Don't forget, bitcoin is a distributed network that is constantly under attack.
Here's a new initiative that is flying under the radar this week, but is significantly more impactful on the long-term health of the bitcoin network than anything happening at the White House or in corporate board rooms around the world; peer-observe from b10c.
In the thrall of number go up, perceived government acceptance of bitcoin, and the incessant coverage of both by the mainstream financial media it is very easy to forget that bitcoin is a distributed network that is vulnerable to attacks at many different levels. And whether you realize it or not, the network is constantly under attack. This should be expected. Bitcoin stands to seriously disrupt the ability of today's power structure to exert force over the Common Man and his money, which is one of the most effective points of leverage the power structure has over him.
While most paying attention to bitcoin right now are focused on the wall of institutional capital flooding into the market and the US government's perceived support of bitcoin, there are a number of under appreciated individuals who have dedicated their lives to ensuring that the bitcoin protocol remains operational and has the necessary alarm systems and defense mechanisms to fend off attacks. One of those individuals is b10c, and early this week he wrote a blog post explaining peer-observe, which monitors the peer-to-peer messaging layer of bitcoin that nodes use to communicate with each other for attacks on individual nodes and the network at large.
In short, peer-observer is a project that entails b10c spinning up what he refers to as "honeypot" nodes with beefed up analytics capabilities to monitor any abnormalities that arise in the peer-to-peer network due to the efforts of an attacker trying to disrupt the facilitation of message transfers, launch Sybil attacks, or flood nodes with large amounts of data which causes them to crash at the peer-to-peer level. He does this with his own hardware and some hardware he was able to acquire due to the generosity of bitcoin development funds who recognize that this is very critical work. We are extremely lucky that someone like b10c exists and is willing to do this thankless Yeoman's work to protect the network. However, it is insane that bitcoin is a $2.35T market and all of us users are dependent on the work of this one man and a few others to even know that attacks like this are happening. Bitcoin is bigger than a number of companies in the Mag 7, and arguably many orders of magnitude more important, yet they certainly dedicate many orders of magnitude more resources to monitor and secure their systems.
To that point, b10c has made a call to action to create a "Bitcoin Network Operations Collective" that would monitor the network, share ideas, produce data, and create tools to make sure users are sufficiently aware when the network is under attack and have the tools necessary to deter it.
Number go up and people who previously derided us for liking bitcoin suddenly talking nice about it is certainly fun and interesting, but it is all for naught if the network isn't sufficiently monitored and defended by those who would like to see bitcoin succeed as it attempts to keep the creation and facilitation of money separate from the state and central banks. Make sure you pay attention to this stuff.
Scott, aka @DarkSide2030_ presented a compelling thesis that Bitcoin's unique properties will create an unprecedented derivatives crisis. As he explained, Bitcoin is the first bearer asset that can be verified on-chain and self-custodied within hours - something Wall Street has never encountered. Scott emphasized that derivatives markets require underlying assets to be freely available for loan, but Bitcoin's finite supply breaks this model. When financial stress hits, institutions will rush to self-custody, rapidly draining available lending supply.
"There's nobody to tap on the shoulder. So ultimately, you have a derivatives market that's growing exponentially. And at the same time, you have an underlying asset, which is infinitely scarce." - Scott (@DarkSide2030_)
Unlike the Volkswagen or GameStop squeezes that Scott referenced, there's no CEO who can issue more Bitcoin to resolve the crisis. He warns this creates a catastrophic feedback loop - the worse things get, the more Bitcoin gets pulled into cold storage, further constraining derivatives markets. This isn't a bug, it's a feature that will fundamentally reshape finance.
Check out the full podcast here for more on stablecoins destabilizing nations, Bitcoin killing the 4-year cycle and structured credit products.
Senator Lummis' Bill Makes Crypto Count for Mortgages - via X
Senator Lummis Introduces Bitcoin Mortgage Bill - via X
Twenty One Expects to Add 5800 Bitcoin - via X
Zooz Raises $180M for Bitcoin Treasury - via X
White House to Release Assets Report Tomorrow - via X
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Final thought...
Pray that I can sleep on this red eye.
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