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The Catalyst That Could ‘Standardize’ Bitcoin



Today in my series called “things people following Bitcoin for the last 13 years have already figured out but I’m presenting as a brand new epiphany”, I wanted to write about a revelation about Bitcoin’s adoption, standardization, and normalization I had this past week. While thinking about what it would take for Bitcoin to receive a massive adoption push in the United States, I was able to think of one such scenario that may not be very far off.

And contrary to what you think, it doesn’t have anything to do with regulation, taxation, accounting standards, or any of the things that are mistakenly talked about as the ebb and flow of Bitcoin adoption on a daily basis. As I learned firsthand while finally doing some research on Bitcoin over the last month, none of those things truly matter. The decentralized nature of the network necessitates that it doesn’t need any of those things to flourish. I noted this in my article last week called “Why I Bitcoin.”

But what I also noted in the same article was that Bitcoin will survive if the people want it to survive. For those who understand the network, they understand that ~20,000 global nodes mean that the network is going to stay up regardless of which politician, jurisdiction, or regulatory agency around the world tries to stand in its way. This is part of the elegance of the network.

And still, having realized that, I think to myself, “What is going to accelerate that adoption so much that we move from now—a point of almost no return for Bitcoin—to a significant point of serious escape velocity?” The answer was right underneath my nose.

When I wrote the title to my article last week called “Why I Bitcoin,” it was just one of those titles that came to me instinctively. Sometimes I spend hours trying to figure out which title is going to be the catchiest, and other times, like with this article, I have the title set out beforehand because it is very clear what I want to say.

But I was walking around over the weekend and wondering where I had heard that phrase before.

Suddenly, it came to me. In one of my favorite comedy skits, a group of Philadelphia improv comedians went to the Occupy protests that occurred as a result of the 2008 economic crash. In more than one spot, there are signs that say “Why I Occupy.” In fact, this was basically the namesake of part of the Occupy movement. I remember that was the source for quite a bit of the pissed-off populace at the time; they thought whatever ideology was on that website was their particular brand of solution to the financial crisis.

It was only after remembering that, that I thought in the next major financial crisis, people really are going to have a legitimate exit ramp from the system. Bitcoin is that exit ramp. It’s the thing that people involved in the GameStop frenzy were so desperately looking for, whether they knew it or not, but couldn’t find.

While the GameStop fiasco was taking place, I remember thinking to myself that there were too many people who were pissed off but didn’t have any idea what they were angry about. In chat rooms and on social media, everybody was catching blame but the Federal Reserve. These people were pissed off because they felt like they were getting gypped: they were reacting, whether they knew it or not, to the widening of the inequality gap while they were struggling to make ends meet.

But what they didn’t know was that this wasn’t the fault of Ken Griffin, Citadel, or short sellers; rather, it was the fault of the Federal Reserve.

Nowadays, it’s becoming clearer as the Fed shoehorns that inequality gap even wider. It’s clearer because inflation is a mainstream story and a phenomenon that people can understand. Even if they don’t know why inflation is happening, most people have a semblance of understanding that it has to do with the Fed blowing out the money supply over the last four years and then, to add insult to injury, lying to the public about inflation being transitory.

And those who hoped to repeat GameStop’s success with names like AMC now know that toxic management and a loss-making business can very easily take the air out of any momentum in any type of short, or FOMO, squeeze in any one equity. And they also know that brokerages and regulators can prevent them from transacting in it anytime they damn well please.

During the next major financial crisis, which, in my opinion, isn’t that far away, the same group of pissed-off “have nots” will hopefully direct more of the blame where it belongs: monetary policy. After all, inflation is a brutal tax on the people who can’t afford it and is all but meaningless for the super-rich. And, the super-rich get super richer as a result of quantitative easing and money printing, which directs a disproportionate amount of relief to the stock, bonds and housing market: assets that rich people have that lower-income people do not have.

I would often ask during the Fed money printing over Covid, that if the Fed wanted to print $5 trillion, why wouldn’t they just divide it up evenly amongst all people in the United States and cut us all a check? After all, $5 trillion divided by 300 million people is about $16,500 per person. Putting systemic reasoning aside, this is a fairly simple straightforward question. If you want to stimulate the economy by spraying money all over the place, why not do it equally amongst all of its citizens, instead of playing favorites?

But that isn’t what happened in 2008, and it’s not going to be what happens during the next financial crisis.

What I do think will happen, however, is a new group of “have nots” and economic renegades will be exponentially more informed about how monetary police works, not just as a result of the GameStop fiasco, but also as a new, younger generation has familiarized themselves with the ideological case for Bitcoin. Before I even took to Bitcoin, one of the things I liked about it was the idea that it was forcing a younger generation to understand Austrian economics in a world where we have all but overused and beaten to death our modern monetary theory privileges. Armed with this new knowledge, an entire new generation of pissed-off, regular people will once again bear the cost of socialized losses from nefarious, toxic companies who privatized their profits. And this will be within an inflationary crisis still fresh in their minds. This time there will be no question about who is eroding the purchasing power and the wealth that they have worked for through taxation and inflation.

Which brings me to my point: Bitcoin could very well be the exit ramp that millions of angry people look towards in such a situation.

Unlike with GameStop, Bitcoin actually does have the chance to affect major change because the network’s success is tethered to how large it grows. This means that with every single person who decides to own, or educate themselves about, Bitcoin, they become part of a self-fulfilling prophecy of the network’s success. And, of course, the ideology behind the success of the network is firmly rooted in empowering people just like them: the people who are tired of having what little they earn silently whisked away from them by the dark inflationary financial machinery of the night.

Many people who participated in the GameStop frenzy, including the “apes” over at Reddit’s Wall Street Bets and millions of other retail traders, will be forced to realize that Bitcoin has all of the positives of what they sought to achieve in the past without the negatives. There is no management to mess it up, there is no counterparty to dilute them, there is no one to turn off the buy button and there is essentially no governing or regulatory body to prevent the network from being a success if the people want it to be one. It becomes the digital freedom that all of these people sought out during the last financial crisis but had no effective way to manifest.

2008 was yet another echo of what has become par for the course on Wall Street: every time things get catastrophic, the public bears the cost, gets pissed off and brandishes the torches. But then it eventually blows over and people go about their business.

“I’m starting to feel a little better about this whole thing,” John Tuld says at the end of Margin Call, signifying that the more things change, the more they stay the same.

Bankers and politicians have been relying on this pattern to play out the way it has in the past in order for them to continue to perpetuate the same scheme they’ve been part of for decades. It is, in essence, what enables the miscarriage of justice of everyday Americans bearing the cost of failures of the ultra-rich.

And so, the next time this happens, the investing public could legitimately have a chance to break that cycle for the first time in half a century by adopting Bitcoin. It has a chance to opt them out of the system that they have railed against. Capital flows into Bitcoin and out of traditional financial assets will send a message to major financial institutions who only respond to the opportunity to make fees (see their newfound obsession with Bitcoin now that there’s ETFs for reference). At the same time these flows could add to the self-fulfilling prophecy of the network becoming a success, due to its redundancy essentially serving as the barometer for the health of the network.

It is by no means guaranteed, but if the system ever goes belly up again, and the average person is looking for a true weapon to fight the system – and one that is literally programmed to be the technological braille of the phrases “there’s safety in numbers” and “power to the people,” Bitcoin could shine through and open an epoch for itself that be seen in the future as its adoption Renaissance.

This is a guest post by Quoth the Raven. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

​ The Bitcoin network teaches us that there’s safety in numbers. Now, what could bring people together in numbers to mass-adopt it further than they have? 

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Riot Platforms’ Bid Spurs Special Shareholders Meeting at Bitfarms – News Bytes Bitcoin News




Bitfarms Ltd. has scheduled a special shareholders meeting for Oct. 29, 2024, in response to a requisition from Riot Platforms, Inc.

​ Bitfarms Ltd. has scheduled a special shareholders meeting for Oct. 29, 2024, in response to a requisition from Riot Platforms, Inc. 

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Bitcoin Seed Phrases: The Challenge of Mainstream Self-Custody Adoption




An underlying theme of this cycle has been to challenge preconceived notions about how people use Bitcoin around the world. New behaviors are emerging and other cultures are using the asset in a way that is breaking previously established molds.

A major trend emerging out of this chaotic environment is the resurgence of seedless security models, which take a radically different approach to securing Bitcoin private keys. Proponents argue that established security practices are failing to meet the expectations of an increasing number of users. Along with the maturation of custodial alternatives, the emergence of ETF products is creating concerns about the prospect that future users will onboard into more complex self-custodial solutions.

It is not the first time security specialists have pointed the finger at seed phrases when asked about the difficulties of Bitcoin self-custody crossing the chasm. Industry veteran Jameson Lopp has long debated the challenges of the security model, and remains outspoken about its pitfalls. His company, multi-signature wallet provider Casa, was formed, in part, to address the issues created by traditional backup methods.

In a conversation with Bitcoin Magazine, current Casa CEO Nick Neuman echoed his colleague’s concerns:

“We need to think more carefully about how we use them as an industry because the user experience of getting hit with a seed phrase the first time you set up a wallet is very difficult.”

The Perils Of Seed Phrases

Despite significant progress in the quality of Bitcoin products and applications, the landscape of self-custody remains perilous for those whose comfort with technology stops at their iPhones. Every other day, accounts emerge of various successful phishing attacks targeting victims’ funds by compromising their wallet’s seed phrases.

Earlier this January, popular hardware wallet provider Trezor announced they had reasons to believe sensitive customer information had been leaked due to a breach in the systems of a third-party service provider. In the following months, X users reported a new wave of phishing attempts hitting their inboxes.

Another reminder of the fragile state of the average person’s security practices came in 2022 following a security exploit that affected popular password manager LastPass.

Following a string of curious wallet-draining incidents affecting mobile and hardware wallet users alike, researchers eventually figured out that seed phrases stored on the service’s servers had been compromised. As of a couple of months ago, losses have been estimated to have reached over $250 million in various cryptocurrencies.

While popular Bitcoin influencers have banged the table for the adoption of more robust security systems involving hardware wallets, a large number of market participants have yet to warm up to this practice. Shehzan Maredia, founder of Bitcoin financial service company Lava, sees a significant divide between security product developers and a large section of the Bitcoin market.

“I’ve realized most people start questioning their ability to self-custody when you involve hardware wallet and seed phrases. Half of them will do a poor job of following instructions and the other half will simply prefer using custodians,” he remarked.

Security experts are adamant that private key material should remain offline at all times, but Maredia suggests secure enclaves present in modern mobile phones are sufficient to thwart the majority of attacks affecting users today.

“Looking at the common causes responsible for the loss of users’ funds, it’s rare to find examples of mobile keys being compromised.” Rather, he argues, it’s more likely users will do a poor job of securing their seed phrase backup or will give it away during a phishing attack.

Seedless Challenges And Opportunities

Bitcoin products have seen a lot of improvements since Casa pioneered the seedless wallet approach years ago but few so far have followed in the company’s tracks. While self-custodial applications are more robust than ever, some changes have introduced additional steps to an already significant learning curve. It’s worth questioning whether a nihilistic attitude towards security has pigeonholed the practice into rituals unpalatable to the average person.

Neuman remains optimistic. He suggests there has been an observable shift in the industry towards more realistic approaches, though he thinks Bitcoin products are lagging behind

“There are still quite a few like wallets that force you to [save your seed phrase] upfront. I think it’s kind of a risk management thing on their end, but it actually works against the goal of helping users feel comfortable holding their own keys.”

Regardless, the trend suggests the rest of the industry is coming around to the risks of users handling sensitive information. Recent technologies such as passkeys, implemented in Coinbase’s new “Smart Wallet,” offer interesting alternatives for this new generation of products. Passkeys are a new standard promoted by internet giants like Apple and Google, which aim to replace traditional passwords with cryptographic keys tied to a user’s device and identity.

According to our research, testimonies from early adopters indicate the technology has yet to sort out important standardization issues. Lava’s Maredia agrees there is room for improvement. He recently launched a seedless solution he thinks achieves the best security tradeoffs one can expect of mobile devices.

The Lava Vault draws heavy inspiration from older contributions from ex-Spiral developer Tankred Hase called the Photon SDK. Photon implements a seedless cloud backup similar to Casa’s early implementation of the mobile key wallet but is fully open-source though it hasn’t been maintained for some time. Maredia is persuaded that the 2-of-2 solution he has adapted from existing designs in the ecosystem can stand against most known attacks.

“We looked at things like passkeys, but we just don’t think they are made to secure important key material like Bitcoin. They basically swap one piece of sensitive information for another and are usually stored in a password manager. In practice, most password managers do a poor job handling them, they can be deleted very easily even on iCloud.”

Lava secures users’ seed phrases using a high entropy key stored on a different server. Once encrypted, the seed is saved in a special directory on the user’s cloud that can help prevent accidental deletion or malicious access. Users authenticate with a key server, which enforces rate limiting, using a 4-digit PIN of their choice. Lava does not require the creation of any account which preserves users’ privacy from the service and its servers. For daily operations, the wallet uses another key stored on the device’s secure enclave.

“Even if a party accesses encrypted information, there is no single point of failure because they’d have to know the encryption key. Forgetful users can set up a PIN recovery method which allows them to change their PIN after a 30-day delay.”

Maredia expects his security protocol to evolve according to users’ needs and different risk profiles. Wallet policies such as 2FA, withdrawal or spending limits, and whitelisted addresses are already on the way. “Lava Smart Key is a very flexible solution. Users can upgrade their self-custody setup easily, and we’re open to accommodating users who have specific demands,” he explains.

Although seedless backups have been criticized for exposing individuals to undue third-party risks, open-source implementations like the Photon SDK and Lava’s vault model suggest more vendors and service providers could implement similar standards and mitigate this issue.

Seed phrases remain an important component of the security stack but both entrepreneurs consulted for this article believe it is essential to abstract them from most future users.

“Seed phrases in general, I think, are a very useful tool for making your keys more portable between wallets and giving you that exit option just in case something happens to the wallet software you’re using,” says Casa CEO Nick Neuman.

To eliminate single points of failure, Casa promotes a combination of multi-sig plans involving hardware devices but insists on sticking to its seedless principles where possible.

“Wallet software is made for managing private keys. Humans are not made for managing private keys. So we should leave that job to the wallets.”

​ Established security practices have failed to accommodate a growing segment of the Bitcoin user market 

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Digital Assets Thrive in H1 2024, CME and Glassnode Report Finds




According to a report from CME Group and Glassnode, these factors have cemented digital assets as a crucial asset class.

​ According to a report from CME Group and Glassnode, these factors have cemented digital assets as a crucial asset class. 

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