin policies.

I spent about three months in El Salvador around the time the Bitcoin law went into effect. I thought then that it was a positive development for the country, but there were aspects of the law that I strongly disliked. Exactly these aspects are now being removed.

Most importantly, Salvadoran merchants will no longer be obligated to accept bitcoin. Great! I don’t think Bitcoin should be forced on anyone, nor do I believe Bitcoin needs that. Bitcoin is an emergent form of free market money, and adoption should happen voluntarily.

(In practice, this aspect of the law was barely enforced anyways. I’ve heard from one relative insider that some of the big fast food chains received phone calls from the government telling them to comply — which would explain why McDonald’s and Wendy’s did it — but otherwise I don’t think any merchants got in trouble for not accepting bitcoin.)

Additionally, El Salvador will have to wind down operations of its Chivo wallet. Maybe the software has improved over the years, but in 2021 the wallet was incredibly buggy; the open source community and free market are much more capable of building such tools. Good riddance!

That said, it is slightly disappointing that Salvadoran citizens won’t be able to pay tax in bitcoin anymore — though, again, I doubt many did. This is probably little more than a nuisance, however. Now, bitcoin-accepting merchants need to sell some of their BTC for USD before paying the taxman.

To succeed, Bitcoin benefits from an equal playing field. El Salvador still goes a long way to offer just that.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.