Bitcoin on July 4th
Bitcoin was just $6.50 on July 4, 2012.
THESE PRICES show how far we’ve come.
Bitcoin is freedom money.
I’M A U.S. CITIZEN. I live near the home of our first president George Washington. I know that the United States views Bitcoin very differently than the rest of the world. We have the privilege of relative economic stability thanks in large part to the fact that the U.S. dollar is the world’s reserve currency. I am fortunate. Our country is lucky. But, the world is changing.
LOOK AT EL SALVADOR. A nation state has declared Bitcoin legal tender—alongside the U.S. dollar. In crypto circles, this was huge news. In the mainstream media, it barely made a dent. Instead, President Nayib Bukele has been blacklisted and the World Bank has refused to assist the country with Bitcoin implementation citing environmental and transparency concerns.
EL SALVADOR USES THE U.S. DOLLAR but they are further removed from the U.S. banking system than Americans and cannot exercise the same actions when it comes to monetary creation and flexibility. Bitcoin provides optionality and those outside of our crypto community don’t appear willing to laud their efforts just yet.
LOOK AT ARGENTINA. Bitcoin has always made sense in Argentina. The country has changed its currency FIVE TIMES in roughly fifty years. Argentines know the value of owning a monetary asset that is separate from the state. They understand how empowering it can be to have a money that cannot be seized. Wences Casares, CEO of Xapo, was one of Bitcoin’s early advocates. He saw the need for it in his home country. The people sought out Bitcoin—not the other way in around.
IN COUNTRIES LIKE El Salvador, Argentina, Venezuela, Nigeria, Lebanon, Ukraine, and Turkey, you don’t have to “pitch” Bitcoin the way we do in the United States. You don’t have to sell people on glitzy annualized returns. They don’t care about that. They have currencies that collapse and prevent them from planning for tomorrow. You just have to give them access to Bitcoin in these countries and let them use it. The value is apparent immediately.
BITCOIN BEACH will be viewed as the El Dorado of the crypto world. The small beach town of El Zonte in El Salvador has been using Bitcoin for transactions on a daily basis for over two years. You can’t tell them that Bitcoin doesn’t work for payments. You can’t tell them that Bitcoin is just for speculation. Bitcoin thrives in places like El Zonte because the people need it to. Bitcoin-related companies and trading thrive in the United States because it’s a sexy investment.
BITCOIN NEEDS ADOPTION in countries like El Salvador AND the United States. El Zonte is on the cutting edge in terms of layer two solutions such as the lightning network that allows for small, fast transactions with minimal fees. While there’s lots of money behind crypto projects in the U.S., political support and informed regulation must persist if Bitcoin is to succeed.
CHINA IS DISENGAGING with Bitcoin by cutting off mining. That’s a major world power moving against it. The U.S., like China, has a love-hate relationship with Bitcoin BUT it’s extremely accessible, regulated, and not going anywhere, no matter what certain politicians or economic critics say.
PART OF WHY I WRITE this newsletter is to emphasize the need for Bitcoin to those around me. We can’t dismiss it. Doing so would be anti-American. It would fly in the face of what our country was founded on and it would naively ignore the value that other countries see in it.
Bitcoin is the ultimate pursuit of happiness via financial inclusion and empowerment. As I said, you don’t have to explain Bitcoin to people in some countries. Many of you live in those countries. We need more of you and more willingness to understand Bitcoin in my own country.
Quick History Lesson
Bitcoin isn’t the first cryptocurrency.
BITCOIN WASN’T FIRST. Contrary to popular belief, Bitcoin isn’t the first cryptocurrency. It’s arguably the first to achieve mainstream adoption, but it’s the result of a lot of trial and error thanks to its predecessors. Critics who claim Bitcoin will be surpassed by other altcoins because it’s the first mover are either ignoring the fact that this isn’t true or they simply don’t know.
Adam Back’s Hashcash—1997
Wei Dai’s b-money—1998
Nick Szabo’s Bit Gold—1998
TO NAME A FEW. Above are just a few highlights in the overall cryptocurrency timeline. Other endeavors, like Pretty Good Privacy (PGP), and academic research dating back decades contributed to the development of Bitcoin. Interesting to note, Satoshi Nakamoto even cites both b-money and Hashcash in the Bitcoin white paper. Bitcoin wasn’t first. It had help and is the culmination of a lot of hard work.
Crypto market sentiment and my take.
STABLE COINS ARE DEPLOYING. I’ve been observing both the similarities and differences between this market cycle and the previous two for the last few months. One point I’ve emphasized that makes this cycle unique is the advent of stablecoins. These are cryptocurrencies pegged to an underlying asset such as the U.S. dollar.
Stablecoins didn’t exist in previous market cycles. That meant that when people exited Bitcoin and altcoins, they cashed out to fiat currency. Now, they have the option to keep their money closer to the sidelines in a stablecoin rather than exiting the crypto market entirely. The data is in and strong hands are deploying capital to buy Bitcoin using stablecoins.
HASH RATE AND PRICE ARE NOT CONNECTED. They may appear to be from time to time but there’s no direct connection. As Chinese miners drop off the network, we’ve seen historic drops in hash rates. This has slowed transaction processing time by a few minutes. Many mistakenly equate drops in hash rates to drops in price but there’s no real value in doing so.
Chinese Miners Are Unplugging
Hash Rates Have Dropped
Hash and Price Are Not Connected
Reported Hash Rates Are Estimates
Hash rate is the amount of computing power on the network created by miners. A key piece to note is that reporting of mining hash rates is largely voluntary. Although Bitcoin is an open source network and we’re able to see a lot of what is happening on the network, there is no God-mode. Measurements of hash rates are averages and short term averages are unreliable.
WE’RE IN A $30,000-35,000 RANGE. Bitcoin is trading sideways. I speak about this in the recent paid email. June closed lower than bulls would’ve liked. Bitcoin has, however, appeared to hold $30k support.
A break below $30k could trigger bearish signals. A break above $35k could increase chances of a shot at $40,000. We’ve seen corrections on weekends lately and this one was no different. Despite threatening to break above $35k, BTC retreated back to the middle of this trading range.
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