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  • ⚡ Lightning Network Grows by 1212% & 💩 New BitVM Framework Renders Altcoins Even More Redundant

⚡ Lightning Network Grows by 1212% & 💩 New BitVM Framework Renders Altcoins Even More Redundant

Greetings Earthling,

Welcome to issue #34 of the Bitcoin Breakdown, where we recognize that Bitcoin provides the solution to most of the modern financial system's problems.

In today’s edition:

  • ⚡ New River Financial report shows the Lightning Network has grown by 1,212% in the last two years

  • 💩 New BitVM framework renders sh!tcoins even more redundant

  • 🔍 Exploring Bitcoin's role in short-term finance amid macroeconomic instability

  • 🔒 BitBox's stance on simplicity as the key to robust security in systems

  • 📝 Fidelity report reiterates Bitcoin's unique position as the prime digital monetary good

  • 💵 How paper money turns governments into predators

  • 🍎 Ioni Appelberg analyzes civilization trends through Kondratieff cycles

  • 🏆 Bitcoin - harder than gold, faster than fiat

  • ⛏ Drivechains from a Bitcoin miners’ perspective

  • 🔑 What is a Bitcoin Key Agent?

  • 📦 BitBox02 review 2023: pros, cons and how it compares



The Lightning Network has grown by 1,212% in the last two years, according to a new report by the Bitcoin-only exchange, River Financial.

Critics point to metrics such as node count, channels, and capacity, which have plateaued over the past year, giving a false impression that the Lightning Network's adoption might be stagnating or declining.

However, this report shows the opposite: the number of users, transactions, and volume has accelerated significantly over the past two years.

In August 2023, around 6.6 million transactions were routed, a substantial increase compared to August 2021's 503,000 transactions.

Key drivers for future Lightning Network growth include greater exchange adoption, selected technical upgrades, and the adoption of Lightning by non-Bitcoin businesses.

New computing framework, BitVM (Bitcoin Virtual Machine), renders sh!tcoins even more redundant.

BitVM was designed by Robin Linus, the creator of ZeroSync, and it theoretically enables complex smart contracts on Bitcoin without the need for a soft fork—a significant technological advancement.

BitVM potentially makes Bitcoin Turing Complete without necessitating any changes to the network's consensus rules, unlike altcoins that either compromise security or decentralization.

‘This is probably the most exciting discovery in the history of Bitcoin script,’ says Super Testnet, who reviewed the paper.

While BitVM is intriguing and holds promise, it remains in the research phase, with much yet to be explored.


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Orange is the New Green (5 Oct | 25 min read)

Theo Mogenet, founder of Institut Bitcoin, highlights how Bitcoin may be a robust long-term savings vehicle but that its current volatility makes it unsuitable for short-term cash balances. He proposes methods for Bitcoin to handle short-term cash before it becomes the global unit of account, even amidst its current price fluctuations. Existing financial systems face instability due to excessive money printing and resulting government interventions. The growing interest in Bitcoin-based money market funds could attract corporations, especially in an unstable macroeconomic setting. Mogenet suggests a perpetual swap strategy for a high-yield Bitcoin money market fund, bypassing third parties. His proposal is essentially for Bitcoin to strategically leverage its opponents' strengths, eventually transforming skeptics into proponents, thus catalyzing a global monetary shift. Listen to the piece here, and here is a recent interview with Mogenet on the TFTC podcast.

Complexity isn't Security (Oct 5 | 6 min read)

BitBox argues that complexity does not necessarily equate to hard-to-hack security, instead it often results in vulnerabilities due to oversights in complicated systems. Referencing an example of BitBox's approach to securing its hardware wallet, this article emphasizes the value of simplicity and transparency in security systems. With a focus on minimalistic design, the BitBox02 hardware wallet only incorporates essential features, discarding superfluous ones that could introduce exploitable flaws. BitBox essentially advocates for comprehensive understanding and control over every component of a security system, as a vital part of guaranteeing robust security. Get your own BitBox02 here.

Bitcoin First Revisited (Oct 4 | 40 min read)

Chris Kuiper and Jack Neureuter published this report for Fidelity Digital Assets, 18 months after they outlined why they think Bitcoin is fundamentally different from other digital assets. All-in-all, they assert that no other digital asset is likely to improve upon Bitcoin as a monetary good because it is the most secure, decentralized, sound digital money and any ‘improvement’ will invariably face trade-offs. They revisit the idea of Bitcoin as a potential 'First Money' devoid of human governance, rooted in physical scarcity like gold, but of digital construction and global access. Historical precedents, ranging from Rai stones to gold, highlight the evolving nature of money and Bitcoin's place in this progression.

Austrian School economist, Peter St Onge, examines how paper money impacts government behavior. Governments, by controlling the production and circulation of paper money, can manipulate inflation rates, expand debts, and redistribute wealth. This approach leads to inefficient public spending, reduced economic prosperity, and increased economic imbalances. However, these practices persist because they grant power and influence to the political class. St Onge proposes switching back to a hard money standard, which would bring about fiscal discipline, reduce wealth disparities, and encourage economic stability.

The Rise and Fall of Civilizations (Sept 29 | 25 min read)

Ioni Appelberg explores the rise and fall of civilizations using the Kondratieff cycles theory which identifies societal progress as cyclical, directed by technological innovation and economic trends. Four phases - improvement, acceleration, stagnation, and regression - are noted within the 50-60 year Kondratieff cycles, where technological underpinning and economic prosperity fluctuates. Appelberg suggests that present-day civilization is in the stagnation phase, with Bitcoin appearing as a disruptive technological innovation for the next cycle. Overall, civilizations' progression ties into a broad pattern of advances and declines ascribed to technological changes and economic influences.

Nick Giambruno discusses for International Man ‘hardness’ as a crucial characteristic of a good currency, indicating resistance to debasement. He then analyse the Stock-to-Flow (S2F) ratio as a measure of an asset's hardness, with gold being the hardest due to its indestructibility and long history of production. However, Bitcoin, with a rising S2F ratio, is poised to become the hardest money ever known, as its supply is unaffected by increased demand. Bitcoin also, being scarce like gold and fast like fiat money, uniquely offers both these benefits. The superior portability and divisibility of Bitcoin make it more advantageous over gold, while its decentralized nature and finite supply safeguard it against the inflationary tendencies of state-controlled fiat currencies.

Bitcoin miners Amanda Fabiano, Harry Sudock, and Rory Murray discuss the promise and potential challenges of drivechains from a Bitcoin miner’s perspective. They delve into the perks for miners such as additional BTC rewards, as well as a broader blockchain ecosystem through expanded functionality. However, they ultimately voice concerns over the potential for increased operating costs, legal implications, undermining Bitcoin's value proposition, and the integrity of the Bitcoin network. They say, ‘While drivechains can drive additional revenue to Bitcoin, this addition of judgment to the protocol is deeply risky, and is trading short-term revenue for potential long-term consequences which remain largely unknown. This is simply not a wise trade off.’



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What is a Bitcoin Key Agent? (Oct 9 | 8 min read)

Phil Geiger of Unchained explores the concept of Bitcoin key agents, describing them as software components that enhance the security of a Bitcoin wallet by distributing ownership and control across multiple entities, effectively mitigating the risk of a single point of failure. Key agents are entities responsible for securing and operating a portion of the keys within a collaborative framework, offering various levels of security and services to different markets, including enterprise, small businesses, and peer-to-peer arrangements. Beneficial to organizations, this system maximizes security while providing flexibility to manage funds by integrating customized rules and protocols.

Athena Alpha reviews the BitBox02, which is a powerful hardware wallet designed for enhanced financial privacy. It comes in two versions: Bitcoin-only and Multi, both with identical hardware. The Bitcoin-only version is secure and ideal for Bitcoiners. The device is compact, resembling a USB drive, with a touch sensor interface. It supports MicroSD backups, Universal Second Factor (U2F), Miniscript, and anti-klepto protection. The wallet emphasizes security, encrypting USB communication, conducting external audits, and offering a bug bounty program. It's open source, transparent, and uses multiple entropy sources for generating private keys. Seed phrases are securely managed, avoiding reliance on closed-source secure elements. Get your BitBox02 here.





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