Taxes are not the only reason to move to Paraguay 😎😋 almost a kg of top quality steak from a fancy restaurant with a million sides for 29k sats (29 usd).
This is extremely valid for us newer bitcoiners. Unfortunately the Bitcoin bug didn’t bite me until 2024. I am still in the process of rectifying my mental stress around going so hard in btc after a lifetime of 60/40 indoctrination and conservative parents. The Blackrock 2% propaganda pill is much easier to swallow. The best mental pillars of strength I’ve found is 1.) “fuck it, at least if I go down with this ship, I was true to myself and not a coward supporting a corrupt system”. 2.) Constant study. The more you understand, the less you fear. The remaining “fears” become calculated risks to account for.
# Critical Risks to Bitcoin Network Failure
## Catastrophic Risk Vectors
### 1. The Custodial Cascade
Most dangerous scenario because it's already happening:
- Users increasingly rely on custodial solutions
- Transactions move off-chain into custodial databases
- Node count drops as fewer users verify
- Mining becomes increasingly regulated
- Properties become theoretical rather than actively verified
- 21M cap becomes effectively meaningless
This is particularly dangerous because:
- Each step seems rational individually
- Follows path of least resistance
- Happens gradually, then suddenly
- Mirrors how gold was captured
- Hard to reverse once started
### 2. The Regulatory Chokepoint
Second most dangerous because it's politically feasible:
- Regulated mining becomes the only legal mining
- KYC/AML requirements for all "legal" transactions
- Node software becomes "certified" only
- Development becomes permission-based
- "Legal" Bitcoin diverges from sovereign Bitcoin
Critical because:
- Creates two-tier system
- Makes sovereign usage increasingly difficult
- Reduces network effect for permissionless Bitcoin
- Could split the network between regulated/unregulated
### 3. The Geographic Centralization Trap
Third most dangerous because it's subtle:
- Sovereign usage concentrates in few jurisdictions
- Most regions shift to purely custodial
- Network becomes dependent on few "free" zones
- Those zones become targets for capture
- Network loses global resilience
### 4. The Technical Monoculture
Fourth most dangerous because it's happening:
- Single implementation dominates
- Development centralizes
- Alternative implementations fade
- Network becomes vulnerable to single points of failure
- Harder to resist protocol capture
## Meta-Risks (Risks that Enable Other Risks)
### 1. The Knowledge Gap
- Fewer users understand the technology
- Sovereignty becomes "optional extra"
- Technical governance shifts to "experts"
- Users can't evaluate changes effectively
- Makes all other risks more likely
### 2. The Convenience Trade-off
- Each sovereignty sacrifice brings immediate benefits
- Costs are distant and theoretical
- Market rewards user-friendly but centralized solutions
- Creates feedback loop toward centralization
- Makes recovery increasingly difficult
### 3. The Protocol Ossification
- Changes become increasingly difficult
- Network can't adapt to threats
- Defensive improvements get harder
- Makes network vulnerable to anticipated attacks
- Reduces long-term resilience
## Systemic Weaknesses
### 1. The Bootstrap Paradox
- Network needs both SoV and MoE functions
- SoV encourages holding
- MoE requires movement
- Each side depends on the other
- Failure in either threatens both
### 2. The Sovereignty Spectrum
- Not binary sovereign/non-sovereign
- Each step away from sovereignty seems small
- Cumulative effect is significant
- Hard to define minimum viable sovereignty
- Makes defense difficult
### 3. The Regulatory Ratchet
- Regulations only increase
- Each rule seems reasonable alone
- Cumulative effect is capture
- Very hard to reverse
- Creates one-way path to centralization
## Most Likely Failure Scenario
The most probable path to failure combines multiple risks:
1. Initial Phase:
- Custodial solutions dominate
- Sovereign usage decreases
- Technical understanding declines
- "Bitcoin banks" emerge
2. Middle Phase:
- Regulated mining becomes norm
- Node count drops significantly
- Development centralizes
- Sovereign usage becomes fringe
3. Final Phase:
- Properties become theoretical
- 21M cap exists only on paper
- Network is effectively captured
- Bitcoin becomes "digital gold" in worst sense
## Critical Points of Resistance
The network is most vulnerable at:
1. The Mining Layer:
- Concentrated hashpower
- Regulated pools
- Permissioned transaction selection
2. The Protocol Layer:
- Development centralization
- Implementation monoculture
- Ossification
3. The Transaction Layer:
- Custodial dominance
- Regulated channels only
- Loss of sovereign usage
4. The Social Layer:
- Knowledge loss
- Sovereignty devaluation
- Cultural shift
## Why These Matter
The most dangerous risks share characteristics:
- Gradual rather than sudden
- Each step seems rational
- Hard to reverse once started
- Interact with and amplify each other
- Often invisible until too late
The network could maintain apparent function while losing essential properties:
- Transactions still occur
- Blocks still mint
- Price might even rise
- But fundamental properties lost
- Similar to current gold market
This makes these risks particularly insidious because:
- Hard to detect
- Easy to ignore
- Difficult to fight
- Nearly impossible to reverse
- Self-reinforcing
# The Bitcoin Medium of Exchange Problem
## The Core Issue
Bitcoin has two fundamental functions that should work together:
1. Store of Value (SoV)
2. Medium of Exchange (MoE)
Current data shows 94% of Bitcoin users treat it purely as a store of value. While this might seem fine on the surface, it creates a deep structural problem that threatens Bitcoin's long-term health.
## Why This Matters
### The Gold Comparison
Gold failed as money because it couldn't practically function as a medium of exchange. This led to paper claims on gold, which eventually became fiat currency. However, gold's physical properties (atomic number 79) remain unchanged regardless of usage patterns.
Bitcoin is different. Its properties aren't maintained by physics - they're maintained by active network participation. The 21 million cap isn't a law of nature; it's a rule that must be continuously enforced by network participants through active sovereign usage and verification.
### The Verification Loop
Every sovereign Bitcoin transaction serves two purposes:
1. Transfers value
2. Verifies and reinforces the network's fundamental properties
When users only hold and never transact, or transact only through custodians, they're not participating in this verification loop. This creates a critical weakness: the network's properties become theoretical rather than actively proven.
## The Monetary Law Problem
### Gresham's Law
"Bad money drives out good money" - when two forms of money are legally required to be accepted at the same face value, people will:
- Hoard the "good" money (Bitcoin)
- Spend the "bad" money (Fiat)
This perfectly explains current Bitcoin behavior. When prices are denominated in fiat with Bitcoin accepted at market rate, Gresham's Law makes hoarding Bitcoin the rational choice.
### Thiers' Law
"Good money drives out bad money" - when exchange rates can float freely and people can choose which money to accept, they'll:
- Prefer to use the good money
- Refuse the bad money
This is what we see in hyperinflationary scenarios where people actively prefer to transact in harder money despite legal requirements.
## The Paradox
This creates a complex challenge:
1. Under current conditions (fiat-denominated prices), Gresham's Law makes hoarding Bitcoin rational
2. But Bitcoin requires active sovereign usage to maintain its properties
3. Without maintained properties, Bitcoin can't reliably serve as a store of value
In other words: individual rational behavior under Gresham's Law threatens the very properties that make Bitcoin valuable.
## The Real Risk
Current trends point toward:
1. Increasing institutional adoption
2. More custodial solutions
3. Growing regulatory frameworks
4. Reduced sovereign usage
This mirrors how gold was captured:
1. Direct usage became impractical
2. Custodial solutions emerged
3. Paper claims replaced physical settlement
4. Properties became theoretical rather than actively verified
But Bitcoin faces an even greater risk than gold because its properties require active maintenance. Without sufficient sovereign usage:
1. The 21M cap becomes a theoretical construct rather than an actively enforced reality
2. Network security becomes dependent on regulated entities
3. Censorship resistance degrades
4. Bitcoin becomes "digital gold" in the worst sense - captured and neutered
## The Convenience Trap
The path of least resistance leads toward:
1. Custodial solutions
2. Regulatory compliance
3. Reduced sovereignty
4. Less direct verification
Each step seems individually rational but collectively threatens Bitcoin's fundamental value proposition.
## Why Technical Solutions Don't Fix This
Current proposals focus on:
1. Scaling solutions (Lightning)
2. Protocol improvements (Covenants)
3. Efficiency gains
But these don't address the core issue: people simply aren't choosing to use Bitcoin in a sovereign way, even when it's easy and cheap to do so. Current fees are minimal (~12 cents) and blocks aren't full, yet sovereign usage remains low.
## The Cultural Shift
The original Bitcoin culture emphasized:
1. Permissionless transactions
2. Censorship resistance
3. Individual sovereignty
Current culture emphasizes:
1. Store of value
2. Institutional adoption
3. Regulatory clarity
This shift matters because it changes behavior patterns that maintain Bitcoin's fundamental properties.
## The Core Question
How does Bitcoin maintain its store of value properties if its medium of exchange function is neglected?
The answer might be: it can't. Just as gold's store of value proposition was ultimately compromised by the failure of its medium of exchange function, Bitcoin faces the same risk - but with even greater stakes because its properties require active maintenance.
## Why This Isn't FUD
This isn't about:
- Price predictions
- Short-term concerns
- Technical limitations
- Regulatory threats
It's about the fundamental requirements for Bitcoin to function as designed. The store of value proposition depends on properties that must be actively maintained through sovereign usage.
2025 Bitcoin Safe Harbor Rule - Optimized 3-Wallet Design.
You want to spend your Bitcoin right?! Use this (or tell me why I’m wrong):
1. HODL Wallet (On-Chain)
• Purpose: Long-term storage for investment and tax-optimized gains.
• Accounting Method: HIFO (Highest-In, First-Out) to minimize gains when selling.
• Use Case: Store Bitcoin securely; avoid frequent withdrawals.
2. Lightning Buffer Wallet
• Purpose: Acts as a staging area for replenishing the Spending Wallet.
• Accounting Method: LIFO (Last-In, First-Out) to minimize short-term taxable gains.
• Use Case: Transfer BTC from the HODL Wallet in larger batches to reduce fees, then fund the Spending Wallet as needed.
3. Spending Wallet (Lightning)
• Purpose: Daily transactions for everyday spending.
• Accounting Method: FIFO (First-In, First-Out) for simplicity and compliance.
• Use Case: Use for small, frequent payments via the Lightning Network.
There is a certain irony to the IMF. One has to wonder if they crack a smile every time a country takes out an “I’m F’d” loan 🧐🥴
That was damn inspiring 🍾
nostr:note1h2hf5frelrnh35s673uwx38t6gyw37j6y6f9s4ad7kgfaqe7wcpspnf38p
Welcome to the club!
Great read!
Primal 2.0 is such a fantastic improvement. It’s so much easier to find interesting content! Excited for the future of nostr 🤩🤩🤩
#primal2.0 #nostr
The real question is can normal people handle the dopamine detox required to engage with a neutral social media framework 🤔 Or how can the framework incentivize them beyond their own well being - humans don’t tend to eat a lot of broccoli and spinach even though it is way better for them than ice cream.
The other alternative is a non private electronic voting system where anyone can verify what anyone else has voted. It would certainly keep people honest.
Shitcoins be shitcoins no matter what lipstick you put on the frog 🐸
Linking Solana to Coinbase’s wrapped “Bitcoin” cbBTC is the best you could do to steal BTC marketing for yourselves?
#shitcoin #solana #bitcoin
I haven’t watched legacy media in a long time. Thank you good sir for brightening my day with this comic relief. I haven’t laughed this hard in weeks 🤣🤣🤣
nostr:note1gfckgccke63z7u773dh6t990kw0fa270dtvx4vg29smu5ynw9n7qkrw8du
Haha yup a revoked law. Historical news.
And they say Paraguay is ugly 🤓😉
#naturalbeauty #Paraguay
