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Nov 30, 2023, 06:50 pm


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Drivechains: The Future of Bitcoin's Scalability and Sustainability

Austin Alexander is Co-Founder of LayerTwo Labs, a company focused on advancing the Bitcoin ecosystem through innovative solutions and specializing in the development of Drivechain, a specific type of blockchain sidechain designed to foster creativity and scalability within Bitcoin.

The Bitcoin network is currently standing at a crossroads of tradition and innovation, with its future hanging in the balance. Since its inception, Bitcoin has evolved from a fringe experiment into a global economic powerhouse, inspiring conversations about the nature of money, finance, economics, and freedom. However, as Bitcoin's adoption continues to grow, so do the challenges it faces. Scalability and flexibility have become paramount concerns, and a novel solution known as drivechains may hold the key to addressing these issues and solidifying Bitcoin's place in the global economic arena.

Bitcoin's meteoric rise to prominence, and tremendous on-chain growth, has come with challenges. Despite its popularity, Bitcoin still faces issues in terms of being used as a mainstream currency for everyday transactions. It is primarily seen as a store of value or digital gold rather than a medium of exchange. Scalability has emerged as a pressing issue, with the Bitcoin network limited in its ability to progress in handling an ever-increasing number of transactions in a timely, efficient, and secure manner. This bottleneck has led to higher fees and slower confirmation times, undermining its potential.

Bitcoin's rigid use cases also pose a serious problem. As the cryptocurrency space continues to evolve, Bitcoin will continue to face growing undeniable competition from other blockchain platforms that offer faster transaction times, lower fees, and additional features. The inflexible nature of Bitcoin is what allowed new projects like Ethereum to flourish. Staying competitive, by securely facilitating new capabilities on chain, in the rapidly changing crypto landscape is a constant challenge and a clear necessity.

Despite these challenges, it is essential to remember the core principles that have guided Bitcoin since its inception: decentralization, censorship resistance, and trustless transactions. Any proposed solution must preserve these foundational tenets. Drivechains represent a novel approach to improving Bitcoin's scalability and flexibility while maintaining these core principles. In essence, drivechains are separate blockchains that are "pegged" to the Bitcoin main chain. They allow for the creation of sidechains, which facilitate experimentation with new features and functionality without compromising the security and integrity of the main chain.

Drivechains operate in a way that allows Bitcoins to be temporarily locked on the mainchain and then released on a sidechain, where they can be used for various purposes. When the user is done with the sidechain, they can "withdraw" their Bitcoins back to the mainchain. This mechanism offers an elegant solution to the scalability issue, as sidechains can process transactions more efficiently, with more confirmations and lower fees. Drivechains enable smart contract functionality and faster transactions, expanding Bitcoin's utility while maintaining its security. Prominent drivechain proposals including BIP 300 and BIP 301, and projects such as Zside have already made significant strides in bringing this concept to life.

Drivechains offer several compelling advantages for the Bitcoin ecosystem. By offloading some transaction processing to sidechains, drivechains can significantly increase the overall transaction throughput of the Bitcoin network. This translates to faster and cheaper transactions for users, which is of paramount importance for Bitcoin to function as a currency. Drivechains also open the door to experimentation within the Bitcoin ecosystem, without posing any risk to the network itself. Developers can explore new features and functionalities that they would otherwise need to turn to other chains and ecosystems to do, in a sandboxed environment without risking the sanctity of the mainchain. This fosters innovation and improvement while keeping Bitcoin at the forefront of digital currency technologies, allowing the ecosystem to grow to its full potential and maintaining improved functionalities.

Drivechains also stand to dramatically improve the mining industry as well, by bringing in a tremendous amount of value of innovation into the industry which would in turn increase mining rewards even in the face of future halving events.

As with any technological advancement, drivechains are not without their critics and potential risks. Those who do not believe in the capacity of drivechains arguments typically revolve around a few key item including security, decentralization, and governance.

Skeptics worry that drivechains may compromise the security of the Bitcoin network. However, it is clear that rigorous testing and careful implementation can mitigate these risks. Detractors also argue that drivechains could centralize control in the hands of a few operators of sidechains. This issue is easily mitigated by proper design and governance of the chains that would not only maintain, but would strengthen decentralization while also enhancing scalability of the network.

Determining how drivechains are implemented, upgraded, and maintained is another key challenge. Implementation of an open and transparent governance process is essential to address these concerns. To ensure the successful integration of drivechains into the Bitcoin ecosystem, consensus and collaboration within the community are paramount. Ongoing research and development efforts related to drivechains, along with robust testing and security audits, should continue to be a priority.

Open dialogue and debate within the Bitcoin community are essential to addressing concerns and refining the path forward. As with any technological advancement, responsible development and governance are critical to maintaining its integrity.

Bitcoin has proven its resilience and value as a decentralized digital currency, but it faces pressing challenges that we as a community are responsible for addressing if we are to ensure its future. Drivechains offer promising solutions to some of the network's most pressing issues that can enhance Bitcoin's transaction throughput, decentralization, and security, while promoting innovation and preserving its core principles. To achieve this vision, we must work together, embracing dialogue and collaboration to ensure a brighter future for the world's most important economic and technological advancement of our time.

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

Source: Drivechains: The Future of Bitcoin's Scalability and Sustainability
Hong Kong Based Boyaa Plans to Buy $45 million Worth of Bitcoin As Treasury Reserve Asset

Boyaa Interactive, a Hong Kong-based gaming company, revealed plans for a potential investment in cryptocurrencies, including Bitcoin, as this endeavor seeks to enhance the Group's asset allocation strategy.

Following an earlier voluntary announcement in August 2023, Boyaa's Board views BTC and crypto acquisition as pivotal for its business expansion and asset allocation strategy. The company aims to seek shareholders' approval to authorize a $100 million acquisition mandate for purchasing Bitcoin, crypto, and stablecoins within a 12-month period.

The proposed mandate outlines the key parameters:

  1. Mandate Period: The acquisition mandate spans 12 months post the ordinary resolution's approval at the Extraordinary General Meeting.
  2. Maximum Amount: An aggregate limit of $100 million has been set, with a specific focus on purchasing BTC, ETH, Tether USD (USDT), and USD Coin (USDC). Allocating $45 million each to acquiring BTC and ETH, with the remainder of no more than $10 million on USDT and USD Coin.
  3. Types of Cryptocurrencies: Boyaa says it is acquiring cryptocurrencies aligning with its business strategy, primarily BTC and ETH.
  4. Acquisition Consideration: Purchases will be based on open market bid and ask prices, with a maximum premium of 10% on the market price. The funding will derive from the Group's idle cash reserves.
  5. Authorization Scope: The Board will exercise discretion concerning transaction volume, timing, and cryptocurrency selection, conducting acquisitions on licensed trading platforms like HashKey Exchange.

The company anticipates dispatching a circular to shareholders by November 30, 2023, detailing the mandate's specifics and the proposed acquisitions. 

Source: Hong Kong Based Boyaa Plans to Buy $45 million Worth of Bitcoin As Treasury Reserve Asset
Nostr, Notes and Other Stuff Transmitted by Relays: Bitcoin Backstage With William Casarin

Nostr, Notes and Other Stuff Transmitted by Relays is a protocol enabling censorship resistant communications across a number of unrelated relay servers used to host and serve messages to users. Users' identities are simply cryptographic key pairs, allowing them to own their identity entirely, and all messages are signed with their identity keys, preventing message tampering in any form. Relays serve as intermediaries in the transmission process, ensuring seamless and reliable communication between senders and receivers. 

Understanding the Basics of Nostr, Notes, and Other Stuff Transmission

Nostr is built around the concept of events, the basic message format that clients communicate with by posting or downloading events to relay servers. Every event has a basic structure including the public identity key that created it, a signature from the identity key that created it over the event, the actual message contents, and other events that it might be related to such as messages a user is replying to, quoting, etc.

This guarantees data integrity for all messages, preventing any alteration of a message after creation. Changing a single bit of a message would invalidate the signature. It also guarantees users own their identity completely. No one can take your identity away from you, as it is simply a private key that only you have possession of, unlike Twitter where your (@handle) is simply an identity Twitter loans you that they control entirely. As well, because all Nostr events are signed by a user's identity key, it is impossible for anyone to fraudulently post messages as another user without compromising that user's private key.

The Role of Relays in Transmission

Relays are the mechanism by which different Nostr users interact with each other. No two relays ever communicate with each other, they only interact directly with user clients. Any client when creating an event can post it to any relays they want, ideally multiple in order to achieve redundancy. Other users can then query relays for specific events, any events created by a specific user, or other criteria.

Every relay is free to set their own policies governing what events they will accept, under what conditions. Some relays are completely free to post and download events from, some charge one off fees, there are even Nostr proposals for relays to require hashcash style proof-of-work be done before a client can post an event to the server.

Each relay is also free to restrict what users can or cannot post events to the server. Overall Nostr is able to function in a censorship resistant manner despite this because clients can query any relay online for events. If one relay server refuses to accept events from a specific user, they can notify followers of other relay servers that will accept their events, and other users can simply start querying those relays in order to see messages from the censored user.

This ability for clients to query any number of independent relay servers simultaneously for events is what guarantees Nostr's overall censorship resistance.

Damus: A Nostr Client and Relay Implementation

Damus is the most widely used mobile client for Nostr, available on iOS, as well as one of the largest relay servers currently operating. Damus was developed by William Casarin, a developer previously working on the Lightning network. He began developing Damus as a passion project after learning about the Nostr protocol, and is the co-author of NIP-57 in the Nostr protocol specification. NIP-57 defines "Zaps", or Lightning payments integrated into Nostr as a form of the like button on most social media protocols.

Damus has pushed Nostr forward implementing new NIPs, or features for the Nostr protocol, since the creation of the client. Despite the issues Damus has had with meeting Apple AppStore policy requirements, there is a bright future ahead for William and Damus in terms of pushing the boundaries of innovation on Nostr.

The Future of Nostr

Currently the dominant use of the Nostr protocol is for social media applications that are effectively clones of Twitter with a decentralized and censorship resistant foundation underneath. In principle, much more can be done with the protocol. Other variations of social media such as Instagram or Facebook are equally possible to build. Even decentralized versions of applications like GitHub or Google Docs are possibilities. The potential types of applications that are possible to build on Nostr are limited only by the imagination of the people building them.

News Recap of the Week (November 6 - November 13, 2023)

  • There is an 8-Day Window between November 9 and November 17 where all 12 of the spot Bitcoin ETFs can be approved. A Bloomberg Analyst said that the SEC could make a decision on 9 of the 12 ETFs before January 10.
  • The SEC is facing trouble with hiring Crypto Assets Specialists because the SEC requires that these specialists divest from their crypto assets to work at the SEC in order to avoid any conflict of interest.
  • CitiGroup was fined $25 million for discriminating against Armenian-Americans and blocking them from getting credit cards or bank accounts blocking people whose names ended in -Yan or -Ian.
  • Custodia Bank has launched its Bitcoin Custody platform.
  • The United States Federal Reserve has sent a cease and desist letter to Bitcoin Magazine. The Federal Reserve accused Bitcoin Magazine of trademark violations for their FedNow merchandise line.
  • For the first time in 18 months, Bitcoin topped $38,000.

Source: Nostr, Notes and Other Stuff Transmitted by Relays: Bitcoin Backstage With William Casarin
Grayscale CEO Says They're "Ready For The Main Event", Awaiting Spot Bitcoin ETF Approval

Grayscale CEO Michael Sonnenshein took to X (Twitter) Monday morning to say "it's been a ten year dress rehearsal. we're ready for the main event," ahead of seemingly imminent approval for the conversion of its flagship fund into a spot Bitcoin ETF.

On June 29, 2022, Grayscale filed a lawsuit against the SEC for denying its spot Bitcoin ETF conversion. Since then, Grayscale won its lawsuit against the SEC, with the regulator then deciding not to appeal the court decision after. Ten days later, the US Court of Appeals issued a mandate that the SEC must re-review Grayscale's spot Bitcoin ETF application.

Approval of a spot ETF by the SEC appears almost certain, with Grayscale's chief legal officer recently saying that a spot Bitcoin ETF approval is "a matter of when, not a matter of if anymore." JPMorgan also commented back in September, saying that the SEC will likely be forced to approve spot Bitcoin ETFs, following Grayscale's victory in court.

Last week, it was highlighted by Bloomberg ETF analyst James Seyffart that a brief window of opportunity for the SEC to approve all 12 spot Bitcoin ETF filings, including Grayscale's GBTC conversion. This window opened up last Thursday and will remain open for at least eight days, with this being the last chance of approval for a spot Bitcoin ETF in the US in 2023.

While it's possible the batch of spot Bitcoin ETFs get approved this week, it is seemingly unlikely. "If we are indeed going to see Bitcoin ETF approvals for this wave, I think it's more likely to happen closer to January than this current window," said Seyffart.

Bitcoin is up 122% year to date, at the time of writing, on the speculation of the first spot ETF approval in the United States, in addition to the upcoming halving in 2024. 

Source: Grayscale CEO Says They're "Ready For The Main Event", Awaiting Spot Bitcoin ETF Approval
As El Salvador's Bukele Approaches Re-Election, Bitcoin Entrenchment Deepens

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, subscribe now.


With President Nayib Bukele's re-election date less than three months away, Bitcoin is seeing continued increases in institutional support within El Salvador, suggesting a strong foundation for the country's experiment with Bitcoin as legal tender.

Election season is entering full swing in the Republic of El Salvador, with the actual vote for President scheduled to take place on February 4, 2024. Polling for a possible election has shown him to have an overwhelming lead over any competitors for months now, although there has been a persistent question of his eligibility to seek re-election. As of early November 2023, the courts have officially declared his candidacy to be valid, and from where things look now, he seems on track to win a second term. Bukele has been famous for a few different policy decisions; although a large degree of his domestic popularity is due to his anti-gang crackdowns, his presidency has been particularly renowned internationally for his campaign to make Bitcoin legal tender.

El Salvador officially adopted Bitcoin as a valid currency in September 2021 after several months of effort, and since then the country has been home to an experiment of historic proportions. Many of the world's financial institutions have shown considerable and persistent opposition to this experiment from the very beginning, and for fairly straightforward reasons: Before Bukele added bitcoin, the only legal currency in El Salvador was the US dollar. This situation put El Salvador in an unenviable situation where another country held a direct and powerful leverage in all economic matters. Removing this leverage was an important motivator, but there are many other benefits to a borderless currency in an economy like El Salvador's: For example, international remittances are a major sources of income for many Salvadorans, and bitcoin offers a way to cut out traditional financial middlemen like Western Union.



Although these two years have been marked by growing pains, many clear signs now exist that El Salvador's new economic model is gaining acceptance in the broader world economy. For instance, the S&P upgraded the nation's credit rating in November, citing consistent efforts to manage its debt obligations and overall economic stability. A major boost to this growing stability has been Bitcoin and its new opportunities, as tourism has massively increased with visitors from the US alone doubling since Bukele first took office. Bukele's administration credits Bitcoin with this success, with Vice President Ulloa calling it the "driving force" of the "rebirth of the country." The data seems to bear this out, as El Salvador has become popular with foreign full-time residents in addition to tourists, due to the ease of using bitcoin in daily life.

So, with all these factors pointing to Bitcoin serving a major role in the economic development of the country, it seems natural that this policy will become a well-established feature of the nation for years to come, right? There's just been one hiccup with this plan, and it's that the population has still shown some reluctance to adopt Bitcoin on a mass scale. Although it certainly has no small number of adherents, the country is far from a status of hyperbitcoinization, where most people use the currency on a regular basis or exclusively. Since the largest part of Bukele's domestic popularity has come from his reputation as a crimefighter, it's not inconceivable that even a successful re-election could see Bitcoin gradually de-emphasized.

However, it seems as if increasing institutional support will prevent this backslide from happening. The government has consciously undertaken actions to facilitate a powerful domestic Bitcoin community in the country, like its ongoing contributions to the Lava Pool project, which seeks to encourage local companies to sprout up in the business of Bitcoin mining, all using renewable energy. Although projects like this have been useful for creating a new ecosystem, the government cannot do this alone. Luckily, it won't have to, as major investments are taking place without the direct encouragement of the state. Distribuidora Morazán, the second-largest distributor of goods in El Salvador, announced that it would be accepting and encouraging Bitcoin through a partnership with the wallet and API platform Blink. The firm does not directly supply goods to consumers themselves, but acts as a middleman: Selling its wares to some 40,000 merchants across the country.

In other words, Distribuidora Morazán is hoping to increase Bitcoinization with business-to-business (B2B) transactions, and it is actively encouraging these businesses to accept and promote Bitcoin, too. Company CEO Jacir Garcia-Prieto claimed that "our distribution operation, until today, has been predominantly managed in cash and this presents a series of logistical, time, and operational difficulties that slow our day-to-day ability to visit more points of sale. Bitcoin solves that." He added that "The vast majority of our customers do not have access to banking services and this is the perfect way to introduce them to their first financial tool." Within days of its launch, the plan was rolled out to dozens of merchants, and they hope to reach 1,000 in the next year.

This is not the only major business initiative to take place at this time, as Bitcoin ATM providers Athena and Genesis Coin have also begun a plan on November 8 to add Lightning Network functionality to Bitcoin ATMs across the country. Although there have been some stalled attempts to introduce this vitally important second-layer solution to El Salvador, the persistent drive to try again shows a real confidence that it will be a profitable investment. The Lightning Network allows for Bitcoin wallets to carry out much smaller transactions without delay or high fees, and it is frequently considered more or less essential in using bitcoin for small purchases. For Salvadorans deciding to try out bitcoin, this new upgrade will make the experience that much easier.

Everything seems set for El Salvador's Bitcoin experiment to turn into a full-fledged economic institution. President Bukele has managed to carry out a remarkable transformation in his first term, and it's anyone's guess as to how far he could continue the project with a few more years at the helm. Although the majority of the population remains skeptical of Bitcoin itself, they still love his administration overall, and now many of the hardest growing pains are in the rear-view mirror.

Bridges are being rebuilt with financial institutions worldwide and Bitcoin is bringing in huge dollars in tourism; more to the point, confidence is growing. Bukele's government has taken an active hand on several occasions with trying to grow the domestic Bitcoin industry, but other private firms have decided to invest independently. Even if the need to win re-election and maintain normal administration takes up a lot of Bukele's focus, companies like Distribuidora Morazán are more than capable of progressing the vision. With a few more years of growth like this, El Salvador's Bitcoin adoption could truly become an economic model to inspire innovation worldwide. 

Source: As El Salvador's Bukele Approaches Re-Election, Bitcoin Entrenchment Deepens
Bitcoin: A Beacon Of Financial Liberation In A Dollar-Driven World

It has become commonplace to normalize the extremity of fiat. The last such instance was in September when the federal government broke another record by crossing the $33 trillion national debt threshold. A decade ago, the USG's outstanding borrowings have already outpaced the US' annual GDP.

The Congressional Budget Office (CBO) now projects a 2% federal debt increase per year. The established dynamic is one of increased borrowing because there is simply no way to patch up budget deficits with tax revenue alone. This year alone, the USG had to pay $711 billion on net interest payments.

Ultimately, the Federal Reserve, as the purveyor of money, has to keep increasing its balance sheet so the USG can keep up with its debt obligations. Inevitably, the ex nihilo creation of new money leads to devaluation of the dollar, the world's dominant measurement of value.

And as previous monetary cycles taught us, when value measurement is warped, extremities can balloon to cartoonish levels.

Destabilized Legacy of Modern Money

As the Weimar Republic led to World War II, and as the war concluded, the new binding framework was put in place in 1944. Known as the Bretton Woods Agreement, it established the dollar as the world reserve currency. Although it technically collapsed in the early 1970s, it left behind the IMF, the World Bank and the legacy of debt-fueled growth.

More precisely, Bretton Woods positioned the dollar as having the largest Net International Investment Position (NIIP). The USG maximally extracted this advantage, as evidenced by the NIIP turning negative decades ago, making the US owe more to foreigners than they owe to the US.

The US' NIIP as of Q2 2023. Source: Bureau of Economic Analysis (BEA)


Where does this leave the world?

Simply put, in a state of unsound money. Last year, borrowings for OECD nations increased 43% above the 2011-2019 average. Simultaneously, borrowing costs more than doubled since 2021, creating a situation wherein much of economic output goes to debt service.

And as governments borrow more money to pay off debt, this leads to elevated debt expenditures. In turn, money printing becomes the go-to remedy to pay off debt, instigating inflation. But as high interest rates are introduced to clamp down on inflation, higher debt levels need to be served.

This is the spiral of currency devaluation. The destabilized macro landscape places a pressure to seek other venues to preserve wealth and outpace the money erosion. Some seek bond yields, some stock dividends, but others turn to a reimagined monetary system outside of central banking.

Bitcoin's Decentralized Promise

For money to become sound, a core prerequisite has to be followed. Because the creation of new money depends on the government's hunger to spend outside its means, the money itself has to be detached from the government.

This way, the moral hazard can be cut at the root. At a glance, this task seems impossible:

  • On a given territory, a hierarchy always emerges to rule it.
  • In one way or another, the top echelon has to maintain legitimacy in order to rule.
  • Legitimacy comes down to money issuance and management.

In turn, it is that money they issue that is perceived as legitimate, becoming legal tender to price goods and services. Yet, even if that tender itself is physically sound, by virtue of counterfeiting such as gold, it can be seized and manipulated.

Bitcoin broke through that impossibility barrier, forever changing the perception of money. Bound by math, cryptography and computing power, Bitcoin removes the need for central authority.

Bitcoin's record of account - the blockchain - is maintained in a decentralized manner, and everyone with internet access can participate in its verification. In addition to having permissionless access to public ledger, Bitcoin is both government and nation-agnostic.

For the first time in monetary history, it became possible to send and receive borderless payments, without entangling any bank or foreign exchange bureau. Although this can be performed anonymously, Bitcoin's public ledger is at all times auditable.

Removing Moral Hazards: Path to Sound Money

When it comes down to it, incentives govern behavior. With fiat money in place, the government always has an incentive to extravagantly spend. It then prints money to make up for balance sheet holes, while leaving the taxpayer with another form of tax - inflation.

Inflation is the immediate manifestation of central banking, but there are many others. During the Great Recession of 2007 -2009, central banks bailed out financial institutions that took too much risk to the tune of $498 billion. These banks had to be bailed out in order to keep the entire financial system stable, but if this is baked into the cake, then risk-taking becomes the norm.

It is from this great moral hazard that pseudonymous Satoshi Nakamoto took the plunge with Bitcoin. Moreover, as central banks shift monetary policies, they tend to generate financial bubbles. Low interest rates caused major bubbles to pop, the tech bubble in the late 1990s and the housing bubble in the early 2000s.

The Great Recession itself was partly caused by low interest rates, as they made it easier for borrowers to get mortgages, leading to the subprime mortgage crisis.

In turn, as bubbles pop, central banking leaves recession in its wake. At the bottom, it becomes difficult for people to orient themselves towards the future. Then, as bubbles, taxes, government spending and inflation continue to pile up, what was previously the norm becomes a far-flung dream for many.

Home Price Affordability in the United States, source: DQYDJ


On the international stage, vying for monetary supremacy can further lead to destabilization to the point of financial exclusion. The -e conflict clarified this point acutely, as the USG weaponized the dollar to inflict pain on its geopolitical rival.

In the middle, Europe suffered the most as sanctions against , abundant in natural resources, boomeranged against Germany, the EU's economic engine. For individuals and nations both, Bitcoin becomes a potential self-sustained wealth machine outside the moral hazards of central banking and politicking.

In the distant alternative future, one has to wonder if large-scale conflicts, alongside infrastructural/economic devastation, would even be possible with fiat money out of the picture.

The Path Forward: Institutional Adoption, Speed, Efficiency and AI

After many market busts and custodial learning opportunities, cryptocurrency at large is on the verge of a legitimacy breakout. This is best exemplified by BlackRock's application to launch a Bitcoin exchange-traded fund (ETF). Larry Fink, the head of the world's largest asset manager, at $9 trillion AuM, made a complete pivot from his previous Bitcoin hostility.

In contrast to 2017 statements framing Bitcoin as " shows you how much demand for money laundering there is in the world,", Fink is hyping up Bitcoin to an unprecedented level:

"We do believe that if we can create more tokenization of assets and securities - that's what bitcoin is - it could revolutionize finance"

Yet, Fink also said that "it costs a lot of money right now to transact Bitcoin". Although he inferred it in the context of general cryptocurrency investing, it is a fact that Bitcoin mainnet is not suitable for daily currency usage.

For global mass adoption, the Bitcoin blockchain's 7 transactions-per-second capacity would have to increase drastically to offer near-instant payments for either online shopping or in-store merchants. This is where Bitcoin scaling comes into play, the most popular example being the Lightning Network.

At an average base fee of 865 mSats ($0.000243), the Lightning payment highway has also proven near-instant as more nodes are added.



Taking advantage of smart contract programmability, Lightning Labs have also integrated artificial intelligence (AI). Thanks to LangChainBitcoin and Aperture, AI agents can directly interface with Bitcoin via LN, allowing for exchange of funds both on-chain and on the Lightning Network.

This opens up a whole new arena of applications, without even having to resort to credit cards or fiat for payment rails. In the near future, we can expect to see real-time cost settlements, pay-per-use AI models, content micropayments, lending, and equitable resource sharing as LN's smart contracts automate subscriptions, rent or even salaries.

We could even see AI-powered underwriting, risk assessment and financial advisors, all using Lightning Network's smart contracts to execute investment strategies.

Although Bitcoin's core code is conservative, Ordinals have showcased that functions could be attached without any forking, soft or hard. During just the first two months of Ordinal hype, as non-fungible tokens (NFTs) creation grew, over 350k were inscribed to Bitcoin's mainnet.

Most recently, Bitcoin developer Robin Linus released the "BitVM: Computing Anything on Bitcoin" whitepaper. Again without any forking, it showcases that Bitcoin's smart contract logic can be executed off-chain but verified on-chain.

Linus forecasts greatly expanded use for Bitcoin if BitVM is implemented in writing/debugging Bitcoin contracts.

"Potential applications include games like Chess, Go, or Poker, and particularly, verification of validity proofs in Bitcoin contracts."

Yet, all that potential remains in the "putting the cart before the horse" stage. Bitcoin's primary job should be to push for financial emancipation from the vagaries of the central banking system. With the Lightning Network in the game, even the Federal Reserve admitted that the necessary ingredients are there.

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

Source: Bitcoin: A Beacon Of Financial Liberation In A Dollar-Driven World
CBOE to Launch Leveraged Bitcoin Futures Trading in January

Chicago Board Options Exchange (Cboe) Digital announced today its plans to introduce trading and clearing in margin futures on Bitcoin, commencing January 11, 2024. This move positions Cboe Digital as the first U.S. regulated cryptocurrency native exchange and clearinghouse to facilitate both spot and leveraged derivatives trading on a unified platform, according to the announcement.

Initially offering financially settled margined contracts on Bitcoin, Cboe Digital plans to diversify its product suite to include physically delivered products, pending regulatory approvals. The margin model is designed to enhance capital efficiency, enabling customers to engage in futures trading without the requirement of posting the full collateral upfront.

The unified spot and derivatives trading platform provided by Cboe Digital aims to streamline customer access to both markets, unlocking opportunities for increased capital and operational efficiencies.

The upcoming launch of margin futures will be supported by other firms in the cryptocurrency and traditional financial sectors, including B2C2, BlockFills, CQG, Cumberland DRW, Jump Trading Group, Marex, StoneX Financial, Talos, tastytrade, Trading Technologies, and Wedbush.

John Palmer, President of Cboe Digital, expressed gratitude for the support from industry partners, stating, "Our upcoming launch of margin futures represents a significant milestone for Cboe Digital, and we are grateful to have the support of such a remarkable group of industry partners who share our commitment to building trusted and transparent crypto markets. Futures have long served as valuable hedging instruments in the traditional financial markets, and we couldn't be more excited to extend access to this tool further into the digital assets markets and offer margined trading for our customers. We believe derivatives will foster additional liquidity and hedging opportunities in crypto and represent the next critical step in this market's continued growth."

The planned margin futures launch aligns with Cboe Digital's existing offerings of Bitcoin, other cryptocurrencies, and stablecoin trading on its spot crypto market. Contract margin requirements for the new futures will be published daily on Cboe Digital's website, accompanied by standardized portfolio analysis of risk (SPAN) compatible risk parameter files for replicable margin calculations.

Source: CBOE to Launch Leveraged Bitcoin Futures Trading in January
Bitcoin: Redefining Ownership

This article is featured in Bitcoin Magazine's "The Withdrawal Issue". Click here to subscribe now.

A PDF pamphlet of this article is available for download.


The traditional way in which our society constructs ownership is inefficient. The Uber-for-X model solves part of the problem by exploiting the unused value of some long-tail assets, but the reason behind the existence of such a huge volume of long-tail assets remains a puzzle. In this essay, I submit that they exist because our conception of ownership is outdated; I propose that individuals only need to own bitcoin. By doing so, we will embrace a full-scale sharing economy backed by Bitcoin, paving the way for a hyperbitcoinized civilization.

Born and raised in China during a decade of a brewing housing bubble, I grew up hearing stories of some property value growing tenfold, or someone suddenly receiving a large sum of money from property developers for dismantling their old houses to build new ones. Indeed, getting the one-time Chinese urbanization dividend on land value was rewarding to many. Yet, apart from the inherent systematic risks of the real estate market, houses are really hard to deal with: high taxes and management fees, difficult tenants, countless malfunctions on the depreciating property.

As I migrated to the U.S. to pursue my higher education, I discovered that for millennials, modern American family values are still widely accepted. To many of them, success means owning multiple vehicles, a main residence, and a beach house as their pied-à-terre. People keep purchasing and giving their life savings to megacorporations in the automobile, real estate, and energy industries.

As a minimalist myself, I was never a fan of the consumerism powered by modern capitalism. Thoreau asserted that a man's necessities consisted of food, shelter, clothing, and fuel. If Thoreau were here today in our very developed world, I would tell him that one just needs their private key.

For years, people have been trying to understand what bitcoin is. Whether people believe that it is a digital version of "gold", or a speculative "stock" on the blockchain, I think none of these definitions captured the essence of bitcoin. In my view, bitcoin is a currency that is not bound by any sovereignty, a belief that can be embraced by the entire humanity, the "truth" that Thoreau alluded to, as no one, except yourself, can take it away from you.

Bitcoiners have a road to freedom. Now, one can easily borrow against their bitcoin to get any kind of fiat currency to spend anywhere in the world. As the value of bitcoin goes up and fiat currency depreciates over time due to roaring inflation, the interest from the bitcoin loan is not a problem. Many Bitcoiners have already been practicing this lifestyle by being a digital nomad, traveling around the world, educating more people about bitcoin, and living their lives to the fullest.

Eventually, I foresee a civilization where we need to own nothing but bitcoin. One can earn "credit" from different countries or borrow against their bitcoin to spend for daily necessities (much like the fiat currency we get today). Nations will be no more than property managers, organizing a sharing economy where people can live in a long-term or short-term place. We will be living in a world where one can easily travel to meet people, learn their culture, and enjoy their freedom.

Till then.


This article is featured in Bitcoin Magazine's "The Withdrawal Issue". Click here to subscribe now.

A PDF pamphlet of this article is available for download.

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

Source: Bitcoin: Redefining Ownership
Jimmy Song: Fiat Withdrawal Symptoms

This article is featured in Bitcoin Magazine's "The Withdrawal Issue". Click here to subscribe now.

A PDF pamphlet of this article is available for download.

You've been hopped up on debt for so long, you can't even remember how it feels to be free from it. Every piece of debt you took on gave you that high, that euphoric rush. Not directly, of course, but from the short-term high of instant gratification that comes from buying something you really, really wanted. Your long-term goals seemed too far away, so you bought that car, that handbag, that new laptop, that house. You financed it all through years of debt service.

Let's pause and think about those words for a moment: "Debt-service". You're literally serving the owners of the debt. You were a slave under debt. Really, you were a slave to your own high time preference choices. In a sound money economy, you would have learned a lesson through the natural outcomes of such frivolous spending, like suffering from having less money for essentials. But under fiat money, you can delay, delay, and delay until declaring bankruptcy. All it costs is your goals, your dreams, and your soul. You became a debt zombie.


But you found bitcoin and started waking from your fiat-induced stupor. Instead of going down the well-trodden debt-slavery path, you got your financial house in order. So now, through years of study, saving, and selling chairs, you've reached a point where you're finally free!

But you don't know what to do with yourself. The freedom is almost too much to handle; you've never had this much responsibility before. Being in debt slavery sucks, but at least you knew what you needed to do. You either had to keep running from the debt collectors or slave away and pay it off slowly, even as you accumulated more debt. The certainty was comforting. Having freedom is hard to handle because you have to think about your life again, and what you actually want. You have to have goals, meaning, and purpose. You're no longer a debt zombie. You have to think and desire things for yourself, and that's not something you're used to doing. Can a recovering zombie have a soul?

Unfortunately, many people waste their newfound freedom and dive right back into debt, just of a different kind. Maybe it's slavery to an altcoin, where you do its bidding, selling your reputation and integrity. Maybe it's slavery to some other high time preference activity, like degenerate gambling. Freedom itself is a righteous burden. You have the responsibility to make something of yourself. But too many people would rather just serve some other master.

Many get caught up in fiat status games. They want to get invited to the right parties, so they buy big houses or the proverbial Lambo. But again, that's a fiat mentality. You're competing to be the chief debt slave -- the kind who can leverage enormous amounts of debt and weaponize it. But do you really want to be Bill Gates? He might have money, but he's a slave like everyone else in the fiat system.

The journey to financial freedom is a roller coaster of emotions, filled with moments of self-realization, ironic twists, and the occasional chair-selling escapade. It's breaking free from the chains of debt, learning to embrace the responsibility of freedom, and discovering that maybe, just maybe, you don't want to be Bill Gates after all.

As you navigate the unfamiliar world of financial freedom, you'll encounter the withdrawal symptoms of fiat money: the temptation to indulge in high time preference activities, the allure of debt-driven status games, and the realization that freedom is a double-edged sword requiring a new level of self-awareness and responsibility. Through it all, you'll find that breaking free from the fiat system is a journey worth taking -- a journey that leads to a life of purpose, meaning, and self-sovereignty.


It's not about the Lambos, the parties, or even the chairs (as important as they may be). It's about understanding that the fiat mentality is a trap, a Venus flytrap of debt that ensnares those who fall for its seductive allure. It's about recognizing that the fiat system imprisoned us, not just economically, but also mentally. To break free from its values can be harder than breaking free from its debt.

Fool me once, shame on you. Fool me twice, shame on me. As we escape the cycle of debt addiction, the temptation is to keep the mentality that had us enslaved. Your very desires, in other words, need reexamination. Fiat values are vices of the soul. Modern society is crumbling under the weight of the fiat incentives these values create. An examination based on first principles of what we really need will ultimately drive us to build. We will use our unique gifts and talents to add our own goods and services.

As you embark on this journey to financial freedom, remember that the withdrawal symptoms of fiat money are just that -- symptoms. They're temporary roadblocks that you can overcome with dedication and reflection, especially around the unquestioned assumptions of fiat idiocy. Embrace the challenge, find your purpose, and always remember the debt slavery you've been freed from.

Now, go change the world.

This article is featured in Bitcoin Magazine's "The Withdrawal Issue". Click here to subscribe now.

A PDF pamphlet of this article is available for download.

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

Source: Jimmy Song: Fiat Withdrawal Symptoms
Philippines Securities Regulator Says Binance Is Operating Without a License

Crypto exchange Binance is not a registered corporation in the Philippines hence its activities in the country are not above board, the Asian country’s securities regulator has said. The regulator warned of a possible jail term for individuals found enabling Binance’s activities in the Philippines.

Licensed Overseas Organizations Still Need to Get Local Approval

According to the Philippines securities regulator, crypto exchange Binance is not a registered corporation and has been operating without the necessary license or authority. In an advisory issued on Nov. 28, the Asian country's Securities and Exchange Commission (SEC) alleges that Binance has been “actively employing promotional campaigns” despite not having the requisite license.

Explaining why it has warned Filipinos against using Binance, the SEC said it is aware that some online crypto exchange platforms are in possession of licenses issued by overseas institutions. However, the regulator insists brokers and crypto exchanges still need to obtain licenses from it before selling or offering securities and investment products to the public.

To get the license, operators of crypto exchange platforms must submit an application for registration together with details on the issuance price, use of the proceeds as well as the nature of the securities. Also, they must be in possession of “a secondary license to sell offer securities to the public.”

Possible Jail Term for Offenders

The SEC claimed that since Binance has not submitted an application for registration it is therefore in violation of the relevant section of the Securities Regulation Code (SRC).

Meanwhile, in addition to advising against the use of Binance, the regulator revealed the penalties that offenders face.

“Those who act as salesmen, brokers, dealers or agents, representatives, promoters, recruiters, influencers, endorsers, and enablers of the Binance platform in selling or convincing people to invest in this platform within the Philippines even through online means may be held criminally liable under Section 28 of the SRC and be penalized with a maximum fine of five million pesos (P 5,000,000.00) or imprisonment of Twenty One (21) years or both pursuant to Section 73 of the SRC,” the SEC said.

What are your thoughts on this story? Let us know what you think in the comments section below.

Source: Philippines Securities Regulator Says Binance Is Operating Without a License
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