The Securities and Exchange Commission (SEC) just approved 11 Bitcoin exchange-traded funds (ETFs). So let’s talk Bitcoin this week…
It’s important to note that the SEC ruthlessly rejected every Bitcoin ETF proposal that crossed its desk over the last decade.
No kidding – the Winklevoss brothers submitted the first Bitcoin ETF application back in 2013. Since then, the SEC denied over 20 separate Bitcoin ETF applications.
So we have to ask – why did the SEC suddenly change course? Why did it go from openly hostile towards Bitcoin to approving not one or two… but 11 Bitcoin ETFs?
Simply put, this is a misdirection play.
To understand why, we have to assess how the narrative around Bitcoin has changed over the years… and why.
Bitcoin first came across my desk back in 2012. Someone was talking about this “magic internet money”. At the time one Bitcoin was worth around $8.00.
And I completely dismissed it.
Nobody’s going to trust magic internet money, I thought to myself. I figured the project would die and Bitcoin would go back to zero… so I gave it no more thought.
Bitcoin then popped back up on my radar in 2014. But now one Bitcoin was worth over $800. It had 100x’d in value in dollar terms.
That caught my attention. How did this thing that I dismissed as a fad skyrocket in value?
So I did my homework and learned about how Bitcoin works under the hood… and that’s when I knew it was the real deal. The technical design is brilliant.
I’ve been a big proponent ever since then. And being plugged in, I saw first-hand how the financial media tried to discredit Bitcoin every step of the way.
First they told everybody that it was just for criminals and drug dealers. That narrative held for a while.
But then Bitcoin’s price shot up to nearly $20,000 in 2017. People couldn’t help but get interested in it after that.
So the media started telling everyone that Bitcoin mining consumed an enormous amount of energy. They said that it was entirely wasteful and contributed to “climate change”. They hoped that would keep the Bitcoin stigma going.
Anyone who understood the technical design knew better.
It’s true that Bitcoin mining requires a lot of electricity. The machines used to mine Bitcoin are application-specific integrated circuits (ASICs). They are now capable of computing over 100 trillion calculations per second. In 2017, the top mining machines could handle around 14 trillion calculations every second. The tech has advanced considerably in a short period of time.
Given this level of computational power, I see Bitcoin mining rigs as mini super computers. That’s why they consume so much power.
And guess what?
That energy isn’t wasted. It is used to secure the Bitcoin network and make it hacker-proof.
Bitcoin mining is a competitive operation. Anyone is free to buy a mining rig and start mining. As such, it’s estimated that there are now over one million Bitcoin mining rigs in operation around the world.
Collectively, these machines currently direct 385 exahashes per second (EH/s) worth of computing power towards securing the Bitcoin network. That means the collective computational power is capable of processing 385 quintillion calculations per second.
And here’s the key – every single mining rig is verifying every single Bitcoin transaction that takes place. And they trace every bitcoin or fraction of a bitcoin that moves back to its point of origin.
In other words, the mining process verifies the entire transaction history for every fraction of a bitcoin in circulation.
Then every ten minutes (roughly) every mining machine broadcasts the results of its verification efforts to the entire network… And a majority of the machines must have exact matching records for those transactions to be verified and completed.
This is why Bitcoin cannot be hacked. There’s no single point of failure.
To control the Bitcoin network, one would need to control a majority of all the computational power directed at mining. But there’s no way to know exactly how many mining rigs are running at any given time… and there’s no way to know where those rigs are or who is running them.
That makes Bitcoin the most secure network on the planet… and by a long shot.
So the whole “Bitcoin mining is wasteful” narrative didn’t stick. And the religion of “climate change” is falling apart right before our eyes.
This is why those opposed to Bitcoin and individual sovereignty had to shift gears.
They found that discrediting Bitcoin no longer works… so they are moving to a new plan. That’s what these Bitcoin ETFs are about.
We’ll dive into the details tomorrow.
-Joe Withrow
P.S. I see Bitcoin as the cornerstone of a strategic asset portfolio… but it has the potential to be so much more than that.
Bitcoin also serves as a medium of exchange. That makes it money. And we could indeed run our economies on Bitcoin if we chose to.
My friends at Bitcoin Bay are demonstrating exactly how this can work.
They are educating farmers and small businesses in the Tampa Bay area on Bitcoin. Then they show these companies exactly how to accept Bitcoin as payment for goods and services. This includes training on the accounting and good practices around handling bitcoin payments as well.
Bitcoin Bay has successfully onboarded a wide range of local businesses in Tampa. That’s created a circular economy based on Bitcoin.
Looking at the business directory, there are ranchers, berry farms, personal trainers, auto mechanics, accountants, roofers, hair stylists, and many others who now accept Bitcoin as payment. That means folks in Tampa can buy goods and services from these companies using Bitcoin – without ever needing to move back into dollars.
This is what the restoration of sound money looks like. You can learn more about what Bitcoin Bay is doing at their site right here.