Bitcoin Well
Adam O’Brien
It’s likely you wouldn’t own any bitcoin if it didn’t have NGU tech (that’s the official term for “price appreciation”), but I would like to argue that that isn’t Bitcoin’s greatest feature.
Obviously, preserving purchasing power is key in your money. But what good is your 100x gainz if you have no access to it?
In fact, I would be willing to bet that the majority of people who lost bitcoin in the FTX collapse would take less bitcoin, just to have access to some bitcoin. In other words, they would be willing to sacrifice gains in favour of custody.
If we dive in further, the Bitcoin whitepaper doesn’t even directly contemplate the capped supply. In fact, the 21 million supply cap is only input into the code, not the whitepaper. Arguably, this was not the most important thing.
It talks about a peer to peer trustless network for payments. This implies that Satoshi’s invention is actually designed to give you the ability to control your money as the primary function.
In 2024, and especially in Canada, you can either hold money (cash) or use your money (bank). They have done a good job eliminating your ability to use cash, which in turn exposes you to needing to ask for permission to use your money. But why? Well friends, let me introduce you to 4 numbers that, when put together, should terrify you.
6 – 1 – 0 – 2
91 years ago, on May 1st 1933, President Roosevelt and the geniuses in charge of the money decided economic spending was down and they needed to stimulate the economy. To be fair, spending was down, but Executive Order 6102 was not the answer.
On May 1, 1933 the government made it illegal to own gold. As of that date it was mandatory to give the government your gold, in exchange for $20.67 of paper notes (US Dollars).
You might think “who cares?” Value for value, right? Gold bars are hard to spend anyway. And this is true. Spending gold and the barter system is completely useless in a modern society (and even in 1933), but the government had the ability to control the paper they gave out to citizens. And that was the issue.
I’m not going to run through the later debasement of the dollars that were given to the citizens of the USA in exchange for gold. Today, I am more interested in discussing how the Bitcoin network, and holding bitcoin in self custody (not an ETF or a “hosted” wallet), prevents against a future 6102 equivalent – where the government demands that we hand over our bitcoin for “paper notes”.
In 2024 there are effectively three types of bitcoin “ownership” (we’ll talk about why I put that in quotations in a minute).
Bitcoin stored on the blockchain in your personal wallet
Bitcoin stored on the blockchain in a “hosted” or custodial wallet (basically someone else’s personal wallet)
Bitcoin exposure through share certificates in an ETF
All of these three types of bitcoin exposure have different pros and cons. Lets start from least risk to most risk.
Bitcoin ownership in your personal wallet
You’ll notice this is the only title with the word ownership. This is the only way you can actually own and take advantage of the entirety of Bitcoin (big B, Bitcoin protocol and network, not just the token that we trade).
The downside here is unwinding our fiat brains, and undergoing a bit of education with a lot of stress. Because, for nearly a century, we have not been encouraged (or allowed) to hold our own wealth.
It seems a little silly when I put it that way, eh? Since the government made it illegal to hold gold in 1933, we have not been able to hold a unit of account stored in a peer to peer trustless network (gold). After May 1, 1933 you were actually punished with 6 months in jail and/or a $10,000 fine for holding your wealth in the then peer to peer trustless network. The only option given was to hold notes of “equal value” in a centralised trusted network (dollars) supposedly backed by (but not auditable) the gold that was taken.
Well, the physicality of gold made it difficult to escape that madness.
You couldn’t just jump on a boat and bolt with your generational wealth in a suitcase. It was too easy to spot. But the same is not true with Bitcoin!
With bitcoin stored in a personal wallet, you can store your generational wealth in digital form. You can save your money in a form that is only accessible by you, and invisible to everyone else. Finally, you can be sovereign.
“But Adam, the tax breaks”
Wake up, son!
They are incentivizing you to physically separate you from your generational wealth. We’ll talk about that in the “Bitcoin exposure through ETF” section, but first, I want to touch on hosted wallets.
Bitcoin exposure through hosted wallets
This is the sneakiest of the dangers. A silent killer of your generational wealth. That the “hosts” or “custodians” that we are trusting with our coins will be on our side. They’ll make it easy for us to use. They’ll share our ideology. They’ll be fighting the same war against dollar debasement and theft. But they’ll have no choice when push comes to shove.
At the end of the day, when you give your coins to a company to “keep safe” they will, until they can’t. And in a 6102 scenario, they won’t be able to.
As I just described, the citizens of 1933 were forced to surrender their gold to the government. Failure to comply was punishable with jail time and massive fines. You and I might choose to individually take on the risk to take our bitcoin and flee that jurisdiction with our bitcoin safely tucked away in our personal wallets. But would the CEO of that company that is holding your coins in a hosted wallet? Would that board of directors?
When coins are held outside of your control, you have no control. It seems like a very basic statement but we sometimes forget when the custodian allows us to withdraw with ease. When they say the same things we believe. When they hate the same things we hate. I am not suggesting they will want to do evil things. I am suggesting they will have no choice but to allow the evil ones to do evil things with your bitcoin.
It is now your duty, as someone who knows better, to onboard your friends and families to self-custody platforms. Do not support those that can be exposed to the evil practices of a 6102 attack. As they grow, so does the centralization of bitcoin, and thus grows the success and reward of a 6102 attack by the government.
“Surely this man is on board with tax sheltered bitcoin, right”?
Bitcoin exposure through ETFs
“Yay! Tax sheltered bitcoin! We are so lucky to be able to hold this influential NGU technology in a registered vehicle!” Right?
Wrong!
This type of thinking gives you a maximum risk of 6102. It is high time preference behaviour that will undoubtedly make it easier for the government to steal “your” bitcoin at any point they like.
When you store your bitcoin exposure in an ETF, you are essentially trading the true value of bitcoin (a peer to peer trustless network for individuals to transact on) for a relatively small and largely unknown tax break in a jurisdiction that you may or may not reside at some point in the future. Further to that, when you sell your exposure for dollars that can only go into one place.
Wut?
You mean to tell me you are going to feel good about looking your granddaughter in the eye, with an empty hardware wallet, and explain to her that you wanted to “protect yourself against the government overreach” by “holding bitcoin” in an account that is literally registered with the government?
You might say “I have my bitcoin in cold storage and I max out my TFSA (Canada) or my 401k (USA) with bitcoin exposure”. And to that, I say good luck. I say that you better hope the government doesn’t repeat their decision from 91 years ago before you sell and get those coins into a real bitcoin wallet that can actually be passed down to provide your bloodline with the benefits you are working hard to provide.
Please take a moment to think about what you just read. Those are the three ways people who say they own bitcoin, “own bitcoin”.
But now you know, there is only one real way to own bitcoin.
You do not own bitcoin you cannot spend without someone else’s permission. In other words, bitcoin held outside the peer to peer trustless network that Satoshi talked about is not real bitcoin.
Is your bitcoin stored in a Blackrock ETF? You cannot spend it.
Is your bitcoin stored in a Coinbase wallet? You cannot spend it.
Is your bitcoin stored in a government controlled app called Chivo? You cannot spend it.
Again, I ask the question, what good is your 100x gains if you cannot spend it the way your grandkids want to?
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Note from Stackchain Magazine: No Bitcoin (or inferior monies) were exchanged for this article. This article was written by Adam O’Brian From Bitcoin Well “The fastest and safest way to buy Bitcoin on-chain or via the lightning network in Canada or the USA” according to their Website BitcoinWell which you should totally go check out. Also you can follow the man himself on X @adamobrien_ or on nostr @adam@btcw.app .if you enjoyed Adam’s article and you’d like to tip him you can do so via LNURL adam@primal.net