Pongo Points: 10/12/23

Fidelity likes Bitcoin | JP Morgan uses blockchain | UK Goes Nuclear | NYT Hates A.I. | Bitcoin Gets Smart

1. Fidelity Releases New Pro-Bitcoin Report

Why it’s interesting: Major financial services companies are beginning to differentiate between Bitcoin and crypto, which indicates greater sophistication by institutions entering the blockchain and digital asset space.

  • The report highlights Bitcoin’s unique value proposition as a new form of money, exhibiting properties that might give Bitcoin the potential to become the primary monetary good.

What stands out: The authors make cogent and non-technical arguments for the future of Bitcoin, including a multi-chain vs. a winner-take-all outcome for the blockchain/crypto industry.

  • The report draws a comparison between Bitcoin’s protocol layer and TCP/IP, the base layer of the internet, suggesting that the Bitcoin network can become the foundation for the future. (Self-plug: Pongo has written about this perspective as well.)

What’s next: Fidelity has over $11.7 trillion in assets under administration and $4.5 trillion under management, making it a behemoth in the finance world. A glowing review of Bitcoin from such a massive and trusted entity is likely to attract more retail and institutional investment.

2. JP Morgan Debuts Blockchain Settlement Platform

Why it’s interesting: The largest bank in the US, whose CEO has previously expressed skepticism for Bitcoin and digital assets, is now actively implementing blockchain tokens as part of its commercial strategy.

  • Jamie Dimon, chairman and CEO of JP Morgan Chase, has long differentiated between Bitcoin and blockchain, arguing that blockchain has benefits whereas Bitcoin is a “hyped-up fraud.”

What stands out: The brief mention of JP Morgan’s system called “JPM Coin” has processed around $300 billion of payments from wholesale clients using dollars or euros.

  • The growing commercialization of tokens might lead to a softening of Jamie Dimon’s stance on Bitcoin and other digital assets, especially if the market begins to demand some decentralization of powers or interoperability with other private blockchains.

What’s next: The success of JP Morgan’s blockchain efforts will motivate other private institutions, from banks to mortgage companies, to develop their own blockchains in order to stay competitive.

3. UK Selects Six Companies to Produce Small Nuclear Reactors

Why it’s interesting: Nuclear energy has long been feared due to its inevitable association with the explosive devices that use the same fuel, but the UK government now recognizes the need to embrace new technologies in the space.

  • Despite historical apprehension, there has been a resurgence in interest (and investment) in nuclear energy thanks to the growing need for sustainable electricity production to meet various global net-zero targets.

What stands out: The process for the selected companies to earn government funding, via contracts and investment, appears protracted, with larger investment decisions not to be made until 2029.

  • The US has also been funding small modular reactor (SMR) technology dating back to 2018, including potential overlap investments with the UK government in NuScale, Westinghouse, and GE-Hitachi.

What’s next: The UK government’s growing acceptance of nuclear power is a positive step to reducing the country’s dependence on oil, as well as helping to secure the UK’s energy independence on the world stage.

4. NY Times Goes After A.I. Electricity Use

Why it’s interesting: Various media outlets have been making efforts to juxtapose the energy consumption of groundbreaking technologies to the electricity use of smaller countries, without identifying a clear objective for the comparison.

  • The implied purpose is that these new innovations are using greater amounts of electricity (which is primarily generated via coal, oil, or gas), and thus contributing negatively to climate change.

What stands out: The Ph.D. student referenced, Alexander De Vries, is the same researcher who spearheaded a number of anti-Bitcoin mining papers and indices, like the Bitcoin Energy Consumption Index.

  • A number of pro-Bitcoin researchers, investors, and companies have pointed out the flawed methodology upon which De Vries bases his research, including the lifecycle of Bitcoin mining equipment and the sources of electricity used.

What’s next: While technologies like A.I. and Bitcoin will continue to use more power in the future, the focus should be on the energy mix that data centers draw from rather than the raw gigawatts being used (i.e. electricity generated by fossil fuels vs. sustainable sources).

5. Bitcoin Gets Smart

Read it on BitVM here: BitVM: Compute Anything on Bitcoin

Why it’s interesting: Bitcoin is often dismissed by the crypto industry due to its relatively simple premise of transacting value, whereas blockchains like Ethereum have greater flexibility and more use cases via smart contracts.

  • This model presents a new use case for Bitcoin without requiring a major fork in the code that might be contested by consensus. In other words, it is functional today and doesn’t risk bifurcating the community.

What stands out: Using the BitVM model, Bitcoin can now be programmed with more complex operations similar to Ethereum or in entirely new, undiscovered ways that might elicit a renaissance for products building on top of the Bitcoin blockchain.

  • It is more limited than Ethereum, in that these more complex operations are currently restricted to two agents (whereas Ethereum can accommodate larger sets of counterparties), but research is ongoing.

What’s next: This research increases the potential for Bitcoin to become the base layer for the next iteration of the internet, since BitVM allows for new products to build on top of Bitcoin and use it a security and data layer.

Meme Finisher

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