It's been a while since I posted a "Saturday Long Read", so allow me to hit you with this little one...



In hindsight, it was inevitable.
We are all hyped up over the ETFs.  As usual we are fixated on something important while we miss the thing that really is the MOST important.  Remember Baakt?  Or is it Bakkt?  Does anyone even know? That was going to launch us into HYPERBITCOINIZATION!  And here we are again... this cycle's hype is ETFs!  Wait... ummm didn't we also try this one before?  It's like the China bans.  We will gladly lap up the same narratives over and over.  Well ETFs ARE coming.  Someday.  Eventually.  But Blackrock, and the others are not the only ones playing.  The powerful people had to figure out Bitcoin eventually, and now the race is on to define who controls the most of it.  That is assuming Blackrock, and the Fed are not mounting a fantastic FUD campaign against Bitcoin.  And I'd estimate there is a 20% chance that is exactly what they are doing.  The reason I say 20 instead of zero is they hate bitcoin at least enough to try this.  The reason I say 20 instead of 100 is these people are not generally dumb.  You do not get to where they are being dumb.  They are in control of the Earth, and they have seen what Bitcoin is.  I think they are smart enough to know they can't stop it.  So the objective from this point is to CONTROL it.  And to do that, in the style they are most accustomed to they must own so much of it that it is easier to buy their product than the real thing.  Make no mistake.  People buying into the Blackrock product (or Fidelity, or ...) are putting 100% trust  and control into the hands of the owners of those funds.  And they will issue "shares"  or "coins" or whatever they want to call it that represent a certain amount of the bitcoin they hold, and thus they can get right back to printing as they always have.  I can try to give them the benefit of the doubt that they will not try their old tricks.  But I am never able to see it as remotely possible.

So that is what we are cheering for.  And look!  I am not saying that it is all bad.  Nor am I saying that it won't set off the rocket of price appreciation.  At least for a while.  The fact of the matter is MOST Earthlings are going to need help.  AND Layer 1, on-chain transactions are going to be expensive as fuck.  The average Joe needs help.  Frankly, even the above average Lisa needs help.  

Seriously... LUKE DASHJR has his coins stolen.

So, it turns out Hal was right again.  We are going to need Bitcoin Banks.  And that is exactly what we are seeing the formation of.  And by the way... I have never thought exchanges were really "bitcoin banks".  Maybe the proto-banks.  But if you are paying attention you can see the tip of the real spear making it's way into the spotlight.

Old dogs... new tricks.
The big exchanges are all conveniently being dragged into the litigation they TOTALLY set themselves up for with all the shitcoin nonsense they did over the last 8+ years.  Or they are busy announcing their next NFT series or some other pablum designed to fleece the tiny audience they have been able to gain worldwide.  At the same time other big legacy players in the "bitcoin space" are busy having their databases stolen, or floating a way to get your private keys.  But at least Ledger is pointed in the right direction macro-strategy wise.  They have entered the race to control the money.  And though their tradeoff is terribly un-nuanced, they are at least realizing where things are going.  Hopefully they improve their strategy.

New Kid on the BLOCK.
If you thought Jack Dorsey was just a lucky nerd to invent "mico-blogging" then what he did with the Cash App should make you reconsider.  But what Block is currently doing tells me that he can see the future.  And don't get me wrong.  I am not fan-boying @jack. He is also throwing his digital hat into the ring of being the best way to hold your Bitcoin. The Bitkey hardware signer is more than a simple signer.  It is also an attempt at creating something your mom or dad could use to hold bitcoin, with SOME sovereignty and a LOT of security.  One interesting thing they have done is set up various forms of redundancy so that it makes it extremely difficult to lose your funds because of a single mistake.  I am guessing it will also integrate L2 networks as the software grows.  At least lightning which Block/Square/CashApp have already done.  But this sort of "Bank" introduces a HUGE amount of trust in Block.  I have not deeply studied the model yet, but at a glance you have to TRUST Block just like you trust JP Morgan.  And although they are dividing the power in a way that you have the majority, they are still able to act as a "safety net" which means they have a lot of control over your UTXOs (or HTLCs).  Still...  This is a good step.  And it might just find the niche that a lot of new Bitcoinners will be attracted to, and frankly better off with than trying to "be their own bank".


Cypherpunks gonna cypherpunk.
I am admittedly a bit of a fanboy of Adam Back.  And I think Blockstream is certainly one of the more important companies in Bitcoin.  Blockstream folks have contributed to Bitcoin Core, as well as producing the 2nd most used lightning implementation.  They manufacture my favorite hardware wallet (tied with Seedsigner)And they have developed Elements, the engine for their layer 2 creation: Liquid.  And though Liquid is a ghosttown still, and has been rightly criticized by people who do not matter very much anymore, it is a very compelling structure into which Bitcoin transactions can move as the fee market makes all of us tremble.  It is interoperable with lightning, and has very interesting security trade offs.  Would I use it for cold storage?  Not yet.  But I do have a non-trivial amount of value in it in anticipation of it being more important as we move forward.  Well Blockstream too has entered the Bitcoin Bank game.  Their Green wallet recently announced the ability to use lightning.  It's still experimental, and I am testing it now.  And I think it can be used both on the Bitcoin lightning network as well as Liquid lightning.  Blockstream is building one of the most compelling sets of tradeoffs.  Trust is introduced, but is distributed unlike most other horses in this race.  And what they have left to do is to make their wallet Green transparently transact on the network that makes the most sense for the end user, whether it be the base layer, Lightning or Liquid.  If they can do that then they will have a very strong business model.  Since they own the Liquid network then they can charge small fees for transactions and make their money that way.  As well as profiting from the exchange of on chain BTC with L-BTC and Lightning.  And their model leaves you ultimately sovereign and distributes risk better than others.

The best of the best for self-sovereignty.
What I really want to see has yet to emerge.  Perhaps I should try to create it... oh wait.  Is that a taco over there?  I think of it as a FOSS Firefox unlike a captured Chromium.  An implementation of an easy to use wallet that employs multiple forms of redundancy and integrates multiple layer two networks seamlessly.  Yet it is fully FOSS, fully un-owned, and run by the users.  It could integrate base layer transactions as well as lightning, and maybe even introduce some of the leading edge strategies like Chaumian Mints (Fedimint, Cashu) or even an Elements based liquid-like implementation.  The latter could be interoperable with other Elements implementations,  including Liquid itself.

Pardon me as I daydream.  But are you seeing it?  The future?  It's out there waiting for us to seize it, direct it, and make it the best it can be.  Even as "just" end users we have a lot of power.  We choose what works best for us and can help others use those tools as well.


No, Neo.  What I am telling you is when you are ready... you won't have to!
So this is where the competition in Bitcoin software is right now.  Becoming the strongest Bitcoin Bank is the prize.  And we need to help steer as many as possible to sovereign  systems as we can.  The old guard, such as the old hardware signers, as well as the big exchanges etc., should be paying attention.  They can be left in the dust in a matter of a few years.  Or sidelined to a single function, or niche use.  While they are still living in the last halving, visionaries are quietly building the rails for the machines that will run on top of Bitcoin.

In the end, we as the users... the seasoned users, need to be vigilant to guide the machines in the right direction by supporting the things that are built with the best tradeoffs.  And we must help the clueless noobs already here, as well as the hoards on the way, UNDERSTAND why every precious bit of sovereignty you trade for every promise of security and convenience must be CAREFULLY weighed.  In the end we, the users, get to OWN our money for the first time in our lifetimes.  

#CCMF