Bitcoin Blocks and Fees

Bitcoin at it’s simplest is a ledger keeping track of transactions. On average every 10 minutes a new “block” of transactions is validated. Using this link you can watch as transactions are added to the next block. I think it’s truly mesmerizing. I think it needs to be made into an easy to watch app or screen saver (hint to someone). It is essentially watching each bitcoin block be organized. Transactions are added to the block and finally confirmed.

There is a lot of interesting data in each bitcoin block. 

Bitcoin miners validate a new block on average ever 10 minutes. Each block confirms the transactions that have happened in that time. Money sent from person X to person Y. 

You can also learn how much is paid in block rewards (currently 6.25 BTC every block) and in block fees. 

It does cost money to send your bitcoin from your wallet to someone else. You might think that’s bad since you can send money via your bank account to people now and “not pay a fee”.

But that is where you are wrong. Banks have tons of fees, from monthly fees to the “fee” of paying you 0% interest. 

Every time you swipe a credit card you are paying approximately a 3% fee. The price is just baked into the price of whatever you are buying as sellers assume you will be using a credit card at this point. 

Here’s all the data from a specific completed block. 

Block 767418

A total of 12,419.79 BTC ($222,022,574) were sent in the block with the average transaction being 4.4515 BTC ($79,577.28). ViaBTC (the miner who solved the block) earned a total reward of 6.25 BTC $111,728. The reward consisted of a base reward of 6.25 BTC $111,728 with an additional 0.1489 BTC ($2,661.81) reward paid as fees of the 2,790 transactions which were included in the block.

6.3989/12,419.79 = 0.000515 *100 = 0.05% of the value of the money sent was used to pay fees. 

As you can see the total of 12419.79 BTC were sent during that 10 minutes worth $222 million dollars. Users were charged 0.1489 BTC which comes out to a 0.0012%! That is insanely low.

If you were paying that percentage to send $100 it would be $0.001 dollars. 1/10 of 1 penny!

If you compare this to a credit card transaction at 3% that would cost you $3 vs $0.001 for a transaction. Imagine if everything we did got 3% cheaper overnight? Why haven’t more sellers adopted BTC?

1 Million Bitcoin HODLers. That’s all?

I saw this tweet by StrictlyBTC the other day and it’s really bothering me! For those who don’t know, there are only 21 million Bitcoins that can ever be created.

About 19 million have been created (mined) already and that leaves 2 million left to mine.  

About 4 million have been lost. By my  math that leaves (19-4)= 15 million bitcoin up for grabs today. There are an estimated 100 million people who have used Bitcoin thus far.  A recent estimate has shown that about 1 million Bitcoin addresses are  holding 1 BTC.

Now it is very easy for any person to have more than 1 wallet. So the number of people who actually own 1 Bitcoin might be higher or lower. It’s possible there are many people who have 2 wallets and 0.5 BTC in each so they will own 1 BTC. It’s also possible (and likely) that many of the 1 BTC and over wallets are held by the same person. So 2 of the 1 BTC wallets might be owned by 1 person. To keep it simple I am going to continue to estimate that there are 1 million people who hold 1 BTC.

There are 47 million millionaires in the world. There aren’t enough Bitcoins for each US dollar millionaire to own even 1 BTC!

Many of these millionaires are older people, since on average, you accumulate wealth as you age which probably makes it less likely for them to accumulate bitcoin as they don’t understand it or don’t see value in it. 

The current price of bitcoin is $17,000/coin. This is down significantly from its previous peak of $69k. If each millionaire was to purchase 1 bitcoin that would be 1.7% of their wealth, for the people who are “merely” $1 millionaires, and if they were to just hold it, as more people would continue to purchase bitcoin that would drive the price up significantly.
Many people would argue that this is possible with any asset, which is partially true. But the main difference between Bitcoin and any other asset is it’s ability to be purchased by anyone in the world at any time, essentially, it’s liquidity. 

“They aren’t making any more land” is a commonly heard phrase. Which is not exactly true for many reasons. 

The Dutch reclaim land from the ocean regularly.

The United Arab Emirates hired the Dutch to build some new land.

Unproductive land is regularly turned into productive land. 

Land has another issue, you usually only buy land locally.

Most other assets have similar issues, or unique issues to each asset, that make them difficult to buy.
There are only ever 21 million Bitcoin and they are the ultimate liquid asset.

For these reasons it is just blowing my mind that Bitcoin has continued to drop in price.

Historically, Bitcoin has gained interest from people, myself included, as its price runs up. When the price is going down, no one cares. I fell victim to this in 2017 when it ran up to $17k and then lost value from 2018-2020. I didn’t pay attention and missed out buying in the $3,000-$5,000 range. 

I started reading a LOT more the next time it ran up in 2021 to $69k. As it’s continued into the current crypto winter I have tried to avoid the mistake I made in the last “crypto winter”. I have continued to accumulate. I have been “Orange Pilled”. 

Since I’ve read so much I also fell victim to the thinking that everyone else was learning the same stuff I was. Seeing that there are only ~ 1 million people holding 1 BTC I see I am still very early. Bitcoin is early. 

But it is legal tender in El Salvador and CAR. 

It is gaining more users every day. 

Hashing power is rising.

There are more Bitcoin conferences every day.

I am very curious to see how Bitcoin adoption continues over the next years!
If you want to learn more about Bitcoin you can contact me via email or comment below!

Bitcoin For Beginners

I have been looking for a great video/podcast to share with people who are newer to bitcoin. I believe I have found one that, while long, is very good! 

 BTC001: Bitcoin Common Misconceptions w/ Robert Breedlove

I don’t have much to comment about for the start of the video. It is just a very informative video and I recommend you listen.

There are 2 time stamps I wanted to highlight towards the end of the video where Robert Breedlove is discussing challenges, risks or arguments against bitcoin.

The first one starts at ~1:39:01. Here he is discussing a common argument against bitcoin that it has “no intrinsic value”. An article from Bitcoin Magazine – DOES BITCOIN HAVE INTRINSIC VALUE -( discusses the thought of if anything has intrinsic value, it doesn’t. Value is only defined when some outside entity is able to use any resource. For example, an ocean world would not have intrinsic value to humans as we are land dwelling, but it would have more value to fish. 

Robert Breedlove makes a distinction between intrinsic value vs. industrial value. When many people make the argument that Bitcoin has no intrinsic value they are comparing it against gold, which has an industrial value in that it can be used in many production processes or to make many useful things. It also has value as art or jewelry. Gold actually has no intrinsic value since as noted before, nothing has intrinsic value. Approximately half of new yearly gold mined is used for jewelry and industrial use and half is used for store of value or “monetary premium” by individuals or central banks. This is in comparison to bitcoin which as people have noted, has no industrial use, it ONLY has monetary premium. The benefit of bitcoin’s preservation of value vs say US dollars is that bitcoin has a capped supply of 21 million coins. Once you buy some bitcoin, you are sure of how much you own relative to the total pie. With USD or any other fiat currency (government issued currency) you don’t know how much more will be issued and will erode your value via inflation. 

The other good discussion comes at 2:00. The free market of history had chosen Gold as the benchmark for measuring value. This is because it was the “hardest” money. It had the least inflation. Gold’s inflation was relative to how much gold was mined each year, which is ~2%/year relative to the current total world gold supply. When you take the inverse of that and compare  the “stock” total existing gold (in tons) divided by the new production each year (flow) you get a number, for example 100 tons existing/2 tons new production = 50 stock to flow number (S2F). 

The “flow” of new material creation compared to the existing “stock”. Commodities like oil and corn have very high flows relative to the current stock which produces a small stock to flow number. Learn more about Stock to flow here

There is not a lot of existing corn or oil carryover each year, relative to the new production. Because of this these things usually have relatively cheap prices since there is so much new creation. Things that have low flows relative to the existing stock have higher values as it’s harder to get the new stuff. In the past gold and silver have both been used as money. But gold eventually won out as the “harder” money to produce. There is more silver produced relative to the current stock of world wide silver, compared to gold. 

Silver has a stock to flow number of 22.

 Gold and bitcoin both have stock to flow numbers of approximately 50-60. But in 2024 (during the next bitcoin halving) bitcoin’s stock to flow number will increase to 120. This is because the issuance of new bitcoin will decrease in half.
This stock to flow of 120 will be the highest Stock to flow number of any asset ever, and it’s only going higher as the issuance of new bitcoin continues to be cut in half every 4 years, due to the technical nature of bitcoin. To learn more about the halving read here

Coming back to the conversation, in the past the world wide free market had selected gold as the preferred store of value due to its “hard” nature and high stock to flow number. With bitcoin having a higher stock to flow going forward, along with all the other benefits it has over gold doesn’t it make sense for bitcoin to be the preferred store of value?

I leave you with a final very short 2 minute video related to discussing what is money and value? Money is best thought of as a tool to compare the value of different things or services. You can measure the value of a house, and apple and a massage in the same currency and compare their value. If the money is inflating then the price becomes confusing for measuring things. It’d be like if a ruler was changing as you were trying to measure a table. Inflation is not good or needed for an economy to work. 

If you want to talk about bitcoin you know where to find me!

Bitcoin Intrinsic Value

One of the main arguments I hear against bitcoin is that “it has no intrinsic value. The thing about money is that it doesn’t need to have intrinsic value. Money has to have a few things to make it “good money”.

It should be scarce. 

It should be divisible.

It should be transmissible.

It should be immutable. 

It should be difficult to counterfeit.

It should be assayable (easy to verify it is what it says it is).

Gold is good at some of these things, for example being scarce and immutable. But it is bad at others, it is not very divisible and it is not very transmissible. It’s very hard to purchase something with $1 worth of gold. It’d be a very tiny spec of gold that you’d have a hard time telling that it was really gold or just a dust flake. 

Fiat money (US dollars or other country dollars) are easier to transmit around the world (although they take a few days to settle international transactions or across borders). They are hard to counterfeit but they are easy for the US government to print more anytime they want.

I’ve collected a few articles and quotes about Bitcoin, money and intrinsic value. 

DOES BITCOIN HAVE INTRINSIC VALUE? – Bob Simon

There is no such thing as “intrinsic value” in the sense of an object having objective value in and of itself. As a thought experiment, think of assets typically assumed to hold intrinsic value such as gold, farmland, stocks and real estate. Now imagine a world where no humans exist. Do these assets still have value? The answer has to be no, because value only makes sense in the context of human existence.

Because of the luxury enjoyed by Americans and citizens of many developed countries, the benefits brought about by Bitcoin may not be as obvious as they are for many people in developing nations. Inflation in the United States has been persistent, but not devastating over the past two generations, and most people haven’t had issues with their banking services being shut down.

Bitcoin Has No Intrinsic Value — and That’s Great. – Conner Brown

The Rai stones used by the Yap people are another example of a store of value without commodity use.

Bitcoin is Not Backed by Nothing -Parker Lewis

“What backs the dollar (or euro or yen, etc.) in the first place? When attempting to answer this question, the retort is most often that the dollar is backed by the government, the military (guys with guns), or taxes. However, the dollar is backed by none of these. Not the government, not the military and not taxes. Governments tax what is valuable; a good is not valuable because it is taxed. Similarly, militaries secure what is valuable, not the other way around. And a government cannot dictate the value of its currency; it can only dictate the supply of its currency.

Venezuela, Argentina, and Turkey all have governments, militaries and the authority to tax, yet the currencies of each have deteriorated significantly over the past five years. While it’s not sufficient to prove the counterfactual, each is an example that contradicts the idea that a currency derives its value as a function of government.”

Bitcoin For Everybody – Saylor Academy

I stumbled upon the Saylor Academy Professional Development course, “PRDV151: Bitcoin for Everybody”. Saylor Academy is associated with Michael Saylor, CEO of Microstrategy, which was the first public company to put Bitcoin on its balance sheet. “Saylor Academy is a nonprofit initiative working since 2008 to offer free and open online courses to all who want to learn. We offer nearly 100 full-length courses at the college and professional levels, each of which is available right now — at your pace, on your schedule, and free of cost.” Saylor Academy has free courses on a lot of things, English as a 2nd Language, Math, Politics, etc. 

While there is some overlap between Michael Saylor and his non-profit and bitcoin, in general it is just a learning website which also happens to have a Bitcoin course. Despite having read many articles about bitcoin for the past 4 years, I decided to take this course. WOW! I learned a lot. The course is free and signing up for Saylor academy is free. I am going to link a few of the articles that I found most interesting from the  courses below as well as some of the most impactful quotes that I got from each article for people who don’t want to read all the articles. Many of the articles are also available from their original sources in spoken format so that would make them easier to listen to while driving instead of taking an hour to read them.
A lot of the information is more about the history of money, how US dollars came to be the World Reserve Currency and other interesting history. Later information gets into the history of bitcoin as well as why it makes good money. I highly recommend taking this course for anyone who is skeptical about Bitcoin. 

Unit 1: Bitcoin Economics

The Bullish Case for Bitcoin -Vijay Boyapati

PoW is Efficient – Dan Held

Everything requires energy (first law of thermodynamics). Claiming that one usage of energy is more or less wasteful than another is completely subjective since all users have paid market rate to utilize that electricity.

Unit 2: Bitcoin Investment

Bitcoin is Not Backed by Nothing -Parker Lewis

“What backs the dollar (or euro or yen, etc.) in the first place? When attempting to answer this question, the retort is most often that the dollar is backed by the government, the military (guys with guns), or taxes. However, the dollar is backed by none of these. Not the government, not the military and not taxes. Governments tax what is valuable; a good is not valuable because it is taxed. Similarly, militaries secure what is valuable, not the other way around. And a government cannot dictate the value of its currency; it can only dictate the supply of its currency.

Venezuela, Argentina, and Turkey all have governments, militaries and the authority to tax, yet the currencies of each have deteriorated significantly over the past five years. While it’s not sufficient to prove the counterfactual, each is an example that contradicts the idea that a currency derives its value as a function of government.”

Bitcoin Cannot be Banned – Parker Lewis

In fact, it posits that bitcoin works so well that it will threaten the incumbent government-run monopolies on money in which case governments will regulate it out of existence to eliminate the threat. Think about the claim that governments will ban bitcoin as conditional logic. Is bitcoin functional as money? If not, governments have nothing to ban. If yes, then governments will attempt to ban bitcoin.

Unit 3: Bitcoin History and Philosophy

Honestly, I didn’t find Unit 3 very interesting. It was full of a lot of history and details that are rather dry reading to me at the moment. While it probably provides useful history, it’s just not very exciting and isn’t completely necessary to understand Bitcoin. 

Unit 4: Bitcoin Technology

THE GREAT PLAGUE OF SHITCOINERY – THIBAUD MARÉCHAL

Under the fiat monetary system, the cost of currency issuance is close to zero, which is very profitable for the national issuers, as there is no longer any limit on the quantity of money that can be created, further shrinking the value of the existing currency in circulation, and annihilating the purchasing power of the currency holders — people like you and me.

Unit 5: Bitcoin in Practice

Unit 5 is relatively short compared to the other units. It is a lot more practical. Here is how Saylor Academy describes unit 5. 

“Now that you have some base awareness of Bitcoin, we will cover basic instruction on putting Bitcoin into practice in this unit. This includes acquiring Bitcoin, using a Bitcoin wallet and the Lightning Network, privacy and security practices, and avoiding common pitfalls, scams, and mistakes.”

This is probably a very useful unit for people who don’t have a lot of familiarity with how Bitcoin works. 

Bitcoin Vs. Cryptocurrencies

Bitcoin – Yes as much as you are willing to go to $0. Expect it to fall at least 50%-80% after you buy it. 

All other Cryptocurrencies and NFT’s – Proceed with EXTREME caution (likely scams). Honestly, probably just don’t buy it. 

For an in depth article about Bitcoin vs. All other Crypto I recommend reading the Fidelity Bitcoin First paper. 

Since I’ve started to post about Bitcoin a little, I wanted to make my stance very clear. Bitcoin, while it has potential to cause disruption to payments and fiat currencies, it is still a speculative asset. I personally have a higher than average income and net worth and as such I am willing to risk a small amount of money on speculative assets that I think have a high return potential. Even as such, I am only betting a very small amount of my assets on Bitcoin specifically. For most finances, savings, investing, I still recommend an asset allocation across index funds as advocated by these people.

The Crazy Man in the Pink Wig

JL Collins

Mr. Money Mustache

If you need more recommendations about what books to read about financial independence and investing for low fees please ask. 

Back to Bitcoin and Cryptocurrencies.

As I said, bitcoin is quite speculative, but most other cryptocurrencies are even more so. Most crypto currencies are thinly disguised, unregulated securities. In this case a security is something like a stock, where it’s like owning a part of a company. Read more here

Most cryptocurrencies are controlled by a small number of initial developers. Those developers also award themselves some of their cryptocurrency before they allow others to buy them, giving themselves an advantage to “get the crypto while it’s cheap/free”.

Bitcoin is different. Bitcoin is decentralized. No one got a bunch of bitcoin at the start. It is being mined everyday. No one controls Bitcoin. No one person can change Bitcoin. That is what makes Bitcoin very different from 99% of the other cryptocurrencies out there.

Another technology that is getting a lot of press is NFT’s. NFT = Non-Fungible Tokens. 

“NFTs are individual tokens with valuable information stored in them. Because they hold a value primarily set by the market and demand, they can be bought and sold just like other physical types of art. NFTs’ unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.” – SimpliLearn

Most NFT’s are either a picture of a GIF. Usually you are literally able to take a screenshot to make a copy or just right click to save. While there may be some minor value in these in general I would just advise beginners to stay far far away from NFT’s. 

In conclusion, do a bunch of research yourself before getting into cryptocurrencies.

Only buy as much as you are willing to lose/have to go to $0. 

This is the same advice as any investment.

Bitcoin As Legal Tender Around The World

One interesting thing about bitcoin adoption is places that allow it to be used either as a legal tender (El Salvador) or for payments (many businesses). I think what is most exciting is the game theory that plays out as more and more nations adopt bitcoin as a legal tender. Being a finite resource, only 21 million bitcoins, will ever be created, there is an incentive to adopt early as a reserve asset. “Getting in on the ‘ground’ floor”. 

Of course, some countries have less incentive to do that. For example, the United States enjoys huge benefits of the USD being the world reserve currency. To adopt bitcoin openly would show lowering faith in the USD, so likely, America will be one of the last countries to openly buy bitcoin. 

El Salvador was the first country to adopt bitcoin as legal tender. It has already given up it’s own currency and all transactions in the country were beign done in US dollars. Adopting bitcoin as a secondary payment method/legal tender really isn’t that big of a deal. 

Now there are a few more small autonomous regions that have started to also allow Bitcoin to be used as legal tenders:

 Lugano, Switzerland

Prospera, Roatan Island, Honduras

Madeira, Portugal

Rio De Janerio (for property tax payments)

The best number I could find was El Salvador owns 1800 bitcoins. I believe it is a few more as this was in Jan 2022. When comparing their population (6.5 million) to the world population (7.9 billion) and their bitcoin holdings (1800) to total bitcoin available (21 million) they hold about the right proportion relative to the world. But Since they are accumulating more, while the rest of the world doesn’t, they should pull ahead and have the economic benefits of that as the price rises. 

There are a few other more autonomous areas that have also legalized bitcoin. 

Lugano, Switzerland, has formed a partnership with stablecoin issuer Tether to establish bitcoin, Tether and Lugano’s own LVGA Points token as essentially legal tender in the city.r”

Rio De Janeiro Is Giving People a 10% Discount to Pay Taxes in Bitcoin

Honduras’ Roatán Island, Portugal’s Madeira to ‘Adopt Bitcoin’

https://cryptonews.com/news/honduras-roatan-island-portugals-madeira-to-adopt-bitcoin-mexican-senator-sends-bullish-sign-too.htm

More information about what exactly Madeira is. 

More information about what exactly Prospera (Rotan Island, Honduras) is.

Of course, Bitcoin is still quite risky. Then again, everything is risky.

Stocks are risky as any 1 company could go under. 

Holding cash is risky as it can be inflated away as a country prints more of it. This has happened in many countries in history. Just because it hasn’t happened in the USA yet is not a good reason to think it couldn’t! (I recommend this book , Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail -by Ray Dalio, as a very interesting history primer on money).  

There’s also a 1 hour youtube video summary, by the author, if you don’t want to listen to the whole book. 

As always, this is not investment advice or telling you to buy bitcoin. But I believe it is a very interesting technology and certainly worth learning about!

Bitcoin

I’ve been thinking about bitcoin off and on since approximately 2017. More intensely since about Dec 2020. Here is a short distillation of my thoughts. 

My main interest in bitcoin is not bitcoin itself but its characteristics of being “hard” currency. Currency that can not be debased or inflated for use by a central authority. Beyond that, bitcoin itself has very few special properties. Any economic research that is interested in sound monetary policy applies to bitcoin, of which there has been much

But Bitcoin does have a few key properties that give it great benefits as a sound monetary unit. 

Bitcoin is much better than gold, the historical hard currency, as a hard currency. 

It has 3 key features. 

One. It can be purchased or transacted from your home, or anywhere else with internet access, to anywhere else with internet access. I can send bitcoin to anyone in China, Haiti or Argentina, or next door. 

Two. It can be split into much smaller pieces than gold. The smallest unit of a bitcoin is a Satoshi. With $1 you can buy ~ 2100 satoshis today (when 1 full bitcoin is worth $~$46,000)  whereas transacting in gold in small useful units is basically impossible. You cannot really buy $1 worth of gold or even $100. 1 oz of gold is nearly $1k. 1 gram of gold is still ~ $60. That is not a useful transaction unit at all. 

The third is that bitcoin has a hard fixed amount that will ever be created. Gold is not truly scarce in the universe. While mining gold is difficult and allows a relatively fixed amount. There is still growth in the total gold supply each year and potential to find new deposits at any time or get a massive amount from asteroids in space. In contrast, Bitcoin is capped at 21 million bitcoins that will ever exist, providing ultimate scarcity. 

For a primer on bitcoin, I recommend the Fidelity Paper “Bitcoin First”

Sound money not only imposes fiscal discipline upon government, impeding reckless federal spending and imprudent warfare, but it also provides a stable unit of account, store of value, and medium of exchange for entrepreneurs, businesses, and individuals.” 

If you have any interest in talking about bitcoin let me know!

The Ministry for the Future: A Novel – And The World Today

I recently finished listening to  “The Ministry for the Future: A Novel” by Kim Stanley Robinson. 

The book focuses on the impacts of climate change in the future. Near the start of the book there is a heatwave that strikes India harder than the rest of the world. 20 million people die.
This makes me think of the link of this event compared to the current wave of covid sweeping through India and what actions they may take as a result?

In the book there are various attacks by environmental terrorist style groups to try to force companies and individuals to reduce their carbon footprint. 

While I don’t condone that type of violence, much of history is driven by violence, and usually the history books are written by the winners, who write their violence off as justified.

This leads me to consider the link between “The Ministry for the Future: A Novel” and another book I am reading now, “Rethinking Humanity: Five Foundational Sector Disruptions, the Lifecycle of Civilizations, and the Coming Age of Freedom (RethinkX Sector Disruption) Paperback –  by Tony Seba, James Arbib”. They are not proposing violence for any change, but they point to how technological change could lead to societal change, and has in the past. And how “Organizational systems” need to adapt to times, or collapse. Historically, they have collapsed, but they are proposing that we have the change to no collapse, this time. I recommend this book to everyone. 

Another development in “The Ministry for the Future: A Novel”  is the carbon coin. This makes me think of a paper written by ARK investment group and Square (the company). It is a very short read (5 pages).

“Bitcoin is Key to an Abundant, Clean Energy Future In this memo, we aim to explain how the Bitcoin network functions as a unique energy buyer that could enable society to deploy substantially more solar and wind generation capacity. This deployment, along with energy storage, aims to facilitate the transition to a cleaner and more resilient electricity grid. We believe that the energy asset owners of today can become the essential bitcoin miners of tomorrow. “ – Link 

The implication is that bitcoin can create an incentive to develop clean energy as long as you can incorporate bitcoin mining as a secondary income source for the green energy when it is not being used by the grid. This would allow a buildup of excess energy supply in the grid that would be used by customers as needed but alternatively used to mine bitcoin, and thus create profit, when there is excess.


I am not aware of this happening yet. Although there are plenty of grid scale battery storage solutions that are replacing “peaker” power plants and providing tremendous payback to their developers. So that is a 3rd option for excess renewable grid buildout. 


There are even more reasons besides temporary surges in use for peaker plants. A coal power plant apparently suffered an explosion in Australia and  a battery plant was able to provide instant backup. 

Various battery plants have also paid back their build cost relatively quickly. 

Back to Bitcoin. The largest risk for Bitcoin is it’s challenge to the sovereignty of Ffat currency of any nation. If it does challenge a nation’s ability to collect taxes in their own fiat currency, it will be outlawed. On the other side though, gold is a current store of value that does not fundamentally topple the current fiat money system, but lives alongside it. If bitcoin were to continue in that manner, it would be fine.

I often call the USD (and all other government issued currency) as “backed by bombs”. This is in reference to any government’s “monopoly on violence”.

Meaning that the threat of violence by the government if you don’t pay your taxes, in their designated currency. 

Various governments have already outlawed Bitcoin, such as the Chinese government, despite a large percentage of Bitcoin mining happening in China.


Other overreaching governments such as Turkey have also outlawed Bitcoin.

What does that mean for Bitcoin in the USA? It is unclear yet. Personally, I hope it is regulated and taxed as a normal currency eventually, (and not as as art or gold, which have very high tax rates as collectibles).