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This article details why the incumbent global financial system is irreversibly broken, how it got to this point, and what the world will look like coming out the other side of the present crisis. It uses the frameworks presented in Ray Dalio’s Principles for Navigating Big Debt Crises along with author's own analysis to contextualize the global economic landscape, and details how the emergence of bitcoin as a global monetary asset will serve as a release valve.

It's easy to see how early adopters of real estate on some forbidding frontier earned their wealth, even if it was only by being early and willing to risk ruin. We also have little trouble celebrating early investors in Amazon or Google or Apple for their foresight and daring to bet on a bold vision of the future. And yet, many people seem unwilling or unable to grant the same recognition to early Bitcoin adopters. When it comes to Bitcoin, the broader public is quick to label early adopters as somehow lucky for the riches they didn’t seem to earn. Ultimately, it doesn’t matter whether you think Bitcoin’s wealth distribution is fair or not. All that really matters is whether you decide to secure some acreage for the benefit of your family and its future generations, as Juan Camarillo did.

In the United States, the banking system as a whole has $22.9 trillion in assets and $20.7 trillion in liabilities. The problem, of course, is that their assets are riskier and less liquid than their liabilities, and so they face both liquidity risks and solvency risks if things aren’t managed well, or if they face external shocks that are larger than they can deal with. The majority of bank liabilities are deposits for individuals and businesses, and these deposits currently total $17.6 trillion. That’s what you and I consider to be our “money”. They offer very low interest rates, especially for checking and savings accounts. Banks currently have just $3 trillion in cash to back up their $17.6 trillion in deposits. The majority of this cash is just a ledger entry with the U.S. Federal Reserve, and so it is not tangible. Somewhere around $100 billion of it ($0.1 trillion) is held by banks in the form of actual physical banknotes in vaults and ATMs. So, the $17.6 trillion in deposits are backed up by just $3 trillion in cash, of which perhaps $0.1 trillion is physical cash. The rest is backed up by less liquid securities and loans. Regulators want banks to be reasonably safe, but not “too safe”. They want all banks to be leveraged bond funds to a certain degree, and won’t allow safer ones to exist.

Open commerce requires the transfer of both information and value. Therefore, both open monetary networks and open information networks (and their actual usage rather than merely their existence) matter for the study of economics, geopolitics, and various long-range investment outcomes. In general, any jurisdiction that is attractive in the sense that people and capital want to come to it, and information can be shared freely within it and with the rest of the world, should welcome such technologies. Open monetary and information networks, especially if their usage spreads around the world in ways that are hard to prevent, enable and accelerate more value flowing into these freer jurisdictions from elsewhere. Borders become less relevant from an economic point of view. On the other hand, any jurisdiction that is unattractive in the sense that people and capital want to escape it, and information is restricted within it and with the rest of the world in order to protect the rulers, should fear such technologies. Open monetary and information networks create more leaks of capital and information into and out of their jurisdictions, empowering their people, or forcing more expenditure by their rulers to increase the existing restrictions to maintain their isolation.

One of the more misunderstood topics in the world is banks. How they work, how they succeed, and how they fail are all things that are typically described with some mix of factual accuracy, factual inaccuracy, deliberate obfuscation, and straight up confusion so profound it is neither correct nor incorrect, but rather so incoherent it seems like it originated from another dimension. To that end, in light of the current Silvergate situation, I am going to endeavor to do three things with this post: 1. Describe a deliberately oversimplified model of how a bank works 2. Describe how banks typically fail, in light of this model 3. Apply points one and two to the current situation at Silvergate

As Powell and the Federal Reserve are emboldened to tighten policy into a global slowdown, with the dollar strengthening to new highs on a weekly basis and energy prices skyrocketing around the world, we view it as increasingly likely that something breaks in a massive way over the next six months. Six months may even be too generous of a timeline. Given the Fed plans to begin quantitative tightening next month, reducing its balance sheet to the tune of $95 billion per month, we expect something under the surface will crack in financial markets. With this being said, we think what “breaks” is liquidity in the U.S. Treasury market, as a soaring dollar, skyrocketing energy prices and subsequently contracting global productivity lead to a sell-off in dollar-denominated assets. There still is a massive implicit short dollar position around the world (USD-denominated debt). We still have yet to see the blow-off top short squeeze in the USD. In that environment only two places are safe, volatility (as an asset class) and dollars. Everything else sells. Bitcoin won't be insulated, nothing will. When that time comes, the Fed will be forced to print into an inflation spike. This is when bitcoin comes back with a vengeance.

Bitcoin mining is currently one of the most competitive and fragmented industries in the world. Our Porter’s Five Forces analysis indicates that the bitcoin mining industry will remain ultra-competitive and fragmented. The industry has exceptionally low barriers to entry, meaning there will be a constant flow of new entrants into the sector. The low barriers to entry are great for decentralization but put pressure on the profit potential of existing players. The ultra-competitive nature of bitcoin mining has two implications. Firstly, the industry will likely stay decentralized, and secondly, only the lowest-cost operators will survive and thrive over the long term.

While bitcoin’s usefulness as a store of value and medium of exchange is becoming more widely appreciated, those choosing to adopt it tend to cluster into stages. These stages are: Learn, Insure, Save, Allocate, Commit, and Endure

“Bitcoin” encompasses two related but distinct concepts. First, individual bitcoins (lowercase b) are units of (fiat) digital currency. Second, the Bitcoin protocol (uppercase B) governs the decentralized network through which thousands of computers across the globe maintain a “public ledger”—known as the blockchain—that keeps a fully transparent record of every authenticated transfer of bitcoins from the moment the system became operational in early 2009. In short, Bitcoin encompasses both (1) an unbacked digital currency and (2) a decentralized online payment system. Whether Bitcoin becomes a bona fide money is still an open empirical question, but at this point—since Bitcoin is already a medium of exchange—Mises’s regression theorem doesn’t have any bearing on the outcome.​

Transcript of the 24 Risks of Equities with Michael Saylor from the Bitcoin Layer Podcast. Michael covers the following risks: #1: Governance Risk #2: Operational Risk #3: Strategic Risk #4: Financial Risk #5: Competitive Risk #6: Technology Risk #7: Political Risk #8: Facilities Risk #9: Regulatory Risk #10: Employee Risk #11: Vendor Risk #12: Customer Risk #13: Reputational Risk #14: War Risk #15: Currency Risk #16: Tax Risk #17: Weather Risk #18: Customs Risk #19: Legal Risk #20: Tort Risk #21: Patent Risk #22: Health Risk #23: Lifecycle Risk #24: Dilution Risk

Nostr is for developers. It’s an open-source project for builders that serves as a broadcast platform and content hub aggregate. From the architecture alone, we can start to differentiate it from Twitter or any other existing platform. This protocol is newly, actively developed — so while it tugs at the root of topics like free speech and privacy, the tech itself is in its nascent stages. Nostr aims to decentralize private communications and data while allowing us to interact in new ways. For all of those reasons, we should learn about it — perhaps in the same way some of us should have learned about Meta products before dishing our credentials.

A perspective of Bitcoin being an artificial life form.

On one side of this, a sharp and persistent increase in the broad money supply is the biggest quantifiable correlate with price inflation. On the other side, sharp changes in the supply of goods and services (e.g. a major boom or a major loss in productive capacity) also significantly affect price inflation. We can see this with long-term charts of several different developed countries as examples. These charts show the five-year rolling cumulative amount of broad money supply growth and consumer price index growth. Areas where money supply growth greatly exceeded changes to consumer price index were generally due to some sort of productivity boom. combination of high debt, high interest rates on that debt, aging demographics, geopolitical tensions, and tight energy supplies are likely to result in ongoing waves of inflation. For periods where we generally get inflation under control, it will likely be due to global demand suppression and economic stagnation, rather than what we actually want: global disinflationary growth.

Greg Foss thinks Bitcoin should be considered default insurance on the entire global fiat currency system—like a CDS on the US dollar, Canadian dollar, British pound, euro, yen, yuan, and all the rest of the government currencies. Some proponents believe the endgame for Bitcoin is to eventually emerge as the world’s dominant form of money. It’s a process called “hyperbitcoinization”—or what I like to call The Bitcoin Supremacy. That’s why Bitcoin is even better than a CDS. It provides insurance against the failure of the entire worldwide fiat currency system, has no counterparty risk, and doesn’t expire.

Would the collapse (in terms of redemptions) of a stablecoin cause contagion in the traditional financial system? To answer this, first we have to clarify the starting point, and then there is actual data that can answer many of these questions.

history of debt in bitcoin mining, examined key principles of debt, and looked at some of the most common structures available to bitcoin miners. Now that we understand the landscape, we will take a look at the considerations for borrower and lender alike, the effect of leverage on mining returns, and discuss how the future of the market might look. Here are the main topics covered in Part 2: ‍Key considerations from a lender's point of view and from miners' point of view, a case study, comments on the future of debt in Bitcoin mining, shortcomings of ASIC-backed debt, cost of capital being king, and The Forever Forthcoming Hash Rate Marketplace.

Computation is competition. While the quantum computing threat is not something we expect to be worth worrying about for many years, it is better to be proactive rather than wait for it to come for us. Security is the science of staying ahead. The very act of wealth preservation is comprised of staving off the many attempts to steal it.

Over the past 10+ years, there has been a growing movement of people adopting a low-time-preference strategy of saving and investing with the goal of achieving financial independence early in life, putting themselves in a position to retire earlier than the traditional age of 65. Hence the acronym, FIRE: Financial Independence, Retire Early. Bitcoin allows you to mitigate the certainty of dollar debasement without exposing yourself to the risks of investing. A deep dive into the bitcoin rabbit hole tends to lead to the conclusion that its adoption will continue apace, leading to its value rising exponentially. Bitcoin represents the greatest asymmetric bet the world has ever seen.

The longstanding compromise on transaction sizes, how Taproot and SegWit inadvertantly blew it up, and the nascent NFT protocol emerging in its wake.

Abstract: In this piece we explore why Dapps are typically built on Ethereum rather than Bitcoin, which takes us all the way back to March 2014. We examine a debate about whether and how a Dapp protocol called Counterparty should use Bitcoin’s blockchain. This was sometimes called “The OP_Return Wars”. We explain the history of OP_Return usage and sidechains in Bitcoin. We conclude by arguing, whether one likes it or not, that it was the culture in the Bitcoin development community in 2014 and the negative view of using Bitcoin transaction data for alternative use cases, which played a major role in pushing developers of these Dapps onto alternative systems like Ethereum, along with other factors.

Part I of the two-part series covers the following topics: ‍(1) The History of Debt in Bitcoin Mining (2) Principles of Debt: Capital stack overview, Creditworthiness, Collateral, Covenants, Cost of capital, Back-end financing (3) Debt Products for Bitcoin Miners: Asset-backed debt, Corporate Debt and (4) Summary Comparison.

Disconnect from price. Secure your bitcoin for the next 10x. Avoid short-term capital gains. Tread carefully with lending opportunities. Develop your own market analysis. If you want to truly change your fortune, use your bitcoin journey as an opportunity for education, rather than a search for overnight riches. Develop new skills. Keep learning about money, technology, economics, and all the problems Bitcoin was designed to solve. The more you understand and appreciate bitcoin, the closer you come to making a splash of your own.

Exasperated with a conversation, I asked my friend directly, "What do you think the probability is that Bitcoin hits $1M per coin?" My friend replied without hesitation, "0.001%." I laughed and said I put it at 80%. We had a conversation about my friend's skepticism, and I wondered if there was some information asymmetry, or if it was self-motivated beliefs. My friend group is full of people like this, highly intelligent and successful, yet resistant to Bitcoin. I've found it to be a topic of fascinated frustration. I believe that my friends are resistant to Bitcoin because of their trust in the current system, and see Bitcoin as a radical departure from it. In contrast, I see Bitcoin as a necessary response to the flaws in the current system and a trust-minimized store of value.

Many speculate that Bitcoin’s security will lapse with the end of the mining subsidy. But other factors will continue to incentivize miners. Two prominent and likely factors are: (1) Higher transaction fees due to base layer settlement activity for higher layers which in turn is the result of increased adoption and (2) Bitcoin miners can act as an auxiliary tool for other business practices, an example being the highly-overlooked development in the mainstream involving the Bitcoin miners’ incentive to pursue stranded, wasted or excess energy.

Bitcoin provides the ultimate form of transferable value because it preserves the encapsulated wealth. This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis about Bitcoin in 2015.