What started out as a Zuma loyalist protest movement has grown into widespread looting and chaos in Durban and the surrounding areas. While violent mobs can steal and destroy your physical property, your digital assets such as pension and bank accounts are threatened by the destruction of the rule of law just as much. Bitcoin is a viable alternative to assets that can be seized and looted.
Some of the other news items for the week are:
1. Square announces open source hardware wallet
Self-custody is how Satoshi intended Bitcoin to be stored. Bitcoin was designed specifically to remove trusted third parties from the equation and as a result of this, we have multiple hardware wallet developers all competing to create the best hardware wallet on which to store your private keys. Square (Jack Dorsey’s “other” company) has been ploughing resources into Square Crypto, a division which creates open-source toolkits, of which their latest is an open source hardware wallet. This is great news for Bitcoiners, as many of the current hardware wallets available on the market are closed source. This means that you have to trust the manufacturer to not leave any back doors into your hardware wallet, while you have no way of verifying their claims that their product is 100% secure.
More details here.
2. Bullish on-chain metrics: New Wallet growth
As we are all painfully aware, the Bitcoin price has been languishing in the territory of $30-$40k for a few months now. This has even led some perma-bears to claim that Bitcoin is back in a bear market. How would you know if this is true or not? Besides price action, there are other metrics that can be included in your analysis of the situation. One of our favourites is on-chain metrics investigating new user growth. Essentially, what this metric shows us is that accumulation of Bitcoin is steadily increasing, this is not the case in a bear market. Read more about it here.
You can investigate on-chain metrics here.
3. Lightning Network growth
The Lightning Network is a second layer built on top of Bitcoin that enables instant and cheap transactions, destroying the value proposition of thousands of altcoins. The capacity of the Lightning Network has been rapidly increasing, with over 20% growth in total capacity in the last month alone.
As El-Salvador moves to incorporate Bitcoin as legal tender, we can expect this growth to increase exponentially. The importance of the Lightning Network cannot be understated, as it essentially allows Bitcoin to scale, provide near instant transactions and keep transaction fees in check. Read more about Lightning metrics here and here.
4. Bitcoin miners move West
Last week, we wrote about the great Chinese miner exodus, following the crackdown by the CCP on Bitcoin miners. However, the Chinese government made one great mistake: they did not confiscate the mining hardware. As a result, the miners have largely picked up their hardware and migrated west.
Large amounts of hash power have been coming online over the past weeks, with over a 50% gain in the last two weeks alone, indicating that the displaced hardware is coming online fast.
Furthermore, large deals are being struck between western institutions, who have access to capital and sophisticated capital markets, and Chinese miners who are selling their hardware. This is great news for the decentralization of Bitcoin.
Why you need Bitcoin in South Africa
Over the weekend of the 10th of July, vast mobs of looters descended on Durban, allegedly protesting the incarceration of ex-president Jacob Zuma. This rapidly escalated into full blown looting, on a scale that is hard to describe. Jacob Zuma’s alleged innocence was soon forgotten, as looters burned businesses to the ground, after looting anything and everything they could lay their hands on. Big or small, no business was spared; from the smallest corner shop to entire shopping malls were set ablaze. Violent looting mobs however, are nothing new, the summer of 2020 in the United States illustrated this well. The difference in South Africa has been the lack of a credible law enforcement presence to protect property from theft and damage.
The police are spread too thin, too underfunded, too poorly trained and in some cases, allegedly complicit in the looting. Armed citizens and private security have formed the backbone of the response to the rampant looting, perpetrated by thousands of individuals. In many cases the police are nowhere to be found, most likely not due to malevolence, but rather just because there are not enough of them. The so-called thin blue line was replaced over the weekend by hundreds of armed, regular citizens, standing up to defend their homes, property and communities.
The cause of the riots is up for debate, but what is crystal clear is that the average citizen is on their own. At best, you can expect the police to show up to take a statement for insurance purposes. They are not a significant deterrent to crime and almost certainly will not be able to stop any crime as it happens. This is a terrifying thought when applied to physical property such as our homes, vehicles and businesses, but what about our digital assets, such as pensions and bank balances?
Do you think that the government agents charged with defending your digital assets will be any better at keeping the marauding hordes at bay when they try to loot your pension? In this scenario the hordes may not be throngs of the poverty-stricken, but rather legislation writing politicians, but the end result is the same. The rule of law is made to be broken. After all, the looting mobs that we have seen over the past few days are simply emulating what politicians have been doing relentlessly over the past few decades.
What is painfully apparent in South Africa today, is that just like providing security against looting mobs rolling into your suburb, you will have to defend your assets yourself. The integrity of your bank balance, pension, home and all your worldly physical possessions are subject to the rule of law being maintained. This weekend has shown us that this thin veneer can rapidly be breached.
But what if you owned an asset that cannot be confiscated? No matter how large the mob, or how duplicitous the government? No matter how determined or angry the attacker, what if they could never take what doesn’t belong to them? What if you had an asset that has no physical presence, but can be used to store tens of millions in value and be transferred to anyone on earth without the permission of any third party? This asset exists, it’s called Bitcoin.
If you think that there is a chance that the mob moves on from looting your business to looting your pension, then you may need to consider Bitcoin.
Bitvice Podcasts and Media
Interview with Roman, upcoming interview with Louis Nel
Last week, we had the immense pleasure of interviewing Roman Cabanac on our podcast. We got into the theory surrounding the philosophy of anarchism and how South Africa is a prime blueprint for anarchy (we didn’t realise it would arrive so quickly).
Keep stacking those Sats and have a safe week further.