This is an opinion editorial by Ruda Pellini co-founder and president of Arthur Mining, an ESG-focused bitcoin mining company.
I recently saw an article that cited the level of leverage and debt of the world’s leading Bitcoin mining companies. Since they are listed companies, it is easy to find their financial statements and prove the obvious: this is a counter-cyclical business that requires a lot of efficiency and professional management.
For those who are still wondering what mining is, let me quickly explain: the term mining makes an analogy to the process of extracting gold and metals, since bitcoin miners are the “producers” of this digital commodity. In practice, mining consists of allocating computing power and electricity to ensure the bitcoin network functions, validating transactions and serving as the backbone of this decentralized system.
Investing in bitcoin mining is different from buying the asset directly. On the one hand, when investing in mining you have constant and predictable cash flow and physical assets that can be liquidated in the event of market stress, making the investment more attractive to more cautious investors accustomed to investing in cash flow generating businesses. On the other hand, besides the risk related to the asset, there are also risks of the operation itself.
Currently, bitcoin is down more than 65% from its November 2021 peak. Moments like this generate apprehension and make the investors ask themselves: is it an opportunity to increase my investments or a risk?
For bitcoin mining operations with structured cash, the moment represents a great opportunity! To quote Warren Buffet: “It’s only when the tide goes out do you learn who was swimming naked.”
The Impact Of Bitcoin Price On Mining
In general, bitcoin miners have their cash flow reduced as the price of bitcoin falls, so at first glance it is counterintuitive that lower prices are beneficial to a mining company.
However, since we are talking about an industry, more important than the market price is the cost of production.
Within the production costs, the biggest cost is the cost of electricity, which is the main input for this data processing activity. Therefore, those who can get a good price for energy and efficiency can remain profitable even in unfavorable market conditions.
Since not all miners can achieve this same level of efficiency, in scenarios like this one many end up having their production cost very close to the market price of the asset, leading them to liquidate their assets and exit the market.
Because of this, as in most commodity markets, this market is also counter-cyclical, and these down times are the best times to expand operations. There is a positive correlation of the price of mining computers with the price of Bitcoin, where the price ends up being adjusted in a greater variation than the asset itself.
While the price of bitcoin fell about 47% from April to August of this year, the price of computers used in mining fell about 60% in the same period.
(Source: Arthur Mining)
The Bitcoin Mining Companies
Particularly, I understand the mining industry in much the same way as the network infrastructure (cable) industry of the 1990s, where there were basically three major cycles of expansion and consolidation.
The first cycle was marked by geeks and technology enthusiasts, who started internet businesses and literally cabled and set up the first network infrastructures. This has also happened with bitcoin miners since 2009.
In the second cycle, we had the entry of players interested in maximizing capital quickly, ignoring the importance of efficiency by focusing only on the accelerated expansion of their structures and on short-term results.
In the third cycle, we had the consolidation of the industry, with the entry of players focused on efficiency and long-term vision, encouraging the entry of venture capital and the professionalization of the market. In the United States, the 50 largest cable companies of the late 1990s were consolidated into four by the end of 2010.
Most of today’s large mining companies entered the second cycle, with too much focus on the short term and not enough efficiency. This results in businesses that are not very robust and are very vulnerable to times of stress.
During bitcoin’s big up cycle between 2020 and 2021, many mining companies took advantage of rising margins to leverage themselves and expand their operations. This is very common in many industries, but in this case in addition to leveraging in dollars, a good portion of the listed miners ended up keeping their cash in bitcoin in an attempt to maximize their results.
According to estimates from Luxor Technologies, estimates indicate that listed mining companies have between $3 and $4 billion in loan agreements used to finance infrastructure expansion and computer purchases.
Mistakenly, these players did not consider that, as in any commodity producer, if you are able to increase your production capacity, it makes sense to sell the stock you produce and reinvest it, rather than keeping the asset you produce on your balance sheet.
In order to be able to honor these commitments, mining companies began to liquidate their liquid assets first, in this case the bitcoins held on the balance sheet. This move further increased the selling pressure during June and July, pushing prices to new lows.
Basically, the result of the cash management strategy adopted by these mining companies was to mine high and sell low, resulting in further financial losses in addition to the operational losses caused by the bitcoin price declines.
After selling the bitcoin from the balance sheet, the less efficient mining companies will need to sell computers to honor payments and maintain the operation, opening up space for more efficient mining companies to incorporate these assets and operations.
As with other commodities, bitcoin mining is an anti-cyclical business. As a result, the best time to grow is during periods of low prices, when inefficient miners face problems and exit the market.
At the current moment the equipment is at a great discount and the investments made now will bring returns faster. So, despite the negative news and the last few months of falling prices, this is a moment of great asymmetry, with reduced risk and high potential returns to make investments in bitcoin mining.
We are in a moment of great opportunities and those who invest now will be winners in the long run. In short, for businesses that are well structured and have strategic advantages that ensure efficiency, all the turbulence of this harsh winter points in the direction of a very favorable spring for growth.
This is a guest post by Ruda Pellini. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Let me tell you a story about what happens when you, and others, leave your bitcoin on exchanges. You might be surprised to hear what that means for your holdings. It might sound a lot like your own.
Let’s call our character Bill. Bill has been cautiously watching bitcoin for years, hearing about it in passing and reading a few articles. After inadvertently saving a lot of cash due to lockdowns, he decided to dive into bitcoin at last. A friend told him to check out Coinbase, Binance or another popular and “trusted” exchange in order to buy his first chunk of bitcoin.
So, Bill created an account and uploaded his face, ID, social security number, address and every other relevant detail about his life until he finally reached the “Buy Bitcoin” screen. He picked up a fraction of a bitcoin, but after all that trouble, he thought to himself:
“I don’t need to learn all these complicated technical details about hardware wallets and self custody — I just want my bitcoin safe.”
Bill reviewed the exchange’s website and decided that the security experts at the exchange, with their wiz-bang cold storage and state-of-the-art encryption, would be better at securing his bitcoin than he himself would be.
Bill was very pleased with himself after making that decision — not only did this exchange make investing in bitcoin simple, it gave him peace of mind knowing that someone else was responsible for keeping his assets safe from any kind of theft or malicious activity. After all, why should he have to worry about such things when there were professionals available who could handle them instead?
Bill has since become quite comfortable with the idea of trusting exchanges with his bitcoin — his coins are now safe from his own mistakes!
When Trust Disappears: The Fall Of FTX
When Bill turned on the news one morning and found out that the massive crypto exchange FTX had just paused withdrawals and seemed to “accidentally” lose $10 billion, roughly a third of its market cap, he was shocked.
How could a firm with its logo on the side of a major sports stadium and a CEO who appeared on CNBC, Bloomberg and in front of the U.S. Congress(!) to talk about digital assets and regulation have lost — or likely stolen — so much from right under everyone’s nose?
Now Bill was stuck between a rock and a hard place. He was suspicious of his own exchange, but setting up his own hardware wallet seemed so difficult and scary. It would require him to invest in a physical device, acquire the necessary knowledge to secure it properly and keep track of his seed phrase backup. Even if he figured out the basics, there was still the risk of misplacing his device or improperly storing his backup and losing access to his bitcoin.
FTX was shocking, but surely Bill’s exchange would never conduct itself the same way. People would see it before it was coming, and he’d have time to get out, right?
Reasons To Take Your Bitcoin Off Exchanges
It’s clear that trusting your bitcoin to an exchange brings with it the risk that you’ll log in one morning to find that your bitcoin just isn’t there. If you hold your bitcoin yourself using a hardware wallet, this can’t happen.
However, there’s another big reason it’s important to take your bitcoin off exchanges: the bitcoin price.
How could self custody affect bitcoin’s price? Everything in economics says that buying and selling affect the market price for a good, not who holds it. However, self custody is very important to price — and it has to do with something I’ll call “paper BTC.”
Introducing The Next Big Thing: Paper BTC
Let’s look at how an exchange works by considering a hypothetical exchange called ExchangeCorp, owned and operated by a jolly entrepreneur named Bernie. ExchangeCorp built an uncomplicated way to buy bitcoin, and hired a team of security experts to make sure hackers are kept at bay. Over time and through great marketing campaigns, ExchangeCorp built trust with traders and investors, drawing many in to store their bitcoin on the exchange.
When users keep their bitcoin with ExchangeCorp, the CEO Bernie and his team maintain control over those coins. Customers simply have a claim on their coins: they can log in and see their balance as well as request to withdraw their coins. However, if Bernie wants to transfer those coins owed to his customers to other Bitcoin addresses, he’s technically able to do so without any customer’s permission.
When Bernie kicks up his feet and looks at the balances in ExchangeCorp’s vault, he’s pleased to see tens of thousands of bitcoin that his customers have deposited sitting pretty. Since ExchangeCorp is doing well, more bitcoin are always coming in than going out.
So Bernie gets a wise idea. He could lend out some of those customer coins, earn some interest, and get the coins back without anyone noticing. He would get richer, and the risk of enough ExchangeCorp customers asking for withdrawals at one time to draw its vault’s massive balance down to zero is miniscule. So Bernie loans out thousands of coins here and there to hedge funds and businesses.
Now there’s another set of claims to consider. Customers have a claim on their bitcoin at ExchangeCorp, but ExchangeCorp no longer has the actual bitcoin — they only have a claim on the coin they lent out. What customers now have is a claim on Paper BTC held by ExchangeCorp, with the real bitcoin in the hands of borrowers.
This is where things get weird. All of ExchangeCorp’s customers still think they have a direct claim on real bitcoin held safely by ExchangeCorp. However, that real bitcoin is in fact in the hands of those who borrowed from ExchangeCorp, and those entities are selling it out in the market.
What happens when ExchangeCorp lends out a large quantity of the bitcoin its customers deposited? A lot of extra bitcoin starts to float around in the market, because investors who think they’re holding actual bitcoin are only holding paper BTC. All of that extra supply of bitcoin in the market absorbs buy pressure, which suppresses the price of bitcoin.
Let’s look at simple supply and demand here:
When paper BTC comes into the market, because market participants are unaware that this new supply is not real bitcoin, it has the same effect as increasing the supply of real bitcoin — until the fraud is uncovered.
Does this hypothetical story sound anything like the recent news around FTX?
The Paper BTC At The Center Of The FTX Fraud
The story of ExchangeCorp and Bernie is exactly the story of FTX and its founder Sam Bankman-Fried, with some save-the-world complexes, study drugs and polyamorous orgies redacted.
By lending out customer funds, FTX essentially inflated the supply of bitcoin by taking advantage of the trust users placed in FTX to safeguard their funds. FTX created tons of paper BTC.
Just how much paper BTC might FTX have created? We cannot be sure of the exact amounts given its absolutely horrid bookkeeping, but the estimate below suggests FTX had 80,000 paper BTC on its books — bitcoin owed to customers that is not backed by real bitcoin.
That would represent a staggering 24% of the roughly 330,000 new bitcoin that were created over the past year through the predictable mining issuance process. That is a ton of extra bitcoin entering the market that nobody — aside from a small group of insiders at FTX — knew about!
It’s impossible to tell where the price would have gone without that extra bitcoin supply entering the market, but we can be almost certain that the price would have climbed higher than it did in 2021.
While the FTX collapse is recent and still unfolding, history has a few cautionary tales to tell about the dangers of paper assets and price manipulation. The story of gold’s failure to resist centralized capture, for instance, can tell us where Bitcoin is headed if we continue to trust exchanges and third parties to hold our bitcoin for us.
The Fall Of Gold
Gold was once used in daily transactions — it takes no more than a visit to a museum of ancient history to see the collections of old gold coins once circulating in local markets. The traditional view of the demise of gold as a transactional currency was that it became too cumbersome or too valuable to continue to function well as a means to buy groceries and beer.
However, this story omits a few key components that only reveal themselves when we trace the evolution that societies took from gold coins to paper bills and digital bank accounts.
Centuries ago, banks started taking customer’s gold in exchange for bank notes — giving customers a measure of security for their gold and a more convenient means of transacting. However, entrusting a bank with your precious metal meant the bank was able to lend it out or make bad investments without the depositor’s consent. When a bank was caught between bad loans and a high rate of depositor withdrawals, they had to declare bankruptcy and shut down — leaving many depositors penniless, holding paper claims on gold now worth nothing at all.
Then central banks came along to “fix” the problem of bankrupt banks leaving depositors penniless. Central banks held gold for people and commercial banks, giving them banknotes from the central bank as receipts for their gold. By 1960, central bank official holdings accounted for about 50% of all aboveground gold stocks, with their banknotes circulating freely. Commercial banks and individuals didn’t mind, since each note was convertible to a set weight of gold by the central bank that issued it.
Notice the note in the upper left? This $5 Federal Reserve note — also known as a $5 bill — is redeemable in gold. Source
This would have worked well, except that central banks — especially the Federal Reserve in the U.S. — started creating more bills than they had gold to back. Creating more bills than the Fed had gold to back was essentially creating paper gold, since each bill was a claim on gold. Doing this in secret meant the Fed was manipulating the price of gold, given the extra circulating supply which the market was not aware of. When many depositors of gold at the Federal Reserve — like the French government — started questioning the Fed’s gold holdings and creating the threat of a run on gold in the U.S., the U.S. government had to intervene.
In 1971, this came to a head with the Nixon shock. One night, President Nixon announced the U.S. would temporarily stop allowing depositors to trade in their Federal Reserve notes for the gold they promised.
This temporary halt in withdrawals was never lifted. Since all currencies were connected to gold through the U.S. dollar under the Bretton Woods agreement, the Nixon Shock meant that the entire world went off the gold standard at once. All currencies were now just pieces of paper, instead of notes giving the holder a claim on a quantity of gold.
This was only achievable because gold, over time, was deposited into commercial banks and then to central banks. Once central banks held most of the gold, they could manipulate the price of gold and remove it entirely from daily commerce. Everyday people chose the convenience of paper notes over the security of holding gold, and paid the price.
Instead of a neutral money backed by a precious metal that is difficult to dig up and impossible to synthesize, currencies became easy to print and thus highly politicized. Keeping the dollar at the top of the food chain no longer required restraint and good stewardship to ensure its backing in gold. Instead, it required military expeditions and strong policing to ensure global governments and citizens continued to use the dollar to transact.
A return to gold at this point would be impractical — the world’s commercial networks span too great a distance with transactions happening at too high a speed. With paper currency and eventually digital banking systems, what we gained in speed and convenience we lost in soundness and neutrality. We lost our savings, our social cohesion and our political institutions as a result.
Preventing Bitcoin’s Fall
Taking your bitcoin off of your exchange is not just good practice for your own security, it’s protecting the price of your bitcoin as well. Our freedoms depend on individuals having control over their own wealth. When we entrust our wealth to companies or states, we go down the path we witnessed with gold.
Thanks to bitcoin’s divisibility and digital nature, it overcomes the hurdles that held gold back from supporting our modern, interconnected economy. Bitcoin can support a global marketplace, but it will only get there if we each hold our own bitcoin.
Don’t let the banksters and bureaucrats manipulate the price of your bitcoin: take it off the exchange and get it on your own hardware wallet.
This is a guest post by Captain Sidd. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
A laboratory technician works at a health and science centre in Bangkok, Thailand. It is a WHO Collaborating Centre for research and training on viral zoonoses. Credit: WHO/P. Phutpheng
Opinion by Roopa Dhatt – David Bryden – Gill Adynski (washington dc/ chapel hill, north carolina/ geneva)
Inter Press Service
WASHINGTON DC/ CHAPEL HILL, NORTH CAROLINA/ GENEVA, Dec 19 (IPS) – Health services don’t deliver themselves. It is the nurse who triages in the emergency department, the midwife who delivers babies and cares for mothers, the community health worker who gives babies vaccines, the care assistant who bathes someone at home, the surgeon who performs the operation, the anesthetist who blocks the pain, the pharmacist who matches the script to the medication, and the physiotherapist who restores movement.
Universal Health Coverage Day on 12 December is the annual rallying point for the growing movement for health for all. It marks the anniversary of the United Nations’ historic and unanimous endorsement of universal health coverage in 2012.
With Universal Health Coverage Day (December 12) just behind us, it is critical to recognize the contribution of health workers, most of whom are women, and call for political leaders to urgently recognize and address the escalating resignations, shortfalls, and staff movements putting health security at all levels, from local to global at risk.
Listening to organizations who represent frontline health workers, community health workers, nurses, family doctors, and health professionals, we hear that after nearly three years of a pandemic there is worker burnout, staff shortages, migration of health workers, increasing reports of danger and violence at work, and rising mental health concerns.
Taken together, there are four alarming trends currently affecting health workers’ ability to deliver health services for all and hindering our advancement towards UHC.
Global shortage of health workers
WHO figures released in April this year estimated a projected global shortage of 10 million health workers in 2030 based on current trends (mostly depicting a pre-COVID-19 situation). Since then, in the US alone, the US Bureau of Labor Statistics now estimates that more than 200,000 registered nurse positions are projected to be vacant annually over the next decade and WHO points out the largest shortages will be in Africa and Southeast Asia.
Globally, burnout levels among doctors and nurses have been estimated at 66 percent, a figure that doesn’t bode well for future health worker retention or indeed the ability to attract new recruits. Lack of available health workers, particularly in the global south where disease burden is higher, was the biggest obstacle to maintaining health services and delivering vaccines during COVID-19, according to WHO.
Protection of health workers
The pandemic stretched already understaffed and under-resourced health systems, increasing pressure and danger. Too often women were issued medical personal protective equipment (PPE) designed for male bodies that left them at risk. Health workers were sent door-to-door to enforce lockdowns or do contact tracing or give vaccines with no added protection, facing angry, confused, or frightened people.
They worked extra shifts under horrendous conditions, many with little or no extra pay. It is no wonder that the International Council of Nurses described the COVID-19 effect as a “mass traumatization of the world’s nurses.” The average prevalence of PTSD among global health workers is estimated to be around 17 percent, but this figure is much higher for women frontline workers, at 31 percent.
Advocates for health equity have a responsibility too, to bring the same passion that we see, for instance, in the global struggle for access to COVID vaccines, to the cause of equity and fairness for health workers who deliver these vaccines.
Women are disadvantaged in promotions too: despite 70 percent of health workers and 90 percent of frontline health workers being women, men hold around three quarters of the leadership positions. Historically female professions, like nursing and midwifery, have workers of all genders but they face difficulties advancing into leadership positions due to historical biases against them as caring and nurturing professions, where they are not seen as leaders.
The “Great Resignation” in health
Unsurprisingly, there is a Great Resignation in health–worldwide we see a flood of women health professionals who are planning to or have already left their jobs. In the summer of 2021, in the UK alone, more than 27,000 staff voluntarily resigned from the NHS amid burnout caused by a combination of pandemic pressures and staff shortages. In Ghana, most health workers experienced high levels of stress (68 percent) and burnout (67 percent) citing lack of preparedness as a key factor.
A billboard on a Nairobi freeway advertises for nurses to move to Germany. On Facebook pages, we find hundreds of advertisements for health workers to move to the UK. The incentive for international moves is fast-track visas and better pay. And why wouldn’t health workers give serious consideration to moving somewhere with better pay or more training or the chance to earn enough to send money back to their families?
There are serious implications as nurses from low-income countries leave their health systems to prop up others in wealthier countries that have failed to train health workers of their own. It is estimated that this Great Migration of health workers costs LMICs an estimated $15.85 billion annually in excess mortality.
While any individual has the right to migrate freely, recruiting companies actively recruit nurses while violating the Global Code of Practice on International Recruitment of Health Personnel, further exacerbating health worker shortages in areas that need health workers most.
Africa has only four percent of all health workers in the world, but more than 50 percent of the 10 million health workforce shortage is in Africa. With the Great Resignation and the Great Migration, these are serious concerns and were pointed out by Heads of State at the U.S.-Africa Leader’s Summit last week.
Universal health coverage should not just be about individuals and communities getting better and more affordable health services, it should also be about recognising health workers, their roles, and their needs. Health workers need safe working environments free of violence and harassment that give them all the resources they need to do their jobs well.
Appreciation isn’t just about applause. It’s about governments, which are responsible for the health of their citizens, ensuring systems are properly resourced–from hospitals to home aid. From guaranteeing equity in pay to properly paid work. From provision of proper PPE to safety at work in all conditions. And making sure that career choices and promotions are open to all, regardless of gender.
If global leaders are serious, then it’s time they do more, as they have promised, and accelerate their efforts to achieve universal health coverage and the 2030 Agenda for Sustainable Development. The Working for Health 2022-2030 Action Plan sets out how countries can support each other to build and strengthen their health and care workforce.
Our overburdened health workers have signaled that they have had enough. They have continued to protect us despite the shortages, lack of protection and problems related to pay, but they are burnt out. It is time we moved from applause to action and begin finally, to address the known problems plaguing global health systems.
This is an opinion editorial by Mark Maraia, author of “Rainmaking Made Simple” and Holly Young, a builder within the Portuguese Bitcoin community.
We’ve all been there. You’re at a social event and a friend, acquaintance or relative comes up to you and says “you were into Bitcoin, right?” You know you only have a brief period of their attention to give them an overview and pique their interest. So how can you give them an intelligible take on such a complex, multifaceted subject?
Here are a few ideas for you to pick and choose from for the next time you find yourself in that situation!
Centralisation Is The Enemy Of Property
Any currency which is centralized can be taken away from you in two ways. It can be done directly, by simply skimming it off your bank account as happened in Greece when people lost 20% of whatever was on their account to a government haircut in 2015 and 16, or by cutting your access to your own assets, as has just been shown by America and the U.K. doing this to Russian corporations or individuals during the current crisis in relations around the Ukraine. Secondly, because all our fiat currencies are centralized, this can be done through inflation — the government simply prints more money which means that whatever you have in your bank account will lose its value — also effectively robbing you of your purchasing power.
Bitcoin is a new kind of digital money that will never be issued or controlled by a corporation or government. It is a new form of money, unlike anything we’ve ever seen before and is a 21st century hedge against inflation and central bank money printing. Unlike the US dollar, it is a provably scarce digital asset that is backed by a wall of encrypted real world energy. These coins reached parity with the U.S. dollar ten years ago and are now worth 20,000 times more than the dollar.
Because it is both scarce and totally decentralized, it is deflationary, and no one can take it away from you as long as you keep it in a storage which is not connected to the internet.
What Is Bitcoin?
The term bitcoin can really mean two things: bitcoin the asset (currently worth 20,000 times more than the USD) and Bitcoin the network which is growing faster than the internet or Facebook or Amazon. Bitcoin the asset travels along digital rails (a shared distributed ledger where a record of all the Bitcoin transactions is kept) that are decentralized onto tens of thousands of devices and computers. This digital asset is a 21st century savings technology which uses military grade encryption and permits you to store value and wealth on a smartphone or hardware device called a wallet.
It allows those who buy it to store the fruit of their labor (or life force) and wealth using software, math and energy that is almost impossible to steal directly or indirectly (through inflation) Once you learn the language of bitcoin, you realize that anyone holding government issued currency (which is all of us) is watching their wealth melt like an ice cube in the sun as the fiat value inflates, and hyperinflated when measured against bitcoin. Anyone who cares about keeping their wealth in the future ( and that should be all of us, especially those of us who have children and intend to leave them an inheritance) needs to wake up and smell the coffee. Fiat currencies are losing their value fast, and although Bitcoin is still volatile, everything points towards it holding its value long term.
The Bitcoin Network Has Never Been Hacked
In 13 years. The Bitcoin network is rock solid.
How Bitcoin Works In A Nutshell
Bitcoin runs on a blockchain. As its name suggests, a blockchain is made up of blocks. Each time a new block is confirmed it gets added to the blockchain. Bitcoin blocks are confirmed by computers known as miners and each time a miner solves the math problem which confirms a block, it gets a reward in new Bitcoin, a process written into the original Bitcoin code. This takes a lot of energy and is the system which keeps the Bitcoin blockchain safe.
Bitcoin mining is the energy intensive process which both creates new coins and maintains a log of all transactions performed on the bitcoin network since its inception. Bitcoin miners take real world energy (stranded and renewable) and convert it into monetary energy that will outlive your grandchildren. The more energy used by bitcoin miners, the more secure and unhackable the network becomes.
The protocol has a fixed supply schedule that issues 6.25 coins into the network about every 10 minutes. In 2024 the supply issuance will be cut in half to 3.125 coins every 10 minutes.
Each time a Bitcoin transaction is made, it’s recorded into the next block. Once that block is confirmed and added to the blockchain it can never be deleted.
Who Uses Bitcoin?
More and more individuals are using Bitcoin. It’s been estimated that in the first half of 2021, the number of people using Bitcoin grew by just under 165 per minute (“How Fast Is Bitcoin Growing?”). That’s a lot of people and a lot of growth.
Bitcoin is the first and only digital asset to be named as legal tender by a nation state. Bitcoin is the first and only asset in history to be named a primary treasury reserve asset by a Fortune 500 company, Microstrategy, an intelligence software company.
Here’s what their CEO, Michael Saylor, had to say about it:
“We converted our balance sheet from a depreciating asset to an appreciating asset. So we have two businesses. One is enterprise software business and the other is digital property business. So why did we do it? Defensively, I don’t want to lose money or destroy the value of the company. Wealth is destroyed. Stage two is opportunistic, we could buy high quality property. Digital property is better than analog property. Stage three is strategic. It’s a good idea to buy up cyber Manhattan before everyone else moves here. If bitcoin is appreciating at 100% per year and I can borrow fiat at 5% then my arbitrage is 95%. Why would I NOT do it?”
There’s A Lot Of Negativity About Bitcoin In The Press
If we look back at history, it’s been pretty rare for a king to be deposed from his throne by a newcomer without putting up a bit of a fight. The fiat banking system has been king almost since its invention by the Medici. It’s not going to go quietly. The fiat system has been able to dictate the terms and its employees profit massively from doing so. Until, that is, Bitcoin came along, the upstart King Arthur who, against all odds, has pulled the sword from the stone. And do the central banks and the governments like that? They do not.
It’s a key reason why central bankers attack and spread untruths about bitcoin.
What are those lies? It’s not backed by anything. It wastes energy. It’s volatile. It is controlled by billionaires. It has no practical uses. It’s primarily used by criminals and terrorists. It’s a Ponzi scheme.
Rubbish. Bitcoin has the potential to upset the current status quo — hence why it’s so maligned by those currently holding the microphone.
You Can Buy A Fraction Of A Bitcoin
Sure, most of us don’t have 20,000 odd dollars just lying around which we could spare to buy a whole Bitcoin with. One Bitcoin divides into one hundred million Satoshis – which means that you can invest 10 dollars in Bitcoin as a start investment, should you so desire.
“Bitcoin is our peaceful weapon of choice against central bank driven time theft.” — Ross Stevens
“Bitcoin is a currency for the people backed by the people.” — Sylvain Laurel
This is a guest post by Mark Maraia and Holly Young. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
When you hear or read about an investing expert’s outlook for the year ahead, bear one thing in mind: Every forecast about 2022 was wrong.
Not just a bit amiss, but complete, total busts.
Oh, some strategists will claim victory for saying the stock market SPX, -1.11%
would be down in 2022 or that Treasury bonds TMUBMUSD10Y, 3.488%
would have yields north of 3%. Or that the yield curve would invert or that inflation would be stickier than anticipated. But they don’t deserve laurels for that.
No one said the market would peak on the first day of the calendar year and go downhill from there and, ultimately, that’s the only tale of 2022 that investors will remember.
Expect forecasts for 2023 to be equally miscalculated.
That doesn’t mean investors should ignore or dismiss the exercise of experts offering outlooks, but it’s why you should question the motives of the soothsayers and revisit one of the greatest market forecasts of all time that’s well on its way to becoming true no matter what the market dishes out next year.
Face it, market strategists and economists don’t make forecasts because they want to, but rather because they have to. Keeping their jobs depends on making mostly lame predictions.
Say something memorable, and the expert and firm might be held accountable for it; pabulum, however, gets overlooked when it’s wrong.
Obvious observations
Thus, forecasts lack insight, gravitating toward the middle ground, to obvious observations on the effect of economic and stock market cycles.
“It looks bad if they don’t have an opinion, but worse when they get something wrong, so most forecasts say as little as possible,” said Jeff Rosenkranz, a fixed-income portfolio manager at Shelton Capital Management, after we finished an interview last week for my podcast, “Money Life with Chuck Jaffe.” “You’re not getting much insight — if they have really valuable insights, this isn’t where they want to tell the world — so most forecasts just aren’t worth much.”
Adds Howard Yaruss, a New York University professor and author of the recent book “Understandable Economics”: “If you are talking about a fine-tuned forecast about stocks and asset values, I don’t see how anyone could go there; accurate predictions aren’t going to happen, or will be luck if they turn out true. Their statements are more about marketing than the market.”
One of Wall Street’s best-known prognosticators says credibility is impossible without accountability, but he acknowledges the tightrope experts walk if they say too much.
Bob Doll, chief investment officer at Crossmark Global Investments, started making forecasts — 10 specific prognostications covering markets, the economy, politics and more — in the 1990s while working for Oppenheimer. He carried the exercise with him during well-chronicled career stops at BlackRock BLK, +0.29%,
Nuveen and elsewhere, and historically has been right on north of 70% of his calls.
‘Wordsmithing’
“There’s wordsmithing going on; you word them so that you have a noticeably higher than 50% chance of getting them right, and then say a few things you truly believe in that will make you look really smart if they happen without making you look dumb for believing it,” Doll says.
Good forecasts are not just an academic, rote exercise, Doll says, provided that they’re relevant, prompt thoughtful reactions from the audience and that the expert stands by them. Doll revisits his forecasts every quarter and doesn’t alter them in response to current events.
“You call the beast as you see it,” he says, “and then you stand by it and live with it, and you don’t worry about getting them all right because if you haven’t gotten something wrong, you’ve only said the obvious.”
Wildest market forecast
Which leads to what I think is the best, wildest market forecast of all time, even if it’s more obvious than it appears: Dow DJIA, -0.85%
116,200.
If that sounds far-fetched with the Dow Jones Industrial Average standing at roughly 33,500 — and down about 8% since the start of the year — consider that the prognostication was made in 1995 with the index hovering around 4,500.
Also, the call was for the benchmark to hit that level in 2040.
Bill Berger, founder of the Berger Funds — which merged into the Janus funds in 2002 — made the call at the first Society of American Business Editors & Writers Conference on Personal Finance in Boston, giving one of the best talks I’ve ever heard, mostly railing against forecasting and the habit of making too much of market milestones.
(If the Dow 116,200 prediction rings familiar to you, chances are you learned about it from me, as I raised it periodically while working as senior columnist for MarketWatch between 2003 and 2017. Today marks the return of my column to this site, and I’m glad to be back.)
Berger cited what he called “the two rules of forecasting.”
Rule 1: For each forecast, there is an equal and opposite forecast.
Rule 2: Both of them are wrong.
Ironically, 116,200 sounds implausible, but looks dead solid perfect.
By 1995, Berger had worked in investments for 45 years; when he got started, the Dow was below 200. Mathematically, he saw the Dow’s future as reflecting the past; repeating the growth he’d lived through would push the benchmark to 116,200 over the next 45 years.
A septuagenarian at the time, Berger wryly suggested that if he was proved wrong, people come find him to discuss it; sadly, he died a few years later.
The long game
Despite the outlandishness of the forecast, Morningstar calculates that hitting the target would have required an annualized gain of roughly 7.35% over the 45 years. When the Dow peaked on Jan. 4, 2022, the necessary gain was down to 6.33% annualized.
As of Dec. 1, Morningstar calculates that hitting 116,200 in the fall of 2040 will take a 7.07% annualized gain, which feels like a safe bet.
Thus, 2022’s disappointments haven’t derailed long-term investors any more than they’ve crashed the greatest-ever market forecast.
That’s the lesson to remember when confronted with 2023 forecasts; neither the market’s issues nor experts’ ability to diagnose them will derail long-term financial plans or make lifetime goals unreachable.
NEW YORK, Dec 16 (IPS) – The writer is Deputy Director, Bureau for Policy and Programme Support, UNDPClimate change is the defining issue of our time. In the words of the UN Secretary General at COP27, “we are on a highway to climate hell with our foot still on the accelerator.” Cutting greenhouse gas emissions to net-zero by 2050 is crucial when it comes to meeting the 1.5 degrees Celsius target.
At the same time, if we don’t effectively deal with corruption in climate action, it will severely impede our abilities to fight the climate crisis through scaled-up adaptation and mitigation efforts.
According to Transparency International, up to 35 percent of climate action funds, depending on programme, have been lost to corruption in the last five years.
Corruption and the climate crisis reinforce each other
On the one hand, corruption fuels the climate crisis by depriving countries of much-needed revenues to act on climate change and build resilience, while also significantly altering the efficient allocation and distribution of resources to achieve development objectives.
For example, according to the U4 Anti-corruption Resource Centre, the top recipients of climate finance are among the riskiest places in the world for corruption.
On the other hand, climate impacts reinforce corruption by creating economic and social instability and inequality, fostering an environment more conducive to corruption and misuse of funds, that ultimately deprives the poorest and hardest hit.
Overcoming corruption in the race against the climate crisis requires collective action and bold partnerships between government, private sector, and civil society to recognise and combat the issue through more effective management of resources and programmes.
This calls for:
• Governments to step up their efforts in environmental governance,
• Businesses to strengthen business integrity,
• Media, youth, and communities to continue to advocate against corruption.
The three immediate actions that require commitment from all actors:
1. Management of funds: A much greater transparency and accountability is needed in the use and management of climate finance in adaptation and mitigation programmes.
Access to finance is often presented as the main obstacle to achieving a just transition and transformative climate action, but that’s only one side of the problem. The other side is to make sure that the much-needed resources to address climate crisis are not lost due to corruption and mismanagement.
One good example is that of the Colombian climate finance tracking system, which provides updated data on domestic, public, private, and international climate funding.
It is one of the first countries in the world to have developed a comprehensive Monitoring, Reporting and Verification (MRV) framework to transparently track the inflow and outflow of climate finance from public, private and international sources.
2. Voice and Accountability: This means leveraging the power of advocacy and accountability mechanisms, and providing civic spaces for meaningful participation of society, empowering them to hold policy makers and private sector accountable.
For example, UNDP is empowering communities in Uganda and Sri Lanka, to use digital tools to mainstream integrity and transparency in environmental resource management. In Sri Lanka,
UNDP has launched a digital platform, in collaboration with the Ministry of Wildlife and Forest Conservation and other partners, for citizens to engage and monitor illicit environmental activities. The initiative is supported through UNDP’s Global Project – Anti-Corruption for Peaceful and Inclusive Societies (ACPIS) funded by the Norad— Norwegian Agency for Development Cooperation.
Meanwhile, in Uganda, UNDP and the National Forestry Authority have launched the Uganda Natural Resource Information System (NARIS), designed to monitor and mediate deforestation throughout Uganda to protect the country’s forests and biodiversity.
In the climate change agenda, fighting corruption is not only about the money. It is also about building trust in institutions and restoring hope in the future. Studies show that ‘eco-anxiety’ is increasing, particularly amongst young people.
A global study of 10,000 youth from 10 countries in 2021 found that over 50 percent of young people felt sad, anxious, angry, powerless, helpless, and guilty about climate change. But we have also seen youth, civil society and communities taking action against the environmental damage and climate change from Serbia to India.
3. Private sector has a key role to play: Public capacity needs to be strengthened to implement policies to regulate private sector activities to protect the environment. At the same time, businesses should also play their part with fair, human-rights based business practices, business integrity, and environmental sustainability goals.
4. The normative framework to protect human rights: An intensified focus on ‘environmental justice’ at global and national level is needed. On 28 July 2022, the UN General Assembly adopted a historic resolution that gave universal recognition to the human right to a clean, healthy, and sustainable environment (R2HE). UNDP promotes responsible business by strengthening human rights standards across 17 countries, with support from Japan.
UNDP has supported over 100 national human rights institutions to address the human rights implications of climate change and environmental degradation. In Tanzania, UNDP has supported the ‘Commission for Human Rights and Good Governance’ to manage disputes related to environmental human rights violations. In Chile, UNDP has supported an ongoing process of constitutional reform which includes strong references to environmental rights.
The development community needs to ensure integrated approaches and break the siloes between the governance and environmental communities; and between public and private sectors to tackle the interlinked crises of corruption and climate change.
This is an opinion editorial by Mitchell Askew, a Christian, conservative Bitcoiner who produces Bitcoin-related research and social media content for Blockware Solutions.
“You don’t change Bitcoin, Bitcoin changes you.”
This is one of many mantras circulating around the Bitcoin community. I am two years removed from the start of my Bitcoin journey and can personally attest to the legitimacy of this statement. While my experience in Bitcoin is relatively short-lived, people can grow a great deal in two years, especially those in their early 20s. Bitcoin is a never-ending quest for knowledge and anyone who joins the expedition will in due time find themselves embracing the cardinal virtues.
The cardinal virtues, deeply rooted in Christianity and among philosophers such as Plato and Aristotle, represent a universal foundation of moral guidance. The virtues are prudence, temperance, justice and fortitude. They were dubbed “cardinal” from the Latin root “cardo,” which means “hinge,” as in: all other virtues hinge (rely) upon the four cardinal virtues.
I have outlined how anyone in honest pursuit of the Bitcoin mission to separate money and state is strongly incentivized to behave according to the cardinal virtues.
Bitcoin Instills Prudence
Acting with or showing care and thought for the future.
You will not understand what Bitcoin is the first time you hear about it. Nor will you have a firm grasp the second, third or fourth time. In today’s fast-paced world, few have put in the hours necessary to have a solid understanding of how Bitcoin functions, technically. Of those that have, even fewer have taken the time to study all of the encompassing domains of Bitcoin, including but not limited to economics, personal finance, computer science, energy markets, the history of money and geopolitical game theory.
To say that Bitcoin will have a profound impact on the world is an understatement. To begin having the slightest understanding of what the impact will be requires prudence. In the words of Michael Saylor “there are no informed critiques.” Those who immediately dismiss Bitcoin as a Ponzi scheme no different than those of Bernie Madoff or Sam Bankman-Fried, are simply exposing their intellectual sloth.
A common theme among Bitcoiners, popularized by Austrian economists such as Saifedean Ammous, is the concept of time preference. To have a low time preference means that you are willing to place more emphasis on your future wellbeing relative to your present wellbeing; this quite literally is the definition of prudence. Those who engage in the speculative markets of altcoins, or attempt to trade bitcoin’s unpredictable short-term volatility, rather than HODL the least uncertain asset of all time, are inherently imprudent.
By putting in the hours necessary to have a basic understanding of Bitcoin’s technical fundamentals and its broad implications on society, you have exhibited prudence.
Bitcoin Instills Temperance
Habitual moderation in the indulgence of the appetites or passions.
Similar to prudence, Bitcoiners achieve temperance through low time preference behavior.
Contrary to common FUD propagated among no-coiners, Bitcoin is not full of whales seeking to dump their positions in pursuit of fiat-denominated profit. Moreover, the exponentially-increasing adoption of Bitcoin coupled with its immutably scarce supply means that each wave of newcomers are met with the realization that it is wise to acquire as much bitcoin as possible before the rest of the world catches on.
When bitcoin becomes your individual unit of account, you begin weighing every potential purchase or experience against the opportunity cost of acquiring more bitcoin. This has led to many Bitcoiners, including myself, embracing minimalist lifestyles. The key point here is that this declination of materialistic goods in pursuit of more bitcoin, though perhaps initially sparked by a desire to satisfy future greed, brings forth the realization that an abundance of materialistic goods is unnecessary.
By eliminating many of the “wants” from your personal budget, i.e., moderating the indulgence of appetites or passions, and limiting yourself to “needs” in order to save wealth in bitcoin, you are embracing the cardinal virtue of temperance.
Bitcoin Instills Justice
Just dealing or right action; giving each person his or her due.
The biggest financial fraud of all time is the fiat monetary system. For far too long, the existence of central banks has provided governments with the ability to fund the ideals of the ruling class at the expense of cash savings and future economic productivity. Prior to the rapid acceleration of inflation during the past couple of years, most Westerners were completely unaware of the backdoor thievery that occurs with the expansion of the money supply.
Bitcoin grants inalienable property rights to all of its users. No government agency or corporation has the power to dilute the value of each unit in the network and, when stored properly, BTC is virtually impossible to confiscate. Bitcoin is an open, neutral network that does not discriminate based on religion, ethnicity, sex, race or vaccination status. Nobody is restricted from running a node to audit the authenticity of each transaction on the ledger.
By guaranteeing irrefutable access to an unconfiscatable and undilutable form of property, Bitcoin represents the most just asset and monetary network in the history of mankind.
Bitcoin Instills Fortitude
Courage in pain or adversity.
Bitcoiners develop fortitude in two ways.
The first way is by encouraging HODLing through volatility. At the time of this writing, bitcoin is down by over 70% from its all-time high. This is the fourth time in Bitcoin’s thirteen-year history that we have experienced a drawdown of this magnitude. Bitcoiners are clearly exhibiting courage in the face of this adversity as evidenced by on-chain data. An all-time high of over 66% of Bitcoin’s supply has not moved in one year or longer. This fortitude is not unprecedented either, as this metric has hit all-time highs during previous bear markets as well.
I sense that a positive feedback loop is occurring here. When you can see for yourself that other bitcoin holders are undisturbed by the extreme drawdowns in price, it enables one to become more confident in the future of the network, and thus continue HODLing themselves.
The second way in which Bitcoiners develop fortitude is by encouraging Bitcoiners to take an action akin to the founding fathers signing of the Declaration Of Independence. While holding bitcoin is not outright illegal in most countries, it certainly does not put you in a favorable standing with the most powerful entities in the world.
History has shown that regimes in control of the global reserve currency do not take kindly to that position being usurped. As such, there is a non-zero chance that Bitcoiners could be declared treasonous in a dramatic, last-chance attempt by the United States government to maintain control over the monetary system.
However, this extremity can be avoided by winning the race of adoption as Cory Klippsten, CEO of Swan Bitcoin, eloquently describes in this article.
This is a guest post by Mitchell Askew. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis about Bitcoin in 2015.
Evolutionary psychologists believe that the ability to “preserve wealth” gave modern humans the decisive edge in evolutionary competition with other humans. Nick Szabo wrote an interesting anecdote about how in his essay “Shelling Out: The Origins of Money.” When homosapiens displaced homo neanderthalensis in Europe circa 40,000 to 35,000 B.C., population explosions followed. It’s difficult to explain why, because the newcomers, homosapiens, had the same size brain, weaker bones and smaller muscles than the neanderthals. The biggest difference may have been wealth transfers made more effective or even possible by collectibles. Evidence shows homosapiens sapiens took pleasure in collecting shells, making jewelry out of them, showing them off and trading them.
It follows that the capability to preserve wealth is one of the foundations of human civilization. Historically, there have been a variety of wealth preservation technologies that have constantly changed and adapted to the technological possibilities of the time. All wealth preservation technologies serve a specific function: storing value. Chief among the early forms is handmade jewelry. Below I will compare the four most commonly used wealth preservation technologies today (gold, bonds, real estate and equities) to bitcoin to show why they underperform and how efficiently bitcoin can help us save and plan for our future. For equities, I focus specifically on ETFs as equity instruments used as a means of long-term savings.
Detail of necklace from a burial at Sungir, Russia, 28,000 BP. Interlocking and interchangeable beads. Each mammoth ivory bead may have required one to two hours of labor to manufacture.
What Makes A Good Store Of Value?
As explained by Vijay Bojapati, when stores of value compete against each other, it is the unique attributes that make a good store of value that allows one to out-compete another. The characteristics of a good store of value are considered to be durability, portability, fungibility, divisibility and especially scarcity. These properties determine what is used as a store of value. Jewelry, for example, may be scarce, but it’s easily destroyed, not divisible, and certainly not fungible. Gold fulfills these properties much better. Gold has over time replaced jewelry as humankind’s preferred technology for wealth preservation, serving as the most effective store of value for 5,000 years. However, since the introduction of Bitcoin in 2009, gold has faced digital disruption. Digitization optimizes almost all value-storing functions. Bitcoin serves not only as a store of value, but also as an inherently digital money, ultimately defeating gold in the digital age.
Bitcoin Versus Gold
Durability:Gold is the undisputed king of durability. Most of the gold that has been mined remains extant today. Bitcoin are digital records. Thus it is not their physical manifestation whose durability should be considered, but the durability of the institution that issues them. Bitcoin, having no issuing authority, may be considered durable so long as the network that secures them remains intact. It is too early to draw conclusions about its durability. However, there are signs that, despite instances of nation-states attempting to regulate Bitcoin and years of attacks, the network has continued to function, displaying a remarkable degree of “anti-fragility”. In fact, it is one of the most reliable computer networks ever, with nearly 99.99% uptime.
Portability: Bitcoin’s portability is far superior to that of gold, as information can move at the speed of light (thanks to telecommunication). Gold has lost its appeal in the digital age. You can’t send gold over the internet. Online gold portability simply doesn’t exist. For decades, the inability to digitise gold created problems in our monetary system, historically based on gold. With the digitization of money, over time it was no longer comprehensible whether national currencies were actually backed by gold or not. Also, it is difficult to transport gold across borders because of its weight, which has created problems for globalised trade. Due to gold’s weakness in terms of portability, our current fiat-based monetary system exists. Bitcoin is a solution to this problem as it is a native digital scarce commodity that is easily transportable.
Fungibility: Gold can be distinguished for example by an engraved logo, but can be melted down and is then fully fungible. With bitcoin, fungibility is “tricky”. Bitcoin is digital information, which is the most objectively discernible substance in the universe (like the written word). However, since all bitcoin transactions are transparent, governments could ban the use of bitcoin that has been used for activities deemed illegal. Which would negatively impact bitcoin’s fungibility and its use as a medium of exchange, because when money is not fungible, each unit of the money has a different value and the money has lost its medium of exchange property. This does not affect bitcoin’s store-of-value function, but rather its acceptance as money, which can negatively impact its price. Gold’s fungibility is superior to bitcoins, but gold’s portability disadvantages make it useless as a medium of exchange or a digital store of value.
Scarcity: Gold is relatively scarce, with an annual inflation rate of 1.5%. However, the supply is not capped. There are always new discoveries of gold and there is a possibility that we will come across large deposits in space. Gold’s price is not perfectly inelastic. When gold prices rise, there is an incentive to mine gold more intensively, which can increase supply. In addition, physical gold can be diluted with less precious metals, which is difficult to check. Furthermore, gold held in online accounts via ETCs or other products often has multiple uses, which is also difficult to control and negatively impacts the price by artificially increasing supply. The supply of bitcoin, on the other hand, is hard-capped, there will never be more than 21,000,000. It is designed to be disinflationary, meaning there will be less of it over time.
Bitcoin’s annual inflation rate is currently 1.75% and will continue to decrease. Bitcoin mining rewards are halved roughly every 4 years, according to the protocol’s code. In 10 years, its inflation rate will be negligible. The last bitcoin will be mined in 2140. After that, the annual inflation rate of bitcoin will be zero.
Auditability: This is not a unique selling proposition for a store of value, but it is still important because it provides information about whether a store of value is suitable for a fair and transparent financial system.
Bitcoin is perfectly audible to the smallest unit. No one knows how much gold exists in the world and no one knows how much US dollars exist in the world. As pointed out to me by Sam Abbassi, bitcoin is the first perfectly, publicly, globally, auditable asset. This prevents rehypothecation risk, a practice whereby banks and brokers use assets posted as collateral by their clients for their own purposes. This takes an enormous amount of risk out of the financial system. It allows for proof of reserves, where a financial institution must provide their bitcoin address or transaction history in order to show their reserves.
In 1949 Benjamin Graham, a British-born American economist, professor and investor, published „The Intelligent Investor“, which is considered one of the founding books of value investing and a classic of financial literature. One of his tenets is that a “balanced portfolio” should consist of 60% stocks and 40% bonds, as he believed bonds protect investors from significant risk in the stock markets.
While much of what Graham described then still makes sense today, I argue that bonds, particularly government bonds, have lost their place as a hedge in a portfolio. Bond yields cannot keep up with monetary inflation and our monetary system, of which bonds are a part, is systematically at risk.
This is because the financial health of many of the governments that form the heart of our monetary and financial system is at risk. When government balance sheets were in decent shape, the implied risk of default by a government was almost zero. That is for two reasons. Firstly, their ability to tax. Secondly, and more importantly, their ability to print money to pay down its borrowings. In the past that argument made sense, but eventually printing money has become a “credit boogie man”, as explained by Greg Foss,
Governments are circulating more money than ever before. Data from the Federal Reserve, the central banking system of the US, shows that a broad measure of the stock of dollars, known as M2, rose from $15.4 trillion at the start of 2020 to $21.18 trillion by the end of December 2021. The increase of $5.78 trillion equates to 37.53% of the total supply of dollars. This means that the dollar’s monetary inflation rate has averaged well over 10% per year over the last 3 years. U.S. Treasury Bonds are yielding less.
For the past 50 years, when equities have sold off, investors fled to the “safety” of bonds which would appreciate in “risk off” environments. This dynamic built the foundation of the infamous 60/40 portfolio — until that reality finally collapsed in March 2020 when central banks decided to flood the market with money. The attempt to stabilize bonds will only lead to an increased demand for bitcoin over time.
Graham’s philosophy was first and foremost, to preserve capital, and then to try to make it grow. With bitcoin it is possible to store wealth in a self sovereign way with absolutely zero counterparty or credit risk.
Bitcoin Versus Real Estate
Given the high levels of monetary inflation in recent decades, keeping money in a savings account is not enough to preserve the value of money. As a result, many hold a significant portion of their wealth in real estate, which has become one of the preferred stores of value. In this capacity, bitcoin competes with real estate, the properties associated with bitcoin make it an ideal store of value. The supply is finite, it is easily portable, divisible, durable, fungible, censorship-resistant and noncustodial. Real estate cannot compete with bitcoin as a store of value. Bitcoin is rarer, more liquid, easier to move and harder to confiscate. It can be sent anywhere in the world at almost no cost at the speed of light. Real estate, on the other hand, is easy to confiscate and very difficult to liquidate in times of crisis, as recently illustrated in Ukraine, where many turned to bitcoin to protect their wealth, accept transfers and donations, and meet daily needs.
In a recent interview with Nik Bhatia, Michael Saylor detailed the downsides of real estate as a store of value asset. As explained by Saylor, real estate in general needs a lot of attention when it comes to maintenance. Rent, repairs, property management, high costs arise with real estate. Commercial real estate for example, is very capital intensive and therefore uninteresting for most people. Furthermore, attempts to make the asset more accessible have also failed, with second tier real estate investments such as real estate investment trusts (REITs) falling short of actually holding the asset.
As Bitcoin (digital property) continues its adoption cycle, it may replace real estate (physical property) as the preferred store of value. As a result, the value of physical property may collapse to utility value and no longer carry the monetary premium of being used as a store of value. Going forward, bitcoin’s return will be many times greater than real estate, as bitcoin is just at the beginning of its adoption cycle. In addition, we will most likely not see the same type of returns on real estate investments as we have in the past. Since 1971, house prices have already increased nearly 70 times. Beyond that, as Dylan LeClair points out in his article-turned podcast, “Conclusion Of The Long-Term Debt Cycle”, governments tend to tax citizens at times like this. Real estate is easily taxed and difficult to move outside of one jurisdiction. Bitcoin cannot be arbitrarily taxed. It is seizure and censorship resistant outside of the domain of any one jurisdiction.
Exchange-traded funds (ETFs) emerged out of index investing, which utilizes a passive investment strategy that requires a manager to only ensure that the fund’s holdings match those of a benchmark index. In 1976, Jack Bogle, founder of the Vanguard Group, launched the first index fund, the Vanguard 500, which tracks the returns of the S&P 500. Today, ETFs manage well over $10 trillion. Bogle had a tenet: active stock picking is a pointless exercise. I recall him stating multiple times in his interviews that over a lifespan, there is only a 3% chance that a fund manager can consistently outperform the market. He concluded that average investors would find it difficult or impossible to beat the market, which led him to prioritize ways to reduce expenses associated with investing and to offer effective products that enable investors to participate in economic growth and save. Index funds require fewer trades to maintain their portfolios than funds with more active management schemes and therefore tend to produce more tax-efficient returns. The concept of an ETF is good, but bitcoin is better. You can cover a lot of ground through an ETF, but you still have to limit yourself to one index, industry, or region. However, when you buy bitcoin, you buy a human productivity index. Bitcoin is like an “ETF on steroids”. Let me explain :
The promise of Bitcoin should at least be on everyone’s lips by now. A decentralized computer network (Bitcoin) with its own cryptocurrency (bitcoin), which, as a peer-to-peer network, enables the exchange and, above all, the storage of value. It is the best money we have and the base protocol for the most efficient transaction network there is (Lightning Network). It is very likely that Bitcoin will become the dominant network for transactions and store of value in the not too distant future. At that point, it will act as an index of global productivity. The more productive we are, the more value we create, the more transactions are executed, the more value needs to be stored, the higher the demand for bitcoin, the higher the bitcoin price. I’ve come to the conclusion that instead of using an ETF to track specific indices, I can use bitcoin to participate in the productivity of all of humanity. As you might expect, bitcoin’s returns have outperformed all ETFs since its inception.
Bitcoin Returns Versus ETFs Returns
The SPDR S&P 500 ETF Trust is the largest and oldest ETF in the world. It is designed to track the S&P 500 stock market index. The performance over the last decade (October 26, 2012 to October 25, 2022) was 168.0%, which translates to an average annual return of 16.68%. Not bad, especially given that all an investor had to do was hold.
However, over the same period, bitcoin‘s performance was: 158,382.362%. More than 200% per annum. We’ve all heard the phrase that past performance is no indicator of future performance, that may be true. But that is not the case with bitcoin. The higher a stock goes the riskier it becomes, because of the P/E ratio. Not bitcoin. When bitcoin increases in price, it becomes less risky to allocate to, because of liquidity, size and global dominance. The Bitcoin Network has now reached a size where it WILL last (Lindy Effect).
We can therefore conclude that bitcoin is likely to continue to outperform ETFs going forward.
Bitcoin has other advantages over an ETF. First, it has a lower cost structure. Second, the latter is a basket of securities held by a third party. You are not free to dispose of your ETFs. If your bank, for whatever reason, decides to close your account, your ETFs are gone too. Bitcoin, on the other hand, cannot be taken away from you or denied access so easily. Additionally, bitcoin can be moved across the internet at will at the speed of light, making confiscation nearly impossible.
Conclusion
Bitcoin is the best wealth preservation technology for the digital age. An absolutely scarce digital native bearer asset with no counterparty risk that cannot be inflated and is easily transportable. A digital store of value, transferable on the world’s most powerful computer network. Considering that the Bitcoin network could theoretically store all of the world’s wealth (Global wealth reached a record high of $530 trillion in 2021, according to the Boston Consulting Group), it may well be the most efficient way we humans have found to store value ever. By holding bitcoin your wealth is going to be protected, likely increasing it by 10x,100x, maybe 500x, during this early monetization process. If you hold out for the next few decades.
In closing, I’d like to revisit Jack Bogle, who was a huge influence on me. As described by Eric Balchunas, Bogle‘s life work is addition by subtraction. Getting rid of the management fees, getting rid of the turnover, getting rid of the brokers, getting rid of the human emotion and the bias. His entire life’s work had been in a similar direction, and as such, I think bitcoin fits well with his investment ethos. Bogle’s primary philosophy was “common sense” investing. He told Reuters in 2012. “Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don’t save, then you’re guaranteed to end up with nothing.” Bitcoin is very similar to what Bogle envisioned with passive mutual funds. A long term savings vehicle for investors to place their disposable income with low cost and little risk. Don’t be distracted by bitcoin’s volatility or negative press, to quote Jack Bogle: stay in the course. We’re just getting started, stay humble and stack sats. Your future self will thank you.
UNITED NATIONS, Dec 15 (IPS) – To commemorate the seventy-seventh UN Day, the United Nations Asia Network for Diversity & Inclusion (UN-ANDI) held a panel discussion on the topic “Making the UN Charter a reality”. The discussion took place virtually on 27 October, and the event was attended by diverse participants from around the world.
The keynote speaker, Ambassador Anwarul Chowdhury, former Permanent Representative of Bangladesh to the United Nations (1996–2001), highlighted the need for the UN to be “proactive in oversight, accountability and transparency” and the importance of “practically ensuring gender diversity”.
UN-ANDI is a network of like-minded Asians of the UN system who strive to promote a more diverse and inclusive culture and mindset within the UN. This interest group was created in May 2021 after several years of groundwork.
UN-ANDI is the first ever effort to bring together the diverse group of personnel (i.e., current and former staff, consultants, interns, diplomats, etc.) from Asia and the Pacific (nationality/origin/descent) in the UN system.
Gender, geographical and regional diversity
“Keeping in mind the event’s theme, ‘Making the UN Charter a reality’, I would underscore that the UN Charter is the first international agreement to affirm the principle of equality between women and men with explicit references in Article 8 asserting the unrestricted eligibility of both men and women to participate in various organs of the UN.
It would therefore be most essential for the UN to ensure equality, inclusion, and diversity in its staffing pattern in a real and meaningful sense”, said Chowdhury, former Under-Secretary-General and High Representative of the UN (2002–2007).
Antonia Kirkland, who is the Global Lead on Legal Equality and Access to Justice at Equality Now, said “to keep the noble purpose of the UN and its Charter alive – encouraging respect for human rights and for fundamental freedoms for all – we must continue to hold the UN accountable to do even more to cultivate a culture of equality and non-discrimination internally and externally, including by ensuring a work environment free of sexual harassment and abuse”.
“As we celebrate UN Day, we are hoping to inspire, raise awareness, and fight for a more inclusive, just, and transparent Organization. One of the UN core values is respect for diversity. It is important to have UN staff and personnel from different backgrounds (i.e., nationality, ethnicity, culture, religion/faith, etc.)”, declared Yuan Lin, one of the UN-ANDI coordinators.
“However, the UN hierarchy and staffing currently do not reflect this reality. UN personnel of Asian nationality, origin, or descent are not properly represented, especially at the senior management level. This glass ceiling has deprived the Organization of meaningful contribution from our community and created an unjust and discriminatory work environment”, said Lin, who is serving in the UN peacekeeping mission in the Democratic Republic of the Congo as Chief of the Business Relationship Management Unit.
In November this year, the world’s population reached 8 billion. The Asia-Pacific region is home to around 4.3 billion people, which is equivalent to 54 percent of the total world population.
Article 101 (3) of the UN Charter affirms that “due regard shall be paid to the importance of recruiting the staff on as wide a geographical basis as possible”.
The largest numbers of unrepresented (17) and underrepresented (8) countries were in Asia and the Pacific. In 10 or more organizations with no formal guidelines for geographical distribution, 25 countries in Asia and the Pacific were not represented among staff.
The majority of senior and decision-making posts are held by staff from the global North. Most internships and JPO programs favor the global North, and this contributes to the issue further, as these are entry points to regular jobs in the UN system.
Among promotions to the P-5, D-1, and D-2 levels, only 14.5 percent were from Asia-Pacific States during the period 2018–2020.
Racism and racial discrimination
The issue of racism in the UN system is deep-rooted with many forms and dimensions. There are also structural issues in the policies of the UN system enabling this situation.
Article 1 (3) of the UN Charter asserts that one of the purposes of the UN is to promote and encourage respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion.
Aitor Arauz, President of the UN Staff Union and General Secretary, UN International Civil Servants Federation (UNISERV), pointed out that “creating an actively anti-racist work environment is not a passive gain – it requires active engagement and daily work to understand each other, value the cultural wealth that our differences bring to the UN, and overcome the biases we all inevitably have. Surveys and direct interaction with constituents reveal that UN personnel of Asian descent face specific forms of bias and discrimination that must be actively addressed.”
He renewed the Staff Union’s commitment to the cause of anti-racism.
Tamara Cummings-John, Steering Committee member of the UN People of African Descent, who is a Senior Human Resources Officer at the World Food Programme in Kinshasa, said, “There is still so much for us to do – and there is so much for us to learn from the outside world, particularly the private sector and above all by listening to our personnel to address the issues relating to racism and racial discrimination in the UN system.”
Staff are reluctant to report or act against racial discrimination when they witness it because they believe nothing will happen, lack trust, or fear retaliation, possibly suggesting a low level of solidarity with those who experience racial discrimination and a lack of faith in the established mechanisms in addressing this issue.
Efforts towards making the UN Charter a reality
Tanya Khokhar, who is Consultant of Gender Racial and Ethnic Justice – International at Ford Foundation, said, “Invisible and hidden power seeks to challenge certain norms and practices of who gets preferential treatment, who is promoted, when trying to build a transparent, inclusive and equitable culture in an organization. This is the hardest to do and it takes years of innovative practices both at the team and institutional levels”.
She further noted, “Going back to the work you all are doing through the network, it’s important to recognize the history, cultures, and rich diversity of the regions you represent and build a strong community, to advocate for one another, to align on agendas and lift each other up”.
UN-ANDI supports the initiatives implemented by the Secretary-General on addressing racism and promoting dignity for all in the UN. It works closely with the UN Staff Union in its efforts towards combating racism. It also promotes a collaborative spirit with other networks and institutions with similar objectives, within and outside the UN.
UN-ANDI contributed to the current review of measures and mechanisms for preventing and addressing racism and racial discrimination in the UN system organizations conducted by the Joint Inspection Unit.
In the summer of 2022, UN-ANDI conducted its first survey on racism and racial discrimination in the UN system faced by personnel of Asian descent or origin, offered in five languages. The purpose of the survey was to capture data and pertinent information, reflecting the Asian perspective, and identify the root causes of racism in the UN system.
UN-ANDI will issue a report on the survey findings to address many critical issues of racism and racial discrimination in the UN system.
Lin proclaimed that “as members of UN-ANDI, with our talent, education, experience, and diversity, we can make a difference and contribute immensely to the UN by engaging our community members in a variety of pressing issues facing the UN!”
UN-ANDI believes that its perspectives and observations will facilitate the journey towards the paradigm that is ingrained in the UN Charter and the Universal Declaration of Human Rights.
Shihana Mohamed, a founding member and one of the coordinators of UN-ANDI and a Sri Lankan national, is a Human Resources Policies Officer at the International Civil Service Commission.
The opinions quoted in this article represent the personal views of the individuals who expressed them. Please contact via email at [email protected] to connect or/and collaborate with UN-ANDI.
This is an opinion editorial by Will Szamosszegi, founder and CEO of bitcoin mining hosting service Sazmining.
Money and energy are two of the most fundamental aspects of an economy because both are universal. Energy is required to transform raw materials into final consumer goods and services. Money is required to store wealth, calculate revenue and losses and trade for goods and services that you couldn’t acquire through barter.
Although Bitcoin drastically improves humanity’s relationship with both energy and money, the problems that plague both energy and money are likely to survive a Bitcoin standard, even if they become lesser in severity. With respect to energy, government regulations, subsidies and bans will continue to have sway. With respect to money, governments will, in all likelihood, continue to employ second-layer fiat money that citizens are forced to use.
Government Meddling In Energy
The United States government has been trying to centrally plan the energy sector since 1789, well before fiat currency reached its “final form” in the fateful year of 1971. In extensive research on the topic of the U.S. government’s history of subsidizing the energy sector, DBL Investors managing partner Nancy Pfund and economics graduate student Ben Healey made several sober discoveries (though they favor government intervention in the energy sector, to be sure):
Although not a direct subsidy, the U.S. government raised a tariff on the sale of British coal in 1789 to benefit the American coal industry. This was only two years after delegates at the Constitutional Convention explicitly fought to include the “gold and silver clause” in the U.S. Constitution. This clause made its way into Article One of the founding document, where it lives on as stating that individual states were not allowed to “make any Thing but gold and silver Coin a Tender in Payment of Debts.” In other words, the political apparatus of the time, though far more monetarily constrained than our present-day Leviathan State, was still able to exert its will over the energy sector.
To be fair, tariffs are easier for a government to enact than subsidies, since only the latter requires the government to have money to spare. But history shows subsidies, too, have existed before the fiat standard went into full effect in 1971. For example, the Price-Anderson Act of 1957 forced the federal government to subsidize nuclear energy by paying for the damages incurred by a nuclear disaster.
Hydropower, too, has been federally subsidized since at least the 1890s, though quantifying the size of these subsidies is challenging. Earth Track, a think tank that works to standardize energy subsidy data, estimates that the U.S. federal government has provided about $2.7 billion (in 2010 dollars) to hydropower from the nation’s inception until 2010. Naturally, this timespan covers a range of different monetary regimes.
Government Meddling In Money
As much certainty as many in the Bitcoin community have about bitcoin becoming the next global reserve asset, governments are unique institutions and can damage our relationship with money, even after bitcoin becomes the new gold.
Governments also wield the threat of violence and incarceration via the military-industrial complex to retain economic power.
For example, imagine that the U.S. government/central bank accepts the new bitcoin monetary regime and even holds it on its balance sheet. Surely by this time, the global economic order will have vastly changed for the better — however, if governments are still around, they are likely still using the threat of violence and/or incarceration to collect taxes. To keep some Layer 2 fiat currency alive, all they have to do is mandate that taxes be paid in said fiat currency. People will then have no choice but to obtain this currency in order to hand it over to the tax man.
To be sure, there are several reasons that such a scheme may not work. For one, “competition” between governments might pressure them to ease up on forcing fiat currencies on citizens who are using Bitcoin and Bitcoin-based Layer 2 technologies in their daily lives. Secondly, ideological pressure from citizens might pressure politicians to give up on creating their own fiat currencies for fear of career suicide. And finally, governments themselves may view such a scheme as being more trouble than it is worth, since a Bitcoin-based economy has the potential to grow at a much greater rate than a Bitcoin-fiat hybrid economy would.
We Must Remain Vigilant
With respect to both energy and money, the government may still intervene after bitcoin has become the next global reserve asset and after Bitcoin mining has forever improved our relationship with money. In this sense, Bitcoin’s inevitable victory is only the beginning — we may still have to fend off meddling bureaucrats. To be sure, freedom-loving Bitcoiners will be in a much better position to do so then than we are now. Nevertheless, we must not rest on our laurels.
What can we do to truly exorcize the State from money and energy? The same thing that we do now: explain our ideas.
We want a free market in energy so that the most cost-effective forms of energy are discovered and made profitable over inefficient alternatives. Furthermore, subsidies, tariffs and regulations in the energy sector hamper innovation. For all we know, absent so much intervention throughout the centuries, our world would be powered by cold fusion, oceans and nuclear energy by now.
And government-imposed money, even if somehow backed by bitcoin, would throw sand in the gears of capital accumulation and economic calculation. The cost of accumulating capital would rise, since we’d need to keep some garbage money in our back pocket for tax season. In other words, the production of all sorts of goods and services would never come to pass, since they’d no longer be affordable. And entrepreneurs’ ability to calculate profits or losses becomes more difficult, since there is no longer a single immutable measuring stick (bitcoin), but also an unpredictable fiat currency still trading alongside Satoshi Nakamoto’s creation.
Our job will not be finished, even after Bitcoin wins the money game and Bitcoin mining wins the energy game, as governments won’t quit. But our ideas will be so much easier to sell by that point, that I, for one, am looking forward to the battles ahead.
This is a guest post by Will Szamosszegi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
We all make mistakes in planning for our golden years. But which are the worst, which are the most common, and which ones do we all need to watch out for?
Financial planners have weighed in with the top 10 they see among clients. It’s emerged in a survey conducted by money managers Natixis and just released. And it’s a terrific checklist for anyone who wants to see how they’re doing, and what they need to change.
This is an opinion editorial by L0la L33tz, a privacy and security researcher and hacking advocate.
Yesterday, the U.S. Senate proposed the Digital Asset Anti-Money Laundering Act Of 2022 — a bill that is not only deeply concerning to international human rights, but unconstitutional and in direct opposition to current U.S. consumer privacy regulations.
What’s In The Bill?
The Digital Asset Anti-Money Laundering Act Of 2022, proposed by Senator Elizabeth Warren, proposes the following regulations, among others:
Section three, part a: The classification of custodial wallets and “unhosted wallet providers,” likely meaning developers of non-custodial wallets, as well as cryptocurrency miners, validators or other nodes that may act to validate or secure third-party transactions, independent network participants and other validators with control over network protocols as money service businesses.
Section three, part d: Promulgation of a rule that prohibits financial institutions from handling, using or transacting with digital asset mixers, privacy coins and other anonymity-enhancing technologies, as specified by the secretary of the U.S. Treasury; and handling, using or transacting business with digital assets that have been anonymized.
Section three, part a of the Digital Asset Anti-Money Laundering Act Of 2022 would deem anyone developing non-custodial wallets as money transmitters, requiring them to obtain a license. The problem: “unhosted wallet providers” do not exist. “Unhosted wallets,” or non-custodial wallets, are simply software.
Infringing On The First Amendment
The enactment of section three, part a would hence require anyone writing software which enabled the sending, receiving and signing of bitcoin transactions to obtain a money transmitter license. This attempt at restricting the writing of code is nothing new and a directly unconstitutional approach, as the U.S. constitution clearly states that “Congress shall make no law . . . abridging the freedom of speech.”
Under these circumstances, attempts at regulating the writing of software have been struck down by U.S. courts numerous times.
In Universal City Studios vs. Corley, 2001, for instance, the second circuit addressed the attempted restriction on computer code with the following arguments:
Communication does not lose constitutional protection as “speech” simply because it is expressed in the language of computer code. If someone chose to write a novel entirely in computer object code by using strings of ones and zeroes for each letter of each word, the resulting work would be no different for constitutional purposes than if it had been written in English.
Computer programs are not exempted from the category of First Amendment speech simply because their instructions require use of a computer. A recipe is no less “speech” because it calls for the use of an oven, and a musical score is no less “speech” because it specifies performance on an electric guitar. The fact that a program has the capacity to direct the functioning of a computer does not mean that it lacks the additional capacity to convey information, and it is the conveying of information that renders instructions as “speech” for purposes of the First Amendment.
Limiting the First Amendment protections of programmers to descriptions of computer code (but not the code itself) would impede discourse among computer scholars, just as limiting protection for musicians to descriptions of musical scores (but not sequences of notes) would impede their exchange of ideas and expression. Instructions that communicate information comprehensible to a human qualify as speech whether the instructions are designed for execution by a computer or a human (or both).
The court further cited that the limiting of free speech under the U.S. constitution is permitted if, and only if, it serves a substantial governmental interest, the interest is unrelated to the suppression of free expression and the regulation is narrowly tailored, which, in this context, requires that the means chosen do not burden substantially more speech than is necessary to further the government’s legitimate interests.
The Key Moving The House Around
That section three of the Digital Asset Anti-Money Laundering Act serves any other purpose but the direct restriction of free expression is yet to be proven by Senator Warren. And even so, the section appears much too broad in scope to be legally applied without directly violating constitutional rights, particularly as developers of non-custodial wallets serve no purpose in the transmission of money.
Non-custodial wallets transmit bitcoin the currency as much as the key to one’s door moves the house around. Non-custodial wallets function as signing devices, which transfer the access rights to bitcoin — while the asset itself never moves. The attempt at restricting the development of non-custodial wallets would therefore constitute a regulation of public-private key cryptography, which, too, has been attempted before and struck down due to violation of the first amendment of the U.S. constitution.
Similarly nonsensical as framing developers of non-custodial wallets as money transmitters is the idea that “nodes who may act to validate or secure third-party transactions” and “independent network participants” must be defined as money service businesses, consequently constituting that anyone who runs a Bitcoin node must obtain a license to do so.
By definition, Bitcoin nodes do not secure third-party transactions. Rather, Bitcoin nodes validate one’s own version of the blockchain against copies obtained through other nodes in the network. Nodes neither secure nor transmit third-party transactions. No other user’s funds are affected if a Bitcoin node goes down.
The attempt of ruling Bitcoin node operators as money transmitters can therefore be seen as the attempt at regulating which individuals are allowed to compare information. Again, the proposed bill is unable to sufficiently prove that section three is narrow enough in scope to sufficiently warrant the approval of such a bill without infringing on further aspects of free speech and the freedom of information.
Section three further attempts to regulate bitcoin miners as money service businesses. Here, too, the bill exhibits an embarrassing level of misunderstanding of the inherent technology it attempts to restrict.
A bitcoin miner is nothing more than a computer, meaning a machine which processes code as speech. In no scenario does a bitcoin miner transmit bitcoin from A to B. Rather, a bitcoin miner propagates blocks of information to the network. A regulation of bitcoin miners does not hold up from a technological point of view. In addition section three again fails to prove that the permissioned use of bitcoin miners would not constitute further violations on anyone using a computer, particularly to access and broadcasting speech as protected under the U.S. constitution.
The FCRA of 1970 is a U.S. federal legislation which regulates the accuracy, fairness and privacy of consumer information as handled by credit reporting agencies in the scope of the collection, dissemination and use of consumer information, including consumer credit information. Under the act, credit reporting agencies are required to remove negative information seven years after the date of first delinquency, except for bankruptcies (10 years) and tax liens (seven years from the time they are paid).
Bitcoin transactions provide an immutable history of themselves. The restriction of privacy services and tools as defined under the Digital Asset Anti-Money Laundering Act as services “designed to conceal or obfuscate the origin, destination, and counterparties of digital asset transactions” directly violate FCRA regulations, as credit reporting agencies would be enabled to maintain indefinite records of any user’s financial information and transactions without the possibility of deletion.
The Gramm-Leach-Bliley Act is a U.S. constitutional act guiding the regulation of banking companies, insurance companies and securities companies. Under the Gramm-Leach-Bliley Act, companies are required to provide consumers with privacy notices at the time of the establishment of consumer relationships, documenting the scope of use of financial information. In accordance with the FCRA, users must be given the right to opt out of the sharing of information.
Because the blockchain is a public ledger, with the restriction of privacy protecting tools and services, users would be unable to opt out of the sharing of information, as financial information regarding bitcoin transactions is shared with everyone and anyone able to view the Bitcoin blockchain by default. The restriction of privacy tools and services therefore constitutes a direct violation of the Gramm-Leach-Bliley Act.
The California Privacy Act is a state-level privacy act which governs the handling of consumer information, including financial information. It is often seen as a more strict implementation of the Gramm-Leach-Bliley Act. The act herein constitutes that financial information must be maintained within one financial entity, restricting access to other financial entities based on affiliation.
In the case of bitcoin transactions, any financial business conducting transactions on the blockchain on behalf of customers unavoidably shares customer’s financial information with other financial entities — namely anyone able to view a block explorer — as, again, the blockchain is a public ledger. Restricting the use of privacy technologies such as blinded e-cash or CoinJoin for businesses herein directly violates the relevant sections of the California Privacy Act.
The Digital Asset Anti-Money Laundering Act further violates the California Privacy Rights Act of 2020 which constitutes that businesses must obtain permission through a parent or guardian to collect data on individuals below the age of 16; a regulation unenforceable with the restriction of privacy tools as the age of Bitcoin users cannot clearly be distinguished in the bulk collection of chain analysis data.
The Privileges and Immunity Clause is part of the U.S. constitution, governing the freedom of movement. In 1869’s Paul v. Virginia, the court ruled that U.S. persons must retain the “right of free ingress into other States, and egress from them,” leading to the creation of this clause. With the restriction of the obfuscation of the origin of funds, as well as restrictions regarding the obfuscation of senders and receivers, the Digital Asset Anti-Money Laundering Act directly opens individuals up to arbitrary restrictions on their freedom of movement, as no individual is able to cross state lines without purchasing the necessary means, such as gas or train tickets.
The ramifications of fully surveillable means of payment on individuals’ freedom of movement have been clear most recently through protests in Hong Kong, during which protestors were identified by the times and places where their train tickets were purchased with digital means of payment.
For these reasons, it can further be argued that the Digital Assets Anti-Money Laundering Act infringes on articles 18, 19 and 22 of the 1966 International Covenant on Civil and Political Rights, which govern individual’s right to protest and freely assemble, as well as Article 11, which governs the right to free association, and Article 9, which governs the freedom of religion, as neither of these rights are effectively enactable by the individual’s side without a private form of payment.
In addition, for the reasons above, the Digital Asset Anti-Money Laundering Act violates Article 13 of the Universal Declaration Of Human Rights, which constitutes the right to freedom of movement, stating that any human must retain the right to leave any country and return to their own countries, as well as Article 12, which states that no one should be made subject to arbitrary interference with their privacy.
Section three, part d of the Digital Asset Anti-Money Laundering Act proposes the enabling of total surveillance of anyone using bitcoin as a currency under the pretense of anti-money laundering regulations. Yet, the Chainalysis crypto crime report of 2021 found that illicit activity in cryptocurrency use had reached an all-time low as volumes reach all-time highs, clearly rendering the proposed prohibitions of privacy technologies in cryptocurrency as arbitrary, therefore constituting a clear violation of Article 12.
It additionally violates the Right to Financial Privacy Act (RFPA), a federal law under which governments must obtain consent of the customer to access financial information, another regulation which would become virtually non-enforceable with the restriction of privacy tools and services and the enabling of bulk surveillance of Bitcoin users. While the RFPA was amended by the Patriot Act in 2001 to include the compelling of disclosures of requested information to intelligence and counterintelligence agencies for any investigation related to terrorism, the bulk surveillance of all cryptocurrency users can hardly be argued under the Patriot Act, in light of a $15.8 trillion market cap at a rate of an associated illicit transaction volume of 0.15%.
As pointed out by the non-profit research and advocacy center Coincenter, the Digital Asset Anti-Money Laundering Act may additionally be in violation of the fourth amendment of the US constitution, as it orders the warrantless surveillance of cryptocurency users through developers and miners while serving no purpose towards their operations.
It can be suggested that that Sen. Warren spends less time attempting to regulate technology that she clearly does not understand and more time learning about existing financial regulations. She would further be well advised in refraining from attempting to violate her constituents’ constitutional rights and instead put her effort toward protecting them. After all, that’s what we pay her for.
This is a guest post by L0la L33tz. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Rikki, author and co-host of the “Bitcoin Italia,” and “Stupefatti” podcasts. He is one half of the Bitcoin Explorers, along with Laura, who chronicle Bitcoin adoption around the world, one country at a time.
A few days before this writing, El Salvador’s president Nayib Bukele announced an immense police operation. San Salvador’s satellite city of Soyapango was surrounded by 8,500 military and 1,500 police officers, who went searching from house to house for gang members still hiding in the area. More than 150 arrests were counted.
Soyapango represents one of the most difficult realities for the country. With 300,000 inhabitants, it is home to several “comunidades,” the name used locally to define slums or “favelas,” if you prefer.
The news of the police operation hit me hard because, only two days before, I had visited two different neighborhoods in that very city: the extremely poor Ciudad de Dios, which stands on an old garbage dump, and the violent Santa Lucia, one of the historical lairs for criminal gangs.
My visit was carefully planned well in advance and the only reason it was possible for me to even enter these places was that the “pandilleros,” the gangsters, have been hit hard by the government crackdown in recent months, a direct result of the upsurge in clashes between rival gangs that had bloodied the country again earlier this year.
Had I tried to enter a year ago, my own life would have likely been in danger. Nevertheless, as a precaution, I had a local driver, only rarely was I allowed out of the car, and we were escorted by a person known in the neighborhood who rode ahead of us on a motorcycle. Our guide was from those streets, had lived for five years under a bridge and had a history of drug addiction, from which he recovered with the help of the community.
It was an enlightening day for me and a necessary one.
Solving Extreme Poverty
My reason for visiting these places to report on them comes from a conversation I had recently with a rather famous Bitcoiner: a developer who is well educated and highly intelligent and has been in the industry for many, many years. Well, his thesis is that El Salvador is not really as poor as people would have you believe, but rather an economically-backward country where the incidence of extreme poverty is not unlike that of far more developed nations.
Yet it is true that many of the Bitcoiner tourists who come here believe it is the lady selling pupusas on the street corner who is poor. She is not. That lady is an entrepreneur. She has a store, a business. The lady, despite the plain clothes creased by hard work, is lower-middle class in El Salvador. Poverty, the real kind, is hidden in huge neighborhoods made of tin houses, without running water, sewage or electricity. Invisible cities, where no one goes and that no one talks about.
This is a serious mistake.
If we want Bitcoin to succeed here, we must also improve the living conditions of these people. Because they are the ones who need it the most and because it is their poverty, as the police operation of the last few days showed us, that directly fuels crime.
The Bitcoiners who come to El Salvador dreaming of a freer nation than the one from which they escape, the entrepreneurs who want to invest here, must understand that among their priorities must be the inclusion of those living in the slums of Soyapango, otherwise it is their very future here, it is their very investments, that are in danger. Indeed, the military solution to the gang problem can only be a temporary palliative. Crime feeds on the slums. This is where bosses recruit new thugs, this is where they sell drugs and profit, this is where they live, rule and hide. If we don’t solve the problem of extreme poverty in El Salvador, the gangs will keep coming back, more dangerous and better organized than before, and El Salvador will never be a truly safe country.
The footage I shot in the slums of Soyapango is a blow to the stomach. But I think it was also necessary to show our community this side of El Salvador, which is too often forgotten.
My Last Days In El Salvador
I’m writing this during my last days in El Salvador — soon I will move to Guatemala to report on a different nation, with a completely different attitude toward Bitcoin and many local communities trying to use this technology to improve their lives. It is time, therefore, to take some stock.
As I have extensively documented, Bitcoin adoption in El Salvador is slowing down. There are many merchants who have stopped accepting BTC as a form of payment. The reasons they always give have been twofold: Bitcoin is too complicated and there is a lack of volume. Very few want to pay this way.
While we have already shown how too much complexity is to blame for the shortcomings of the Chivo wallet, the second problem is far more serious and delicate. On the one hand, there are the citizens of El Salvador who earn and spend dollars — a strong currency, not a victim of serious inflation — and they view digital payments with suspicion. On the other, however, there are the encouraging data that tell of a strong increase in tourism in this country, also related to the many Bitcoiners who come here to visit the country of BTC legal tender.
But if there are thousands of Bitcoiners coming to visit, how is it possible that the volume of BTC transactions in the streets is not increasing? Maybe we are not numerically sufficient?
Maybe. But I think the problem is also another one.
Let me give you an example: A few weeks ago, outside the Mi Primer Bitcoin graduation ceremony in the small town of Ataco, I met a Spanish gentleman who had come to the country specifically for Bitcoin. Tall and grizzled, in his 40s, he was helping this association that educates very young people in El Salvador about Bitcoin. He was an examiner, one of the “experts” called upon to assess the children’s preparation. Wearing a Bitcoin Beach cap and Bitcoin t-shirt, with a lean and tanned physique, he appeared to be a typical fanboy, in appearance.
We lingered talking outside of the school and I happened, almost by accident, to mention how I was a bit disappointed with the worsening adoption of Bitcoin among people there.
It was at this point that he started telling me how he himself, strong, in perfect Spanish, always asks whenever he buys something if he can pay in bitcoin. But when he gets an affirmative answer, he starts investigating with the merchant to figure out exactly what they are going to do with the satoshis he would be sending him. Basically, it’s an interrogation. If the poor merchant responded that they wanted to keep the sats for the future, then they will receive some from the experienced Western Bitcoiner via a Lightning transaction. But if they instead admits that they want to exchange or receive the bitcoin directly in dollars, then this Westerner gives up using bitcoin and pays directly in fiat.
Can you see how idiotic that is? It makes no sense at all.
I thought that our mission in El Salvador was to incentivize adoption as much as possible, to help these people through a new and alternative economic system. But no! Now we even demand that they be HODLers. Otherwise they are not worthy of our bitcoin. This is a creepy mindset and pure selfishness.
When I pointed out to him that the future of these people also depends on the success of bitcoin in the country and that perhaps his attitude is a bit selfish — because after all, we can sacrifice a few thousand satoshi to incentivize adoption, even if they are converted to dollars — he went on a rampage and started screeching that he lives in El Zonte and that all of his friends are the poor in the village and that he cares about the fate of them all.
Evidently, however, not enough to sacrifice a few dollars in sats.
And, mind you, there are many other people who think like this. I have seen plenty of Bitcoiners here paying in cash or with their flaming credit cards. We are all familiar with the narrative behind this gesture: “Bitcoin are not to be spent. HODL to the death. Bitcoin will be worth billions, it’s not like they’re being spent today. We wouldn’t want to end up like that fool Laszlo!”
Too bad that Bitcoin’s success in El Salvador is also linked to transaction volume and that if we win our battle in this country, the value in bitcoin’s markets will be positively affected, to the benefit of our entire community. So evidently, we all want bitcoin to gain in value, but only a few are willing to sacrifice a handful of satoshis to really contribute to the ultimate victory. How boorish and selfish.
I mean this in no uncertain terms: At the risk of angering someone, if you come to visit this country for Bitcoin and you are not willing to pay in bitcoin, do El Salvador a favor, stay home.
PS
I saw the guy again a few weeks later in El Zonte, comfortably seated, eating a shrimp cocktail, peering out to sea at Palo Verde, one of the most exclusive resorts in the village. It is one of those places that his “so many poor friends” cannot even afford to look at from a distance.
PPS
Laszlo Hanyencz is a hero and has gone down in the history books, unlike all of those who consider him a fool.
This is a guest post by Rikki. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
NEW YORK, Dec 14 (IPS) – The writer is former Under-Secretary-General and High Representative of the United Nations, former Ambassador of Bangladesh to the UN and former President of the Security Council.As COP27 was coming to a close, the leader of the Youth Constayituency of UNFCCC declared in an emotion-choked voice that “Incredible young people from the global North and the global South are standing together in solidarity asking for action. We need to look for more than hope. We need those in power to actually listen and implement the solutions”.
Action for implementation is the clarion call of the younger generation to tod’s decision-makers. It would be prudent to listen to the future decision-makers in the best interest our people and planet.
SDGs, G20 & GOAL 5 ON GENDER EQUALITY:
First, G20 Declaration last month in Bali, Indonesia resolved, “We will demonstrate leadership and take collective actions to implement the 2030 Agenda for Sustainable Development and accelerate the achievement of the SDGs by 2030 and address developmental challenges by reinvigorating a more inclusive multilateralism and reform aimed at implementing the 2030 Agenda.”
As we get energized by this commitment of the G20 leadership, a sobering UN Women 2022 research report tells us that the world is not on track to achieve Sustainable Development Goal 5 – in fact it is almost 300 years off. Our planet absolutely require the full and equal participation of women and girls, in all their diversity.
Ambassador Anwarul K. ChowdhuryWithout gender equality, there is no climate justice. Gender equality is the crucial missing link in the achievement of the 2030 Agenda and the Sustainable Development Goals, in particular Goal 5. Let us always be deliberate and consistent in ensuring space for young women and girls who have been leading global and national climate movements.
Only an estimated 0.01 per cent of global official development assistance addresses both climate change and women’s rights. The necessary structural measures require intentional, meaningful global investments that respond to the climate crisis and support women’s organizations and programmes. Astonishingly, less than 1 percent of international philanthropy goes to women’s environmental initiatives. That must change.
IGNORANCE OF WOMEN’S CONTRIBUTION:
Second, activists express frustration saying that “Gender is still largely seen as an isolated issue that is discussed in a room away from the main debates about mitigation, financing, and technology. Thus, it does not appear to be an issue integrated within the intersecting policies of different ministries.
This reinforces the ignorant notion that women in all their diversity are neither key actors nor agents of change but merely victims of the climate crisis.” That mindset should go as it results in the continuation of patriarchal hegemony.
Women’s and girl’s full and equal participation in decision-making processes is a top priority in the fight against climate change. Without gender equality today, a sustainable, more equal future remains beyond our reach. Give power and platforms to the next generation of Earth champions. As has been said recently, “Our best counter-measure to the threat multiplier of climate change is the benefit multiplier of gender equality.”
COPs ARE NOT FOR FOSSIL FUEL LOBBY:
Third, the current process continues to fail to meet the urgency and clarity of purpose that science and experience are calling for—a full-scale, just, equitable and gender-just transition away from a fossil fuel based extractive economy to a care and social protection centered regenerative economy.
Globally, for every $1 spent to support renewable energy, another $6 are spent on fossil fuel subsidies. These subsidies are intended to protect companies and consumers from fluctuating fuel prices, but what they actually do is keep dirty energy companies very profitable. We are subsidizing the very behavior that is destroying our planet.
The UN should not allow future COPs to be an open platform for the presence of the fossil fuel lobby. Concrete action is needed to stop the toxic practices of the fossil fuel industry that is causing more damage to the climate than any other industry.
CHILDREN & YOUTH ‘RECOGNISED’ AS AGENTS OF CHANGE:
Fourth, the full impact of climate change on kids is becoming clearer and more alarming. Children’s developing brains and growing bodies make them particularly vulnerable. The very experience of childhood is at risk. Research reports concluded that with the increasing frequency and severity of climate crisis, young children are at risk of severe trauma during the period of life when neural connections in the brain are forming and susceptible to disruption. Reports found that “This trauma can have lifelong impacts on learning, health, and the ability to form meaningful relationships.”
Bearing this in mind, a much-needed step was taken at COP27 by recognizing “the role of children and youth as agents of change in addressing and responding to climate change”. It also encouraged “Parties to include children and youth in their processes for designing and implementing climate policy and action, and, as appropriate, to consider including young representatives and negotiators into their national delegations, recognizing the importance of intergenerational equity and maintaining the stability of the climate system for future generations.”
The decision expressed appreciation to COP27 Presidency “for its leadership in promoting the full, meaningful and equal participation of children and youth, including by co-organizing the first youth-led climate forum (the Sharm el-Sheikh youth climate dialogue), hosting the first children and youth pavilion and appointing the first youth envoy of a Presidency of the Conference of the Parties and encourages future incoming Presidencies of the Conference of the Parties to consider doing the same.” It would be more meaningful if the hard-headed negotiators and fossil-fuel lobby were exposed to the children and youth events at the main conference hall at COP27. Hopefully COP28 would arrange for that to happen.
HUMAN RIGHT TO A CLEAN, HEALTHY, AND SUSTAINABLE ENVIRONMENT:
Fifth, another positive outcome at COP27 is the first multilateral environmental agreement to include an explicit reference to the human right to a clean, healthy, and sustainable environment. This should open a path for this right to be recognized across all environmental governance and also codified by the United Nations.
STRONG CIVIL SOCIETY PARTICIPATION NEEDED:
Sixth, key civil society leaders were critical of their exclusion complaining that “Observers were consistently locked out of the negotiation rooms for a repeated ‘lack of sitting space’ excuse … We have also witnessed painful orchestration of last-minute decisions with few Parties.” They alerted the organizers and hosts of future COPs by saying that “This needs to be called out and ended.”
Strong civil society organizations are a critical counterbalance to powerful state and corporate actors. They help to keep governments accountable to the people they are meant to serve –– both key to climate action that prioritizes the wellbeing of people and planet.
ECOFEMINISM IS THE WAY AHEAD:
Seventh, bringing together feminism and environmentalism, ecofeminism argues that the domination of women and the degradation of the environment are consequences of patriarchy and capitalism. Ecofeminism uses an intersectional feminist approach when striving to abolish structural obstacles that prevent women and girls from enjoying equal and livable planet. This is a smart and inclusive policy not only for women, but for the humankind as a whole.
Vandana Shiva, one of the world’s most prominent ecofeminist, propounds, “We are either going to have a future where women lead the way to make peace with the Earth or we are not going to have a human future at all.” Any strategy to address one must take into account its impact on the other so that women’s equality should not be achieved at the expense of worsening the environment, and neither should environmental improvements be gained at the expense of women. Indeed, ecofeminism proposes that only by reversing current values, thereby privileging care and cooperation over more aggressive and dominating behaviors, can both society and environment benefit.
FOOD FOR RETHINKING: ELITIST MULTILATERISM CANNOT DELIVER:
Civil society representatives at COP27 verbalized their anger by announcing that “Even as we call out the hypocrisy, inaction and injustice of this space, as civil society and movements connected in the fight for climate justice, we refuse to cede the space of multilateralism to short-sighted politicians and fossil-fuel driven corporate interests.”
Patricia Wattimena of Asia Pacific Forum on Women, Law and Development pushes the point further to say, “We can’t keep on negotiating people’s rights at global climate talks. The rich must stop commodifying our rights especially women’s human rights and start paying for their ecological debt.”
With the 2030 deadline for SDGs knocking at the door, the call in the Bali G-20 Summit declaration for “inclusive multilateralism” is a timely alert to realise that current form of multilateralism dominated by rich and powerful countries and well-organized vested interests, on most occasions working with co-aligned objectives, cannot deliver the world we want for all. That elitist multilateralism has failed.
Minimalistic, divisive, dismissive, and arrogant multilateralism that we are experiencing now gives honest multilateralism a bad name. Multilateralism has become a sneaky slogan under which each country is hiding their narrow self-interest to the detriment of global humanity’s best interest. It is a sad reality that these days negotiators play “politicking and wordsmithing” at the cost of substance and action.
Multilateralism – as we are experiencing now – clearly shows it has lost its soul and objectivity. There is no genuine engagement, no honest desire to mutually accommodate and no willingness to rise above narrow self-interest-triggered agenda. It has become a one-way street, a mono-directional pathway for the rich and powerful. Today’s multilateralism needs redefining!
In this article, I enumerate the costs of setting up and running a node in Nigeria, informed by my experience of running one over the past couple of years. I also offer some cost mitigating suggestions to hopefully encourage more participation on the bitcoin network.
Before exploring the costs involved: What is a bitcoin node?
A bitcoin node is software that connects to the Bitcoin peer-peer network. A node receives, validates and broadcasts transactions/blocks to other nodes on the network, according to the network rules. Ted Stevenot concisely described nodes as the messengers and rule keepers of Bitcoin.
The broadcast blocks are part of a distributed ledger which contains records of each transaction, keeps track of bitcoin ownership and the corresponding amount owned. This publicly shared ledger is generally known as the Bitcoin blockchain.
A Bitcoin node is usually run on portable single-board computers (SBCs) like the Raspberry Pi, or on a personal computer. However, a node can also be run in a virtual machine or on a smartphone. Bitcoin Core is the most widely used bitcoin node software and can be downloaded here.
Nodes can either be full or light:
A full node stores a full copy of the blockchain and verifies every transaction and block, from the first block — the genesis block — against the consensus rules. Consensus rules are specific rulesets enforced by full nodes to determine the validity of a block and its transactions.
There are two types of full nodes: archival nodes and pruned nodes. Archival nodes store the entire blockchain locally and relay it to other nodes, this also helps to bootstrap new ones. Meanwhile, a pruned node only saves a specified minimum number of blocks as it verifies transactions and blocks. Therefore, more computer disk is saved by pruned nodes compared to archival nodes. However, pruned nodes are unable to serve the entire blockchain to other nodes.
A light node does not enforce the consensus rules and relies on third party run full nodes to receive block data, which involves a privacy trade-off.
Full nodes will be the main focus of this article — any mention of “node” hereafter implies a full node unless explicitly stated.
Why Run A Node?
There are personal and network benefits to running a node. Some of these include:
Privacy when broadcasting transactions, verifying bitcoin received in your wallet, and exploring blockchain data, without third parties logging your personal information.
Strengthening the Bitcoin network. The more nodes on the network, the more decentralized and resilient Bitcoin is against malicious parties, jurisdictional restrictions or black swan events.
Increasing your understanding of how the bitcoin network operates and sharing this acquired knowledge with others.
With some of the benefits outlined, let’s analyze the costs of running a node from a Nigerian perspective.
Hardware
The common hardware, that meet the minimum requirements, used to run a bitcoin node on are either:
Plug and Play nodes or
Do-It-Yourself (DIY) nodes.
Plug And Play Node
Some bitcoin companies offer plug and play full node products that run on SBCs like the Raspberry Pi, RockPro64 and Rock Pi4, and mini PCs like the Intel NUC and Librem Mini. Some of these node providers are:
Node prices range from $300 to $700 — excluding shipping ($100 minimum to Nigeria) and customs duty — dependent on hardware and storage size. Currently, international purchases made on most Nigerian Naira debit cards are limited to $20 per month, a reduction from a previous $100 limit. Your node purchase options are to use a dollar debit card — tied to a domiciliary account — with deposited dollars obtained from the black market (currently 70% above the official rate), use a virtual dollar card which offers convenience but at a higher rate than the black market, and bitcoin.
There are other obstacles you might encounter in purchasing a node. Firstly, not all node providers ship to Nigeria. Additionally, due to chip shortages, some of these products are out of stock. One way of surmounting some of these hurdles is employing the alternative availed by node providers of sourcing node components yourself, and installing their respective bitcoin core embedded software on your assembled node.
DIY Node
In sourcing hardware components, we’ll only consider SBCs as they are cheaper than mini-PCs. The hardware components required to run an SBC node are:
SBC + power supply
SD card + reader
SSD + enclosure
Heatsink case/fan
The current chip shortages and high demand for single board computers have led to a massive increase in prices and supply deficits, Raspberry Pis in particular both locally (used and new) and internationally. However, some Raspberry Pis and RockPro64s are available on Aliexpress. Regardless, there are some fake sellers on the platform, you need to be especially wary of newly created stores, read negative reviews and request a refund if an item does not arrive within the estimated period.
Considering the international purchase limit on Naira debit cards, these SBCs will need to be purchased using a dollar card — there is no bitcoin purchase option. The table below summarizes average hardware component costs from Aliexpress, for building new Raspberry Pi or RockPro64 nodes.
Data
Before a node is able to perform its role as a messenger and rule keeper on the bitcoin network, it needs to be synchronized with other nodes on the network. This is done by downloading and verifying all the blocks from the genesis block in a process known as the Initial block download (IBD). Currently, the bitcoin blockchain is approximately 440 GB in size.
The following table summarizes the average data costs, from network providers, for the IBD and roughly 5.3 GB required monthly to sync your node with the blockchain. An assumption is made that you reside in an area with somewhat reliable 4G network coverage.
Power
To simplify the power cost analysis, the assumption is made that you live in a region with no electricity (at least 80% of the time in my location) and will need a solar generator to power the node and router, which isn’t ideal as it’s weather dependent. Replicating something similar to Chimezie Chuta’s Spacebox incurs the subsequent mean costs.
Finally, the estimated full node setup costs is tabulated below.
In Conclusion
Running your own Bitcoin node has a lot of benefits, some of which were listed earlier on. However, with ongoing chip shortages, inflation and node setup costs (despite the assumptions and cost-cutting recommendations made herein), running a node might not be feasible for everyone. One practical solution would be to implement Arman The Parman’s circle of trust idea or Obi Nwosu’s guardians and users model of having a technical individual run a node for a trusted group of people like close friends, a family or community. This approach does involve a trade off, but is much better than connecting to third party nodes and helps in easing bitcoin’s custody challenge.
This is a guest post by Chinedu. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Pierre Rochard, the Vice President of Research at Riot.
Ben Sixsmith has published a thoughtful piece in The Spectator entitled “Saying Goodbye To The Crypto Nerd Utopia,” providing an outside perspective on the crisis facing the broader crypto economy.
While there’s a lot I agree and disagree with in his piece, I’ll focus on the primary line of reasoning: Bitcoin is one of many cryptocurrencies, cryptocurrencies have no intrinsic value, and cryptocurrencies are speculatively traded on exchanges like FTX; therefore, the scandalous collapse of FTX reveals that Bitcoin is no better than the status quo.
The first paragraph in Sixsmith’s piece establishes the conflation of Bitcoin and crypto: “The value of Bitcoin, Ethereum and Luna crashed in May.”
At first glance, this assertion may seem uncontroversial, all three of these assets rely on cryptography and varying degrees of decentralization, and all three of these assets experienced sharp declines in trading prices on exchanges. On the other hand, if we look at their underlying open-source software, we see radical differences:
Bitcoin’s protocol is specifically configured for minimizing uncertainty with conservative parameters and a constrained feature set, and its simple ledger architecture results in supply auditability of BTC.
Ethereum is optimized for cutting-edge experimentation and a wide range of programmable features, but its complex ledger architecture results in an unauditable supply of ETH.
Putting all three of these assets into a single “crypto” bucket is reductive — they are different technologies optimizing for different outcomes. Bitcoin has accomplished long-term network stability — you could have run the same node software continuously for the past decade without any problems. The same cannot be said for Ethereum node software, which completely changed its consensus mechanism in September 2022. This change was only able to occur because the Ethereum Foundation has a unique centralized role in designating the official staking contract. Ethereum has to be more centralized than Bitcoin to push through aggressive “upgrades” to its protocol. Bitcoin has no such centralized operator or authority, and its consensus rules are unofficial: a spontaneous, inter-subjective, network-wide agreement among the users.
To address the second element in Sixsmith’s line of reasoning: the intrinsic value of holding any form of money is that you are minimizing uncertainty by hedging against unpredictable future cash flows. In the fiat system, the least-uncertain assets are physical cash and government-insured bank accounts; however, even those are subject to the fiat power of the governments issuing such currencies and insuring those bank accounts — that is, your money is only as good as the applicable government’s promises.
Setting aside Bitcoin’s exchange rate, on a fundamental engineering level, holding BTC with your own private keys and verifying the ledger with your own node results in less uncertainty than holding even physical cash or an insured bank account. That is bitcoin’s intrinsic value. While the spot price/purchasing power of BTC can be subject to the whims of market forces, the uncertainty-minimizing principles of how to receive, hold and send BTC have not changed since its inception. Thus, you can be certain that the smart contracts locking your BTC will execute as written, so that only a signature from your private keys can move your money.
The third element addressed in Sixsmith’s piece relates to the speculative trading of cryptocurrencies on exchanges. Exchanges operating in the United States are legal entities subject to U.S. laws governing exchanges and are subject to compliance with both state and federal money transmitter, custodian and investor protection regulations. They are regulated federally by the Commodity Futures Trading Commission, the U.S. Securities and Exchange Commission and/or the Financial Crimes Enforcement Network, and they have clear terms of service and user agreements. Even an “offshore” exchange in the Bahamas is accountable to the English Common Law. To label these entities as “crypto” exchanges obfuscates their centralized fiat nature.
Sixsmith states, “…we knew that crypto-currencies were not a surefire route to freedom and independence when their value hinged on the good sense and morals of a bunch of weird nerds online.”
While humorous, this statement conflates Bitcoin’s value with the (mis-)management of fiat/crypto exchanges; akin to questioning the value of tomatoes because a supermarket went bankrupt. Furthermore, there’s nothing inherent about BTC that would necessitate leaving it at a fiat exchange, vulnerable to theft. It is harder and riskier to properly secure and use an exchange account’s password than it is to do so with BTC private keys. Furthermore, there are bitcoin-only brokerages that encourage or require the delivery of BTC directly to the client’s keys. Countless individuals and businesses receive BTC not as a trade for fiat, but as revenue for goods and services. The continued development of a circular economy will lessen the need to ever exchange for fiat.
In conclusion, despite adjacent cryptocurrencies and fiat exchanges that are centralized and unreliable, Bitcoin is a decentralized and reliable alternative monetary system. Bitcoin’s vision for the future is not utopian or idealistic, rather it is simply looking at the past decade of successful adoption, noting that Bitcoin’s fundamental properties have only improved, and projecting out continued growth. Perhaps the bottleneck in Bitcoin’s adoption is peoples’ understanding of what differentiates Bitcoin from fiat and crypto.
This is a guest post by Pierre Rochard. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Following a sharp and sustained rise in interest rates, U.S. stocks have taken a broad beating this year.
But 2023 may bring very different circumstances.
Below are lists of analysts’ favorite stocks among the benchmark S&P 500 SPX,
the S&P 400 Mid Cap Index MID
and the S&P Small Cap 600 Index SML
that are expected to rise the most over the next year. Those lists are followed by a summary of opinions of all 30 stocks in the Dow Jones Industrial Average DJIA.
Stocks rallied on Dec. 13 when the November CPI report showed a much slower inflation pace than economists had expected. Investors were also anticipating the Federal Open Market Committee’s next monetary policy announcement on Dec. 14. The consensus among economists polled by FactSet is for the Federal Reserve to raise the federal funds rate by 0.50% to a target range of 4.50% to 4.75%.
A 0.50% increase would be a slowdown from the four previous increases of 0.75%. The rate began 2022 in a range of zero to 0.25%, where it had sat since March 2020.
A pivot for the Fed Reserve and the possibility that the federal funds rate will reach its “terminal” rate (the highest for this cycle) in the near term could set the stage for a broad rally for stocks in 2023.
Wall Street’s large-cap favorites
Among the S&P 500, 92 stocks are rated “buy” or the equivalent by at least 75% of analysts working for brokerage firms. That number itself is interesting — at the end of 2021, 93 of the S&P 500 had this distinction. Meanwhile, the S&P 500 has declined 16% in 2022, with all sectors down except for energy, which has risen 53%, and the utilities sector, which his risen 1% (both excluding dividends).
Here are the 20 stocks in the S&P 500 with at least 75% “buy” or equivalent ratings that analysts expect to rise the most over the next year, based on consensus price targets:
Most of the companies on the S&P 500 list expected to soar in 2023 have seen large declines in 2022. But the company at the top of the list, EQT Corp. EQT,
is an exception. The stock has risen 69% in 2022 and is expected to add another 62% over the next 12 months. Analysts expect the company’s earnings per share to double during 2023 (in part from its expected acquisition of THQ), after nearly a four-fold EPS increase in 2022.
Shares of Amazon.com Inc. AMZN
are expected to soar 50% over the next year, following a decline of 46% so far in 2022. If the shares were to rise 50% from here to the price target of $136.02, they would still be 18% below their closing price of 166.72 at the end of 2021.
You can see the earnings estimates and more for any stock in this article by clicking on its ticker.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Mid-cap stocks expected to rise the most
The lists of favored stocks are limited to those covered by at least five analysts polled by FactSet.
Among components of the S&P 400 Mid Cap Index, there are 84 stocks with at least 75% “buy” ratings. Here at the 20 expected to rise the most over the next year:
Among companies in the S&P Small Cap 600 Index, 91 are rated “buy” or the equivalent by at least 75% of analysts. Here are the 20 with the highest 12-month upside potential indicated by consensus price targets:
This is an opinion editorial by Roy Sheinfeld, the cofounder and CEO of Breez, a Lightning Network mobile app.
Ready for a hot take? Check this: Money has no inherent value. And, besides being a special kind of money that allows for disintermediated transfers, the same applies to bitcoin.
As banal as it may sound, money is just a means to an end. As a matter of fact, it’s a means to any number of ends. And those ends are what matter. Money — whether dollars, satoshis or the rai stones of Yap — is not valuable for what it is, but for what it lets us do. We transform money into experiences, and experiences are what make a life, not ledger entries. Everything else is bank propaganda devised to generate interest.
As long as it’s “just” a store of value, bitcoin is even further removed from the ends that matter (unless watching charts is your thing). At least by turning bitcoin into a medium of exchange that can be traded for those valuable experiences, the Lightning Network moves bitcoin closer to what matters.
In fact, here’s a general postulate: bitcoin’s value is inversely proportional to the friction between the blockchain and the experiences it enables. Lightning was one big step in reducing that friction, and Lightning itself has taken several steps in the last four or so years to diminish it further, including:
Mobile Lightning nodes
On-the-fly channel creation
Zero-confirmation channels
LSPs to manage users’ connectivity and liquidity
Still, though it’s painful to admit, there remains more friction in non-custodial Lightning than in the best custodial and fiat solutions, and users will choose whatever gets them to those experiences faster and easier.
Less friction means moving bitcoin closer to creating experiences, which means more value in bitcoin and in life.
For more joy, reduce friction. (Image: Berry College).
The First Key To Reducing Friction: P2P Interaction
The peer-to-peer (P2P) economy refers to disintermediated exchange, like creative people trading the fruits of their creativity — podcasts, videos, fanfic novels, 3D-printed cosplay accessories — with users for cash, without the intervention of banks, payment processors or aggregators.
Each intermediary in an interaction induces friction and increases the distance from the desired experience, and they can’t help it. Banks have to placate shareholders and regulators and make a profit. Aggregation platforms have to placate shareholders and regulators and make a profit. Payment processors have to placate shareholders and regulators and make a profit.
Notice the pattern? While each intermediary claims to be giving people what they want, they’re actually serving different groups who want different things at the same time. That intermediaries always take a cut, induce friction and increase the distance between people and experiences isn’t the result of bad management or evil intentions, it’s just the nature of the beast.
So, why not create something far better for users? Let people interact directly, pay each other directly, exchange goods and services directly. There are even services out there — social networks, messaging services, content aggregators, gaming platforms — that would like to facilitate transactions among their users, but they can’t because legacy intermediaries induce too much (financial, regulatory, UX) friction. Worse still, the centralization induced by these large data networks increases their power over each user and, therefore, increases the risk of abuse to all users.
The P2P economy isn’t some billionaire’s pipe dream; it describes a world where we’re closer to the experiences we value and to each other. That’s what Lightning was made for. We just need to make it happen.
Web 2.0 interaction is you paying a conglomerate with money controlled by someone else; the P2P economy is just two people trading ideas, goods or a laugh for some P2P cash. (Image: Brooke Cagle).
The Second Key To Reducing Friction: Fitting The Right Application To The Experience
A lesson we’ve drawn from developing Breez is that different kinds of experiences (ends) need different payment interfaces (means). For example, the point-of-sale (PoS) terminal and podcast player that are included in our app are meant to feel like their own little self-contained interfaces, tailor-made for their respective purposes (or as close as we could get with the technological limitations of running a node on a phone).
But you can only cram so many activities and experiences into a non-custodial Lightning payment app. And, however clever, charming and good looking a team behind the payment app may be, they’re not necessarily best placed to devise new ways of applying P2P payments to new types of experience. We know how to make Lightning mobile and how to improve its UX, but when it comes to commerce, music, video streaming or any other vertical solution, experts in those fields know better how to craft the best experience.
Indeed, the PoS mode and the podcast player are just scratching the surface of what’s possible. We implemented them according to the KISS principle. Though they have scaled and attracted new users, they’re basically demo versions implemented to showcase how people interface with the P2P economy.
Could others with fine-grained expertise of those and other kinds of experience come up with better ways to apply P2P money to P2P interaction? Of course they could. And would those better applications achieve scale that our neophyte, outsider attempts never could? Absolutely.
And that’s the point. The better we apply the tech, the closer people get to the experiences they want, the more they will use the tech, the faster Lightning will scale. The scale we’re aiming for is not X orders of magnitude; we’re shooting for a world where kids roll their eyes whenever an adult says “Back in the fiat days…”
Achieving scale is a matter of reducing friction, and multiple, tailor-made apps that apply Lightning technology optimally to life’s many worthwhile pursuits is the best way of minimizing friction and expanding the P2P economy. It’s not about making the best wallet that can do everything; it’s about adapting Lightning — the means — to whatever end users want and whatever kinds of experience they want in exchange.
Those who understand the technical requirements of running a non-custodial Lightning app will have realized already that adapting Lightning payments to any number of existing and yet-unimagined applications is incompatible with running a node in a single app. Lightning is far too technically demanding to scale the P2P economy as we have described it. Running the kind of always-on node required is an experience that few users, developers, creators or vendors out there will relish.
We’re envisioning Lightning as a Service (LaaS). LaaS is about using Lightning to remove friction from life, from the experiences we crave. The point isn’t to improve the user experience in the app, but to improve the users’ experience of Lightning as a whole that gives them more value in their lives.
And LaaS is doable. Our vision for LaaS has three major components:
1. A Lightning Software Development Kit (SDK)
As it stands, anyone seeking to integrate Lightning payments to their existing business faces a steep learning curve. Accepting payments over Lightning requires them to run a node, secure liquidity with a Lightning service provider (LSP), manage fiat exchanges, perform swaps on and off the Bitcoin blockchain, manage a wallet, and so on. A non-custodial SDK would give P2P entrepreneurs and existing web utilities access to those functions without having to start from scratch.
With a well-designed SDK, developers could select the Lightning functions they need from a menu and integrate them quickly and easily into their own applications. Instead of having to learn the Lightning tech stack, a Lightning SDK will let developers simply plug it into their own tech stacks.
2. Hybrid Architecture
Lightning needs to be immediately available wherever and whenever people want to make payments. Locking a user’s functionality into a single app or on a single device would require the user to adapt to the technology, which is backwards. That’s friction.
At the same time, though, KYC friction and global, cross-market expansion requires a P2P, non-custodial solution. As soon as LSPs start acting like banks, regulators will start treating them like banks. That’s friction too.
The solution is a hybrid architecture based on sovereign remote nodes, but that locates those nodes in the cloud rather than on users’ local devices. Any service could access these nodes from any device, but as long as the users’ keys are locally stored, users would maintain custody of their own funds, minimizing the operators’ regulatory profile.
P2P plus minimal friction equals scale.
3. Decentralizing Liquidity
There is no credit on Lightning. The liquidity to settle any transaction needs to be preloaded onto the network. While this imposes a significant liquidity burden on those seeking to process users’ payments, it also presents the rich opportunity of a snowball effect: the more liquidity the network contains, the more transactions it can process, the more transaction fees the operators can collect, the more liquidity they have to invest in the network, and so on.
“Once there are tens of thousands, hundreds of thousands, or millions of participants, and with larger average channel balances, then routing a payment from any arbitrary point to any other arbitrary point on the network becomes exponentially easier and more reliable.”
Ironically, snowballs are only possible when water is frozen, i.e., not liquid. (Image: Pauline Bernfeld).
In order to get the snowball rolling, we must distribute the burden of preloading the network with liquidity by onboarding new LSPs. By attracting LSP collaborators, we will raise the liquidity level of the network overall, turning the snowball into an unstoppable avalanche of liquidity.
A Postscript On Shortcuts And Friction
A dear, old teacher of mine always used to say, “Doing it the right way is the shortcut.” Like so much wisdom gained from experience, this was infuriating to hear as a young person, which makes it no less wise.
The thoughts above about how to scale Lightning and catalyze the exponential growth of the P2P economy never even flirt with the idea of third-party custodians. And yet I would be the first to admit that connecting users via third-party custodians would make everything so much easier. Throw together a jazzy interface for an app in a few weeks or so, have your developers implement a database in the backend to manage users’ transactions, cut everything down to a single node and a handful of big payment channels, and you’re off. Less hassle for Lightning operators, a tighter network and a shallower learning curve for Lightning users.
We could push this even further. For all its revolutionary potential, bitcoin can be a pain in the neck. Private keys can get irretrievably lost or stolen. The network needs a certain amount of energy to run. A satoshi can only be in one place at any given time, limiting financial innovation. Why not just tell everyone that we’re moving their bitcoin around, when in fact they have no bitcoin … and neither do we? Same database, same interface, infinitesimal hassle, free Lambos for everybody.
At which point we’d have to learn from our mistakes, start over from scratch, and do it again the right way. Fortunately, it’s still early days, and we can still do it right the first time. An omniscient being able to view all possible timelines would assure us that the sometimes tedious path of sovereignty and self-custody is, in fact, the shortest route to our P2P future. Though LaaS envisions a slightly different network than we have now to realize the future of Lightning, the principles and technological integrity that make Bitcoin worthwhile must remain inviolate.
Is bitcoin volatile? How does one determine volatility? How can those with diamond hands so decisively say “no,” while those stuck in the fiat mindset so emphatically say “yes”? Which one is correct? Is it just that both sides have to agree to disagree, or can both of these seeming contradictions simultaneously be true?
In Einstein’s attempt to better understand how the elapsed time of two clocks moved differently, we need to look at one of his thought experiments: Imagine two individual observers, one sitting as a passenger on a train and the other onlooking from a nearby platform. The train passenger sees two bolts of lightning strike each end of the train, the first bolt from the front of the train, and the second bolt from the rear. Meanwhile, the onlooker on the nearby platform sees the two bolts strike both the front and the rear of the train at the same time. The train passenger claims that the front strike happened before the rear strike, while the onlooker claims that the strikes happened simultaneously.
Whose perception is accurate? Can both of them be? Einstein believed that both interpretations are valid because they each have their own frame of reference.
This phenomenon led to Einstein’s theory of special relativity: different reference frames necessitate different perceptions on the simultaneity of events. Said more simply, having a different reference point changes one’s perception. Granted, this is a gross oversimplification and a narrow view of a much broader concept, but this limited scope will suffice for how it relates to the disparity in perceptions regarding bitcoin’s volatility.
In this analogy, let’s consider Bitcoiners as the passengers on the train. Due to the nature of the technology, we’re traveling at a consistent speed set by math and code. Inside this protocol, we see that one bitcoin equals one bitcoin. We can verify its scarcity with a supply hard cap of 21 million. We understand how the lack of need for trusted third parties or central authorities ensures a trustless and permissionless peer-to-peer system. We realize that a whale has no more clout over the control of the ledger than a shrimp. We know that every two weeks, the difficulty adjustment will continue to produce blocks at an estimated once every ten minutes; we grok the term “tick tock, next block.”
None of this speaks to volatility; just the opposite, in fact. All of this speaks to consistency; the consistency of the network. It speaks to our grounded perception from within a stable and secure system of value transfer over space and time. We passengers inside the train that is Bitcoin are better able to make economic decisions based on sound systemic fundamentals. This is one of the main reasons that Bitcoiners are able to have and maintain a low time preference; we’re not as susceptible to the distortions created by less-volatile systems, which leads to erratic economic behavior. Said differently, the predictability of the protocol perpetuates low time preference.
From an outside onlooker’s perspective, it’s clear that bitcoin is volatile. Their main frame of reference is not the network, but simply the asset (specifically, the BTC/USD exchange rate). When the supply of the dollar fluctuates wildly, when the cost of capital is consistently manipulated — not to mention with the competing, equally-flawed currencies attempting to claw their way out of hyperinflation — the onlooker’s perception is distorted.
This is a real-world application of Wittgenstein’s Ruler, a concept which states that, “Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler.”
Fiat onlookers’ view of bitcoin the asset are obfuscated by their frame of reference, which is to say, an unnecessarily convoluted one.
What’s worse is that, because of this perceived volatility, onlookers are disincentivized to take a deeper look into Bitcoin the network. They find comfort in the known. They’re unwilling to do the work to understand why their arbitrarily-chosen system is flawed. As Jeff Booth points out, “Perhaps the biggest impediment for people understanding Bitcoin is bringing their baggage from how the monetary system works today and in the past, versus how it will work in the future.”
All of the misinformation inside the fiat system pushes its constituents away from connecting the dots… while they are simultaneously seated on a sporadic and spastic merry-go-round. They’ve either consciously or otherwise accepted that the fate of their money (in its forms as a store of value, medium of exchange and a unit of account) will potentially change roughly every four years with election cycles. They’ve been conditioned to believe there must be a small group of elites who “know best” how to manipulate the growth of an economy (while also ignoring the elites’ inherent incentives). They overlook the fact that the currency they’re compelled to use has lost 99% of its value over its lifetime.
This last point nudges those inside the fiat system to adopt a high time preference, knowing the value of their time and efforts will be devalued over time. This further distorts their frame of reference, thus their ability to make sound, economic decisions; choosing between a volatile, alternative asset which requires a low time preference and a lot of effort to understand versus a new, gizmo gadget providing endless dopamine dumps… well, I can see how it’s an easy choice for them.
All of this can simply be stated as: Bitcoiners determine volatility based from the reference of its network and protocol while fiateers derive its volatility from the reference of bitcoin the asset.
As Gigi says, “Bitcoin isn’t volatile. Humans are.” Therefore, we must continue to reframe the conversation from the asset to the network and protocol. The asset will continue to show volatility (to the upside over the long term), which is not due to Bitcoin the network or protocol, but due to the volatility of human nature.
This is a guest post by Tim Niemeyer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
NEW YORK, Dec 13 (IPS) – The African women and Girls were deeply concerned about the lack of commitment by UNFCCC Parties as climate change continues to impact negatively on the continent victimizing more women and girls.
Africa cop denies African women & girls’ demands
The WGC has uplifted the voices of African feminists at COP27, asserting their power to demand climate-justice articulated in the powerful set of proposals presented as the African Women and Girls’ Demands. The demands stress in particular the need for more Inclusion of women and young people in decision-making processes;
Imali Ngusale, FEMNET Communication Officer, Kenya was clear in her pronouncement on this dimension saying that “Remarks about women and youth engagement have been regurgitated in well-crafted speeches. Promises have been made year in year out, but the reality check keeps us guessing whether the implementation of the GAP is a promise that may never be achieved. A gender responsive climate change negotiation is what we need. The time for action is yesterday.”
“… We are saddened by the outcomes of the implementation for the GAP. The GAP remains the beacon of hope for women and girls who are at the frontline of the climate crises,” lamented Queen Nwanyinnaya Chikwendu, a Climate Change and Sexual and Reproductive Health and Rights (SRHR) Activist of Nigeria.
Ambassador Anwarul K. Chowdhury
In a hard-hitting statement, the WGC spokesperson Carmen Capriles said out loud in her statement at the closing ceremony on 20 November that “This COP is not a safe space for women environmental and human rights defenders, neither at this venue nor in its decisions. We have experienced being sidelined once again, we have experienced harassment, oppression and resistance against our feminist climate justice demands, however, this only makes us stronger.”
This powerful one-page statement has been posted on the reliable and prestigious Women’s UN Regional Network (WUNRN) website and worth reading by all activists and supporters for the rights of women and girls. It would be worthwhile for the UN to look into the issues raised by in the WGC statement at COP27 and publicly share its findings. UN Women and UN DESA which oversee NGO participation throughout the UN system should be the lead entities to pursue this matter from the UN Headquarters.
Expressing a total dismay with the lack of substance in the outcome, politicization and non-participatory process, Zainab Yunusa, Climate Change and Development Activist of Nigeria pondered, “As a young African climate justice feminist, I came to COP27 excited to see concrete decisions to follow the intermediate review of the Gender Action Plan (GAP)…. Rather, I witnessed restrictive negotiation processes that undermined my contributions.”
“I observed the cunning political power play of ‘who pays for what,’ at the expense of the sufferings of women and girls of intersecting diversities. I saw a weak, intangible, eleventh-hour GAP decision that merely sought to tick the box of arriving at an outcome. COP27 side-lined the gender agenda in climate action. It failed women human rights defenders, indigenous women, young women, National Gender Climate Change Focal Points, and gender climate justice advocates clamoring for gender equality in climate action.”
Gender-Climate Change activists are wondering whether these frustrations would reappear at COP28. Their limited expectation, however, relates to the skillful, transparent, and impartial handling of the negotiations at the final stages at COP27 by the facilitator Hana Al-Hashimi of the delegation of UAE, the next host.
Wikigender’s role doubted:
In the context of gender and climate advocacy, a number of civil society activists have expressed doubts about the role of the Wikigender, which claims to be “ a global online collaborative platform linking policymakers, civil society and experts from both developed and developing countries to find solutions to advance gender equality.” It reportedly provides a “centralized space for knowledge exchange on key emerging issues, with a strong focus on the Sustainable Development Goals (SDGs), and in particular on SDG 5”.
The Wikigender University Programme engages with students working on gender equality issues. As an OECD Development Centre-supervised online community, activists wondered about the platform’s bias, more so as it deals with gender equality issues.
Women’s participation marginalised:
Another major concern widely shared by most activists was that too few women participated in COP27 climate negotiations. Women are historically underrepresented at the United Nations’ global conferences on climate change, and COP27 was no exception. A BBC analysis has found that women made up less than 34% of country negotiating teams at Sharm El-Sheikh. Some delegations were more than 90% male.
ActionAid UK emphasizes that “there is no getting around when women are in the room, they create solutions that are proven to be more sustainable.” To make the matter worse, the UN has estimated that 80% of people displaced by climate change are women. ActionAid said that climate change is exacerbating gender inequalities. Decisions at COP27 were not focused on the specific issues as well the perspectives which are of particular concern to women.
At COP27, the inaugural ‘family photo’ showed a dismal reality featuring 110 leaders present, but just seven of them were women. This was one of the lowest concentrations of women seen at the COPs, according to the Women’s Environment and Development Organization (WEDO), which tracks female participation at such events. Twelve years ago in 2011, countries pledged to increase female participation at these talks, but the share this year has fallen since a peak of 40% in 2018, according to WEDO.
According to the UN, young women are currently leading the charge on taking climate change action. Some of the most famous legal cases brought against governments for inaction on climate change, have been brought by women. It is obvious that the outcomes of the climate change negotiations will be affected by the lack of women participating. They must have a seat at the table.
As in other years, women, and especially women of color and from countries in the global South had been demanding, that their voices be heard and amplified in climate negotiations. Their demands fell into deaf ears. “When we talk about representation it is about more than numbers; it is meaningful representation and inclusion,” said Nada Elbohi, an Egyptian feminist and youth advocate, in a press release. “It is bringing the priorities of African women and girls to the table.”
Civil society ignored in a big way:
UNFCCC website claims that “Civil society and non-governmental organizations (NGOs) are welcomed to these (annual COP and related) conferences as observers to offer opinions and expertise, and to further represent the people of the world.” There are 1400 such observer organizations grouped into nine constituencies namely, 1.Businesses and industry organizations; 2. Environmental organizations; 3. Local and municipal governments; 4. Trade unions; 5. Research and independent organizations; and organizations that work for 6. the rights of Indigenous people; 7. for Young people; 8. for Agricultural workers; and 9. for Women and gender rights.
Though these constituencies provide focal points for easier interaction with the UNFCCC Secretariat, based in Bonn, and individual governments, at COP27, such interactions did not happen. Complaining the lack of effective civil society space, Gina Cortes Valderrama, WGC Co-Focal Point, Women Engage for a Common Future (WECF) focused bluntly on the reality speaking on record that “Negotiations at COP27 have taken place amid deepened injustices in terms of access and inclusion, with participants facing discrimination, harassment and surveillance, and concerns for their safety as well as the safety of activists and human rights defender.”
She further added that “Instead of this being the space for guaranteeing human rights to all, it is being utilized as an Expo where capitalism, false solutions and colonial development models are greeted with red carpets while women and girls fade away in the memories of their lost land, of their damaged fields, of the ashes of their murdered.”
A WGC representative verbalized their anger by announcing that “Even as we call out the hypocrisy, inaction and injustice of this space, as civil society and movements connected in the fight for climate justice, we refuse to cede the space of multilateralism to short-sighted politicians and fossil-fuel driven corporate interests.”
Key civil society leaders were critical of their exclusion complaining that “Observers were consistently locked out of the negotiation rooms for a repeated ‘lack of sitting space’ excuse … We have also witnessed painful orchestration of last-minute decisions with few parties.”
They alerted the organizers and hosts of future COPs by saying that “This needs to be called out and ended.”
COP27 peoples’ declaration:
In the final days of COP27, becoming increasingly frustrated, the Women and Gender Constituency together with different civil society movements across the world endorsed a joint COP27 Peoples’ Declaration for Climate Justice. The Declaration called for: (1) the decolonisation of the economy and our societies; (2) The repaying of climate debt and delivery of climate finance; (3) The defense of 1.5c with real zero goals by 2030 and rejection of false solutions; (4) Global solidarity, peace, and justice. Full text is available at COP27 Peoples’ Declaration (womengenderclimate.org).
This substantive and forward-looking Declaration should strengthen civil society solidarity and provide a blueprint for their activism in upcoming COPs and other UNFCCC platforms.
Given the ill-treatment and huge disappointment of the civil society observers being denied access during COP27, it would be beneficial for the COP process and the next COP Presidencies to allow one representative from each of these nine constituencies to be present at all the meetings of the Parties from COP28 onwards.
Fossil fuel lobby comes out of the shadow:
On one point there was a near-unanimous opinion at COP27 that the fossil fuel industry has finally come out of the shadows. One key takeaway from Sharm El-Sheikh was the presence and power of fossil fuel – be they delegates or countries.
Attendees connected to the oil and gas industry were everywhere. Some 636 were part of country delegations and trade teams, reflecting an increase of over 25% from COP26. The crammed pavilions felt at times like a fossil fuel trade fair. This influence was clearly reflected in the final text.
Sanne Van de Voort of Women Engage for a Common Future (WECF), commented, “… although it is long overdue, only a handful of countries presented their revised national plans in Sharm El-Sheikh; in contrast more than 600 fossil fuel and nuclear lobbyists flooded the COP premises, selling their false climate solutions”. According to the Spiegel, the COP27 became a marketplace where 20 major oil and gas deals were signed by climate-killers such as Shell and Equinor.”
Tzeporah Berman, international program director at grassroots environmental organization “Stand.Earth” lamented that “To be sure, the burning of fossil fuels such as coal, oil, and gas, is the chief driver of the climate crisis. Our failure to recognize this in 27 COPs is a result of the power of the fossil fuel incumbents, especially the big oil and gas companies out in force at this COP who have made their products invisible in the negotiations”
Climate-campaigners described the UN’s flagship climate conference as a “twisted joke” and said COP27 appeared to be a “festival of fossil fuels and their polluting friends, buoyed by recent bumper profits …The extraordinary presence of this industry’s lobbyists at these talks is therefore a twisted joke at the expense of both people and planet.”
Ambassador Anwarul K. Chowdhury is former Under-Secretary-General and High Representative of the United Nations, former Ambassador of Bangladesh to the UN and former President of the Security Council.
