Certain topics recur periodically in my work. This page sorts some favorites thematically. Skip to:
- Proof of Reserves
- Free Banking
- Bitcoin Banking
- Political economy
- Measuring blockchains
Proof of Reserves
Proof of Reserves is the idea that custodial businesses holding cryptocurrency should create public facing attestations as to their assets held on deposit, matched up with a proof of user balances (liabilities).
- Coindesk, Let’s Actually Commit to Proofs of Reserve This Time, OK?
- Coindesk, How to Stop the Next Quadriga: Make Exchanges Prove Their Reserves
- Chamber of Digital Commerce, Proof of Reserves: the Practitioner’s Guide
- Medium, How to scale Bitcoin (without changing a thing)
- Medium, The Status of Proof of Reserve as of Year End 2022
- Medium, Proof of Reserve for Policymakers
- On The Brink, Proof of Reserves miniseries
- My Proof of Reserve Wall of Fame (and FAQ)
Bitcoin Energy Consumption
Much has been written on the topic of Bitcoin’s energy consumption and whether it’s ultimately worthwhile. I cover both the normative debate – does Bitcoin have a valid claim on any of society’s resources – and the factive debate – what does Bitcoin’s energy footprint actually look like? I recommend the full suite of articles to understand this complex topic.
- Coindesk, Crypto Mining, the Energy Crisis and the End of ESG
- Coindesk, The Last Word On Bitcoin’s Energy Consumption
- Coindesk, What Bloomberg Gets Wrong About Bitcoin’s Climate Footprint
- Coindesk, The Frustrating, Maddening, All-Consuming Bitcoin Energy Debate
- Coindesk, Want Cleaner Bitcoin Mining? Subsidize it
- Coindesk, Bitcoin Mining Is Reshaping the Energy Sector and No One Is Talking About It
- Coindesk, Crypto Mining, the Energy Crisis, and the End of ESG
- Medium, Noahbjectivity on Bitcoin Mining
- Medium, On Bitcoin, the Gray Lady Embraces Climate Lysenkoism
- Harvard Business Review, How Much Energy Does Bitcoin Actually Consume?
- Bitcoin Magazine, The Bitcoin Energy Debate is a Modern Reprise of the Gold Resource Cost Debate
- Bitcoin Magazine, Miners are the Optimal Buyers: the Data Behind Bitcoin-led Decarbonization in Texas
- Bitcoin Magazine, Bitcoin’s Proof of Work is Well Worth its Fees
- Newsweek, Bitcoin Mining Is America’s Most Misunderstood Industry
- NYDIG, Bitcoin Net Zero (with Ross Stephens)
- Letter to Michael Regan of the EPA, with Darin Feinstein and Michael Saylor
- Medium, Comments on the White House report on the climate implications of crypto mining
Talks and Appearances
- The B Word conference, Debunking ‘Bitcoin wastes Energy’ (video) (PDF)
- The On The Brink Mining Miniseries
- Texas Blockchain Summit, Bitcoin Mining in Texas (PDF)
- Reason, The Fake Environmentalist Attack on Bitcoin, (Nov. 2021)
- This Machine Greens, documentary by Jamie King (Sep. 2021)
- Bloomberg’s What’d You Miss, What People Get Wrong about Bitcoin’s Carbon Footprint, live on TV with Joe Weisenthal (Feb. 2021)
- Nic’s Youtube Channel, Bill Maher relies on debunked science for his Bitcoin energy critique (breakdown of the infamous Mora et al 2018 paper)
I make no secret of the fact that I believe that a complementary phenomenon to Bitcoin is the insertion of fiat currency on chain. Far from being competitive with Bitcoin, I view this trend as highly synergistic. Cryptodollars have only been able to reach critical mass because of the infrastructure built to support Bitcoin: exchanges in virtually every country on earth, and ever more sophisticated wallet technology, in particular on mobile. And as cryptodollars proliferate, they introduce users to the notion of storing value as information, popularizing non-state cryptographic bearer assets.
In the long run, Bitcoin will impose discipline on every single central bank, but in the near term, the greatest threat to weak sovereign currencies is simply high-powered, frictionless cryptodollars – delivered on crypto-financial infrastructure. While I initially wasn’t impressed by cryptodollars, I have come to see them as occupying a different niche: they are ultimately liabilities of the banking system and will never be liability-free “digital specie” like Bitcoin. Nevertheless, it is cryptodollars which have seized the spotlight this year.
- Coindesk, The Crypto-Dollar Surge and the American Opportunity
- Castle Island, Cryptodollars: the story so far
- Coindesk, Policymakers Shouldn’t Fear Digital Money: So Far It’s Maintaining the Dollar’s Status
- On The Brink Podcast, The crypto-dollarization miniseries
- ARK Invest’s FYI Podcast: A History of Bitcoin’s Predecessors, Dollarization, and Stablecoins, hosted by Yassine Elmandjra
- Bankless, Crypto-fiat: Mutualistic or Parasitic?
- On The Brink Podcast, Matt Ahlborg on Bitcoin as a bridge currency
Free Banking, alternatively known as laissez-faire banking, refers to banking arrangements in which central banks and governments exert little control or regulation over the bank sector. Left to their own devices, banks historically issued banknotes redeemable for specie held in reserve. In the most unregulated configurations, free banking systems were remarkably stable and run-free, with shocks infrequent and bank failures uncommon. The best-documented instances date back to 1714 to 1844 in Scotland and in the 19th century Canada, but other episodes can be found in Switzerland, Sweden, Chile – in total, around 60 historical episodes. Many have drawn comparisons between free banking episodes and contemporary stablecoins. I explore those here.
- Coindesk, Why Central Bankers Invoke Free Banking to Attack Stablecoins
- Castle Island, Cryptodollars: The Story so Far
- Murmurations, Scotland, Free Banks, and Stablecoins
- On The Brink, George Selgin on Stablecoins, Bitcoin, and Free Banking
- On The Brink, Larry White on Free Banking in the Age of Crypto
Something I often think about is how Bitcoin can scale and function in a layered manner as the liability-free collateral for a robust financial system. Currently, Bitcoin is partially financialized, held by a patchwork of intermediaries like exchanges and custodians. Some of these have begun to offer banking services, as a proto-crypto banking network has begun to develop.
It’s my belief that, given Bitcoin’s amazing auditability and verifiability properties, and the ease of taking “physical” delivery of the asset, Bitcoin could function as a kind of neo-specie to power a free banking system that would echo the successful periods of unregulated banking in the 19th century in places like Scotland.
A development of a system like this would enable Bitcoin to scale its usage of the base-layer blockchain and functionally scale in the layered manner than visionaries like Hal Finney predicted. However, much work remains to be done: Bitcoin banks operating today must be held accountable, lest they abuse their privilege, as they have done many times in the past:
- Coindesk, The Credit Crunch Is Not the End of Crypto Lending
- Coindesk, The Case for Bitcoin Banking (Despite Cred’s Bankruptcy)
- Medium, How to scale Bitcoin (without changing a thing)
- Medium, Unpacking Bitcoin’s Assurances
- Bankless, A crypto banking reality check
- On The Brink, Lawrence White – Free Banking in the Age of Crypto
The political economy of Bitcoin
Bitcoin isn’t just a monetary phenomenon. It’s a profoundly political idea. Some of its critics use this as a smear, attempting to class Bitcoin as a dangerous or radical notion. While Bitcoin is a neutral money, thanks to its free market initial distribution as well as the abolition of monetary discretion within the protocol, its imposition on the world is decidedly non-neutral. Bitcoin is perhaps best described as a revanchist movement, aimed at taking back what certain developed countries once had: a system of free and unconstrained banking based on a gold standard.
Thus it’s very important to understand the values that are embedded in the protocol: self-determination, a strong and inviolate respect for property rights, a rejection of seigniorage and ‘Cantillon insiders’, and an indifference to the contingencies of an individual’s birth or circumstances. All are treated equally by the protocol.
- Medium, A most peaceful revolution
- Medium/The Bitcoin Times, The cat is out of the bag
- Medium, Lessons from the uneven distribution of capital
- American Mind, Après Le Déluge, Bitcoin
- Coindesk, Corporate America Knows the Bailout Is Baked In
- Coindesk, Crypto Progressives Become Conservative With Their Own Chains (originally titled ‘The paradox of crypto-progressivism’)
- Palladium Podcast: Bitcoin as a Disciplinary Force, hosted by Wolf Tivy
How to measure public blockchains
Actually determining the relative importance of public blockchains is a controversial field. While measures like transaction count and market capitalization have historically been lionized, I have endeavored to help researchers think beyond those metrics and look for more sophisticated measures.
Time to finality
Relative measures of economic significance
- Coin Metrics, Evaluating Bitcoin forks with network data
- Medium, Transaction count is an inferior measure
- SSRN, Calculating Cryptoasset Market Shares (with Konstantinos Stylianou)
- HBS Blockchain Conference (2019), Assessing the relative economic impact of public blockchains
New measures of transactional value and economic size
- Coin Metrics, Introducing Realized Capitalization
- Coin Metrics, Introducing our adjusted transaction volume estimates
- Baltic Honeybadger Conference (2018), Bitcoin as a Novel Market Institution (where I first introduced Realized Capitalization)