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📊 MicroStrategy To Buy More BTC, 📍 SEC Only Wants BTC, 📝 KPMG BTC Report

📊 MicroStrategy To Buy More BTC, 📍 SEC Only Wants BTC, 📝 KPMG BTC Report

Naiw
August 03, 2023 • Estimated Reading Time: 14 minutes

Greetings Earthling,

Welcome to Issue #24 of the Bitcoin Breakdown, your all-in-one source for understanding Bitcoin's role in the future to come.

Happy reading! 👽️

📰 HEADLINES

MicroStrategy files paperwork to let them sell up to $750M worth of Class A common stock in order to raise money to buy more Bitcoin. This comes as the company had its Q2 earnings call. They purchased 12,333 BTC (worth $347M) throughout the quarter. The company also bought an additional 467 BTC after Q2 ended in July. This brings MicroStrategy’s total to a whopping 152,800 BTC purchased for $4.53 billion or $29,672 per Bitcoin.

SEC asked Coinbase to halt trading in everything except Bitcoin. This is according to Coinbase’s CEO, Brian Armstrong, who says that the SEC told him that “[the SEC] believes every asset other than bitcoin is a security. [Y]ou need to delist every asset other than Bitcoin”. SEC Head, Gary Gensler has previously said he believes most cryptocurrencies with the exception of Bitcoin are securities. The recommendation to Coinbase signals that the SEC has adopted this interpretation in its attempts to regulate the industry. Nature is healing.

KPMG releases shockingly refreshing Bitcoin report, dispelling any Bitcoin mining FUD. KPMG is one of the Big Four global accounting organizations and the report focuses on the benefits Bitcoin offers to ESG goals. Regardless of what you might think of ESG, the report’s content and the mere fact that KPMG authored it bode very well for Bitcoin because it contributes to the broader adoption among a wider audience. Specifically, the naive TradFi Yuppy Elite types that never really learned to think critically for themselves.

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🏆 TOP STORIES

The Government Wants to Turn Blockchain Firms into Servants of the State (July 28 | 6 min read)

Andrea Togni, philosophy and history teacher, penned an article for the Mises Institute discussing the rise of blockchain surveillance (BS) companies in the cryptocurrency industry and their partnership with governments to implement surveillance measures. These companies develop proprietary software to collect and interpret public data from blockchains, providing services to governments, banks, and exchanges for compliance and detecting financial crimes. The burden of proof is placed on customers to demonstrate their innocence when flagged by BS companies. However, Togni points out that these heuristic assumptions can lead to false accusations, as seen in the case of Roman Sterlingov. The closed-source nature of the software also raises ethical and legal concerns, as it can be used to charge users with criminal behavior without transparency. BS companies ultimately serve as governmentalities, aiding the state in reducing financial privacy and increasing control over cryptocurrency markets.

Traditional Securities vs Self-Custody: Assessing the Danger of Bitcoin ETFs, Stocks, and Trusts (July 28 | 9 min read)

Jameson Lopp, co-founder and CTO of Casa discusses the paradox faced by investors when allocating funds to Bitcoin. They often hesitate to take full custody of it due to personal risk and prefer proxy securities like ETFs, trusts, and other investment products, allowing them to indirectly invest in Bitcoin without managing it themselves. Lopp highlights that these proxy options, however, come with tradeoffs and risks, such as lack of visibility, limited redemption mechanisms, market risk, geopolitical risk, leverage, custodial risk, and dilution. He emphasizes the importance of self-custody and holding one's Bitcoin keys to preserve the true essence of Bitcoin as trustless and self-sovereign money, offering investors more control and security.

Lightning Everywhere (July 24 | 12 min read)

Tony Giorgio (working at Voltage and on Mutiny wallet) discusses the growing usage of Lightning as a superior payment technology for instant payments derived directly from the Bitcoin base chain. He highlights that Lightning's use cases go beyond simple person-to-person payments and extend to e-commerce, tipping, automation, and services. Giorgio also focuses on solving problems related to Lightning usability, the dominance of custodian usage, and the lack of easy options for non-custodial receives in various applications. He proposes incorporating federated custodianship for smaller amounts and promoting self-custodial solutions to create a better user experience.

Why CBDCs Wrongfully Break Down the Separation Between Money and State (July 28 | 6 min read)

NYU law professors Richard Epstein and Max Raskin write that countries that have, until now, not sought to control their citizenry through the financial system should not start down the dangerous path with central bank digital currencies (CBDCs). Central banks worldwide are increasingly experimenting with CBDCs, claiming they will protect consumers, reduce costs by eliminating private banking middlemen, and provide new policy tools. However, the core issue is the potential privacy concerns and concentration of power in a government entity that can track every transaction. CBDCs remove the anonymity of cash and bearer instruments, allowing governments to monitor all transactions. Epstein and Raskin warn against the dangers of giving government enterprises vast power over people's financial lives, potential political manipulation, and lack of accountability.

Tomer Strolight: The Bitcoin Breakthrough (July 27 | 7 min read)

Strolight writes for Swan Bitcoin about the significant changes Bitcoin will bring about to society. He compares the impact of Bitcoin to the invention of the automobile, which transformed society and brought about massive changes. Just as the automobile replaced horses and revolutionized transportation, Bitcoin is poised to replace traditional forms of money, such as gold and fiat currency, due to its superior attributes as engineered money. Strolight also shows how Bitcoin is not just a breakthrough in money but also in energy, personal lifestyle and government. For example, by creating a monetary system that cannot be manipulated by governments, Bitcoin challenges the current relationship between money and government and has the potential to reshape and limit the powers of all governments.

Mining Bitcoin Is an Act of Freedom (July 28 | 3 min read)

Burak Tamaç, CryptoQuant researcher, covers how Bitcoin mining is seen as an act of freedom and a way to actively participate in shaping the network's ethos of decentralization and freedom. Political philosopher Hannah Arendt's concept of "vita activa" applies to miners, who actively participate in the network and shape its present and future. Mining represents positive liberty, where individuals contribute and realize their potential. It aligns with the idea of living free from subjection and vulnerability to others' will. In essence, mining is an exercise in positive freedom, making every miner a political actor contributing to the ethos of decentralization and bitcoin freedom.

"Crypto" is an Affinity Fraud on Bitcoin (July 27 | 16 min)

Ansel Lindner of Bitcoin and Markets writes about the fundamental fraud in the crypto space, which is fundamentally different from Bitcoin. It is termed "affinity fraud," where scammers target specific groups, exploiting their trust and shared ignorance of the subject matter. Altcoin promoters pretend to be part of tech-savvy idealist groups to attract investments in their projects, claiming to be better than Bitcoin. However, these affinity fraudsters rely on a category error, where altcoins are falsely associated with Bitcoin, using terms like "blockchain" and "cryptocurrency." Lindner emphasizes that Bitcoin is unique and cannot be compared to other projects based on shared properties alone. He calls for recognizing this fallacy to prevent falling for scams and urges to distinguish Bitcoin from the rest of the crypto space.

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📖 GUIDES & EXPLAINERS

What Is Frostsnap? (July 3 | 6 min read)

The Bitcoin Manual discusses "Frostsnap," a new method of multi-sig that addresses some of the current pain points of multi-sig wallets, such as complexity, cost, and the risk of losing multiple keys. Frostsnap addresses these drawbacks by offering flexibility, adaptability, and increased privacy through Taproot. Frostsnap aims to reshape the multi-sig landscape and create an open standard that allows various devices to be part of a multi-sig wallet setup.

What is Channel Splicing in Bitcoin’s Lightning Network? (July 31 | 4 min read)

Bitfinex published a blog post explaining the concept of "splicing" in the Lightning Network. Splicing is an advanced feature that allows users to increase or decrease the capacity of their existing payment channels on the Lightning Network without having to close the channel entirely. By using splicing, users can add or withdraw funds from the channel by creating new transactions, making it more efficient and cost-effective compared to traditional methods that require closing and reopening channels. The benefits of splicing include seamless transactions, reduced costs, efficiency, speed, flexibility, and improved liquidity management. Various Lightning Network projects and implementations have started to integrate splicing into their platforms to enhance the user experience and offer more dynamic channel management options.

Is Bitcoin a Safe Investment? (Aug 2 | 7 min read)

Athena Alpha discusses the safety of investing in Bitcoin and highlights its advantages, such as strong property rights and immunity to money printing. The core technology of Bitcoin is built on a secure cryptographic algorithm, making it safe to use. However, the article also points out several risks associated with investing in Bitcoin, including volatility, exchange fraud, hacking, scams, lack of insurance, evolving regulations, and protocol risk. To invest safely, you cannot avoid having to do your own proper research about Bitcoin, as well as using self-custody wallets to control private keys, starting with small investments, and avoiding the temptation to diversify into other cryptocurrencies. Lastly, do not engage in trading and understand tax laws when selling Bitcoin for fiat currency.