Hello, World! | The Bitcoin Beat #1

Hi everyone!

Welcome to The Bitcoin Beat. This newsletter aims to bring you curated headlines from the world of Bitcoin from the past week, cut through some of the FUD surrounding Bitcoin, and start you on the path of learning more about Bitcoin. My target audience is mainly curious folks and beginners, but everyone is welcome. I’m just learning in public and passing that knowledge along.👍🏼

Every Sunday at 5 PM, I’ll deliver three headlines from the previous week to your inbox, followed by what I hope are easy-to-digest lessons on Bitcoin and its impact. The Bitcoin Beat will grow and expand over time as I can devote more resources to it. Hopefully, it’ll be a newsletter to set your clock to - like a block every 10 minutes, or a halving every 4 years. If you don’t know what that means, don’t worry - you will!

If you enjoy this post, don’t forget to share it with friends and subscribe to The Bitcoin Beat to have important Bitcoin headlines and topics delivered straight to your inbox every Monday. ₿

Last Week in Bitcoin

In this section, I feature three important headlines from the world of Bitcoin over the past week along with a quick explainer about each.

A small collection of African villages, electricity, and Bitcoin mining

In this article by Ian Birrell for UnHerd, we are given a glimpse into Bondo. Bondo is a group of villages located in Malawi near the Malawi-Mozambique border, close to Mount Mulanje. Bondo recently received access to electricity thanks partly to a mini-electrical grid funded by Bitcoin mining, powered by hydro turbines. Is this a model that could bring electricity to other remote and impoverished regions in Africa?

A spot bitcoin ETF by Wednesday? BlackRock thinks so

The Block, reporting on an article written by Fox Business, writes that the largest asset manager in the world believes its spot Bitcoin ETF application could be approved by the SEC as soon as this coming Wednesday (1/10).

What’s a spot ETF, you ask?

ETF stands for exchange-traded fund, which means that shares of the fund are traded on traditional stock exchanges. This will allow investors who don’t feel comfortable buying and holding bitcoin to gain exposure to it through more familiar methods. The “spot” of spot ETF means the current price of whatever asset is the basis of the ETF - in this case, bitcoin.

The spot bitcoin ETF, if approved, signals continued mainstream adoption of Bitcoin as investors seek to diversify their portfolios. All eyes will be on the SEC next week as we inch closer to a potential landmark moment in the history of Bitcoin.

VanEck plans to donate 5% of spot ETF profits to Bitcoin Core developers

According to Bitcoin Magazine, the investment management company has also donated $10,000 to Brink, a nonprofit that focuses on the open-source development of Bitcoin. If I’m not mistaken, VanEck is the first and only company so far to make such a pledge, which will last for over a decade. I don’t think they’ll be the last though, as it’ll be important for companies with these spot ETFs to help contribute to the growth and the security of the Bitcoin network so their products are successful.

Beginner Bit: What is money?

For this first issue, I might as well start at the beginning. No, like, the real beginning: what is money?

By this point, everyone and their mother - hell, maybe even their grandmother - has heard of Bitcoin. Ask them what it is, however, and you’ll get a range of different answers.

It’s fake money. It’s a digital currency. It’s a cryptocurrency. It’s money used by criminals and fraudsters. It’s burning the trees and boiling the oceans all so a few bag holders can get rich.

Bitcoin is, first and foremost, a problem-solving tool.

You’ve arrived at this newsletter because you want to learn more about Bitcoin. But it’s challenging to understand Bitcoin and the problems it can help solve without first having a better understanding of money and our relationship with it.

The Bitcoin Standard and its author, Saifedean Ammous, offer a concise definition: a good that assumes the role of a widely accepted medium of exchange is called money¹ . Jason Maier, author of A Progressive’s Case for Bitcoin, writes that money is anything that combines, in some way, being a medium of exchange, a unit of account, and a store of value² .

Basically, money should let you buy things now, put a price on things, and buy things later, too.

The first money that pops into most heads is probably paper money or fiat money. Whether it’s US dollars, British pounds, or any of the other 178 currencies recognized by the United Nations, fiat is the only money that a lot of us have ever used.

The financial system as we’ve experienced it has been around for a little less than a century - a blip in terms of how long humans have been walking around.

First, we bartered - we still do. That was followed by cattle, cowrie shells, wampum, coins made from metals, paper banknotes in China, and even slits in noses³ . Paper money backed by physical gold, referred to as the gold standard eventually gave way to paper money backed by the authority and power of a national government, which is what we call fiat.

Money evolves and changes over time as the needs of society evolve and change, and as better money emerges. How wild the world would be if we had to take a cow to the supermarket to pay for a week’s worth of groceries! (Didn’t actually do the math on this one - a cow could probably get you a good bit, despite inflation.)

The money used by most people today, fiat, started to lose its ties to gold in 1931, when the British went off the gold standard. The United States was next to follow in 1933 but didn’t fully complete the process of decoupling greenbacks and gold until the Nixon administration in 1971 when the ability to convert US dollars to gold was ended.

So, if not gold, what makes fiat currency valuable? As mentioned before, fiat currencies get their value from A.) the fact that only the government can issue it, and B.) faith in and the stability of the government issuing the money.

In the case of the US dollar, its value also comes from the fact that it’s the world’s reserve currency, meaning that goods are priced in USD globally and global transactions are conducted using USD.

This system has been functional for the past few decades in the Western world, as governments and policies have remained relatively stable. Fiat currency hasn’t worked so well in places like South America and Africa, with Zimbabwe being the poster child of how a nation’s currency can become worthless through hyperinflation.

We’re getting a little ahead of ourselves by getting into inflation, though. And there are many other issues with fiat money that I’ll expand on in further issues. For now, when initially understanding money, it’s enough to understand that as our society changes, and as technology advances, how we exchange value with one another does, too.

If you enjoyed this post, don’t forget to share it and subscribe!

Next week, I’ll dive further into the pros and cons of the fiat system. We’ll also take our first steps into learning about Bitcoin and how it differs from fiat.

Until then, have a wonderful week!

-groovin’

Disclaimer: The content above is not financial advice. The Bitcoin Beat is an educational newsletter and does not offer financial advice.

Sources

1. Ammous, Saifedean. “Chapter 1: Money.” The Bitcoin Standard: The Decentralized Alternative to Central Banking, John Wiley & Sons, 2018, pp. 3.

2. Maier, C. Jason. “Chapter 2: Why Bitcoin?” A Progressive’s Case for Bitcoin: A Path Toward a More Just, Equitable, and Peaceful World, Nashville, TN, Bitcoin Magazine Books, 2023, p. 39.

3. “The History of Money.” PBS, Public Broadcasting Service, 26 Oct. 1996, www.pbs.org/wgbh/nova/article/history-money/.