HRF’s Weekly Financial Freedom Report #13

The Financial Freedom Report is a newsletter focusing on the role currency and banking play in the civil liberties and human rights struggles of those living under authoritarian regimes. We also spotlight new tools and applications that can help individuals protect their financial freedom.

Good morning readers,

This week, we witnessed a rise in state-level censorship in finance and communications. Honduran regulators banned the country’s financial institutions from trading in cryptocurrency; Nigerian officials restricted access to global cryptocurrency exchanges in a desperate attempt to stabilize its currency, the Naira; and Pakistan blocked access to the X platform for eight days straight amid political unrest.

In the good news department, the Signal messaging app introduced a new way for users to connect without having to share phone numbers, helping strengthen individual privacy.

Finally, we highlight an important video from educator and HRF partner Ben Sessions sharing advice on how human rights advocates can fundraise safely, as well as an interview between Twitter and Block founder Jack Dorsey and Reynolds Foundation CEO Álvaro Salas Castro on the critical nature of open source code in the fight for free and democratic societies.

Let’s dive in.

P.S. HRF staff will be attending and speaking at Bitcoin Atlantis, taking place this weekend in Madeira, Portugal. HRF will be curating a track on Bitcoin and human rights, where our chief strategy officer, Alex Gladstein, will be speaking alongside Jack Dorsey, Lyn Alden, and Farida Nabourema. HRF’s Jhanisse Vaca Daza and Arsh Molu will also speak on themes of activism, education, and global adoption. To learn more, click here.

Global News

Signal | Introduction of Usernames

Signal, an open-source end-to-end encrypted messaging app, is introducing usernames and phone number privacy, making it possible for users to connect with each other without sharing their phone numbers. Signal uses end-to-end encryption, which means only the sender and recipient can access the content of messages. This ensures that communications remain private and that no third party, including governments, can intercept messages. This new functionality will offer increased security for activists, who may use the app to — for example — coordinate financial transactions. To sign up for their beta program and test this feature, click here.

Honduras | Bitcoin and Cryptocurrency Ban

The Honduras National Banking and Securities Commission (CNBS) implemented a ban prohibiting financial institutions from engaging with Bitcoin and digital assets not authorized by the country’s central bank. The CNBS cited concerns over the multi-jurisdictional nature of many crypto platforms operating in Honduras, stating that Honduran law lacks control over them and that they risk “lending themselves to activities of fraud, money laundering, and terrorist financing.” A crackdown on Bitcoin comes at the same time the government is developing a Central Bank Digital Currency (CBDC), which they began researching in 2022. Something to also keep an eye on is that Honduras contains a special island economic zone called Próspera, which recently adopted Bitcoin as legal tender. It will be interesting to see if this status can survive the government’s harsh stance on cryptocurrency.

Nigeria | Stablecoin Censorship and Manipulation

To support its crumbling currency (the Naira), Nigeria blocked access to global cryptocurrency exchanges (i.e., Coinbase, Binance, and Kraken). Binance, under regulatory pressure, tried to cap the selling price of USDT (Tether stablecoin) at 1,802 Naira, even as the dollar street rate plummeted below that rate. “Binance, facing regulatory showdown in many countries and causing disruptions in the currency market, should not be allowed to dictate the value of the naira, not on its crypto exchange platform,” Bayo Onanuga, special adviser on information and strategy to the president of Nigeria, said. The government is clearly desperate to assert control over citizen use of technologies like stablecoins and Bitcoin when its own currency is collapsing so badly that the price of food has doubled, and people are dying in rice stampedes.

Pakistan | Censorship of Social Media

Amid political unrest and protests sparked by recent election results, Pakistan’s media regulators blocked social media platform X for eight consecutive days. With years of financial mismanagement, just $8 billion in foreign reserves (only enough for six weeks’ worth of imports), most of the state revenue going to repay interest, and an energy crisis, access to online information on social platforms during electoral periods is more critical than ever. Online conversations help Pakistanis make informed decisions about their financial and economic future. Human rights activists have since demanded the immediate restoration of internet services and access to social media across the country. To keep an eye on the unfolding situation, follow Netblocks, a nonprofit and HRF grantee that tracks Internet shutdowns worldwide.

Ethiopia | Authoritarian Regime Mining Bitcoin

The Ethiopian government unveiled a $250 million mining project in collaboration with Hong Kong-based West Data Group, making it the first country in Africa to engage in state-level Bitcoin mining. Each year, the country generates many gigawatts of power it can’t use, and that electricity goes to waste. Bitcoin mining promises to help ameliorate this, but questions remain about how the authoritarian regime will use these new resources and whether the state’s strict controls on the citizen’s use of foreign exchange and Bitcoin can survive in an environment where Bitcoin mining is becoming more widespread.

The Latest in Bitcoin Development and Education

Braiins | First Mining Pool to Integrate Lightning

Bitcoin mining pool Braiins introduced Lightning payouts, making it the first Bitcoin mining pool to do so. Demanded by small miners over the years, this is a step forward to streaming mining revenue to Lightning nodes. Individual miners (especially home miners) will be able to instantly receive BTC directly to their Lightning wallet, benefit from significantly lower fees, and have no withdrawal limits. This latest innovation is a significant milestone in the evolution of Bitcoin mining, creating a world in which small off-grid mining operations, which are critical to the decentralized nature of Bitcoin, can operate more effectively.

Blockstream | Cross-Input Signature Aggregation Research

Blockstream Research, a Bitcoin-focused cryptography team, outlined details for a proposed future Bitcoin upgrade called Cross-Input Signature Aggregation (CISA). CISA is a potential soft fork for Bitcoin that reduces transaction weight on the blockchain. Instead of having one signature per input in a Bitcoin transaction, CISA aggregates inputs into one aggregate signature while still ensuring all inputs are valid. This would reduce transaction sizes and lower fees, allowing more transactions to be included in a block and contributing to a more scalable and efficient Bitcoin network. CISA could also boost Bitcoin privacy by making techniques like CoinJoin more economical for users. It’s possible that CISA could even make privacy-preserving transactions like CoinJoin cheaper than normal, non-privacy-preserving transactions.

Bitkey | Releases Wallet Code

Bitkey published the code for its hardware, firmware, mobile app, and server to signal its commitment to transparency. “Starting today, anyone can audit the code behind Bitkey to understand how it works and to verify that it doesn’t include functionality that could give Block control over our customers’ funds,” the company said. Bitkey is a self-custody Bitcoin wallet developed by Block that provides users with a mobile app, hardware for securing savings, and recovery tools. Its simplicity makes it particularly attractive for newcomers and individuals who are not particularly tech-savvy but still wish to run a self-custodial multi-signature setup.

Phoenix Wallet | Swaproot and Quiescence

Phoenix released a significant update, introducing Swaproot and Quiescence to its Lightning wallet. The upgrade comes in the form of a new swap-in protocol (a “swap-in” is an on-chain transaction used to add funds to a Lightning Channel). “Using Taproot, MuSig2, and bitcoin descriptors, we designed and implemented a new swap-in protocol: swap-in transactions are now cheaper and harder to track on-chain, and Phoenix will generate a new swap-in address every time you receive a transaction,” Phoenix said. Additionally, Phoenix added support for Quiescence, enabling splices and Lightning payments to happen simultaneously. Implementing Swaproot and address rotation not only makes on-chain deposits cheaper but also introduces a stronger level of privacy for Phoenix users. Paired with Quiescence, these features make for a powerful, non-custodial, open-source mobile Bitcoin wallet that has already proven useful for activists worldwide.

CTV | Optimizing Lightning Channel Management

In this insightful X thread, Lightning engineer ZmnSCPxj explains how a potential future Bitcoin upgrade called CheckTemplateVerify (CTV) could enable more efficient Lightning channel management, especially useful for users who are often offline, such as activists who are on the go. They propose combining various channel types and batching channel openings to cut down on fees. Additionally, they suggest using timeout trees for smooth fund transfers between expiring channels. While their approach aims to address challenges faced by offline users (and enhance the efficiency of Lightning channel management, potentially reducing costs), it’s still important to note CTV remains a proposed softwork.

OpenSats | New Batch of Open-Source Funding

The nonprofit OpenSats has announced its fourth wave of Bitcoin and open-source software funding, supporting a range of initiatives targeting: mobile wallet Satsigner, open-source ASIC Bitaxe, splicing in Lightning’s LDK environment, Bitcoin Core testing, Lightning Network testing, a Lightning testnet, privacy-focused Lightning Wallet Firebolt, Bitcoin education, and Braidpool, a project aimed at decentralizing Bitcoin mining. Read more details and learn how you can support OpenSats here.

Recommended Content

Best Practices for Activists Crowdfunding Bitcoin, feat. Ben Sessions

In this short video, educator Ben Sessions shares advice on how human rights advocates can fundraise bitcoin safely. He suggests they use the platform (and HRF grantee) BTCPay Server to crowdfund bitcoin and then CoinJoin the funds to maintain the privacy of users and their addresses. Additionally, he advises implementing a 2-of-3 multi-signature arrangement, entrusting keys to influential individuals beyond their jurisdiction for enhanced security. If you’re an activist and thinking about crowdfunding in bitcoin, this video may help you. Watch the full interview here.

In Conversation: Jack Dorsey and Álvaro Salas Castro

In this fireside chat, Twitter and Block founder Jack Dorsey discusses with Reynolds Foundation CEO Álvaro Salas Castro how open-source software is a critical component of free and open societies. Dorsey advocates for systems owned and built upon by the people and emphasizes the importance of open-source applications in fulfilling this goal. “I think it’s really important that we at least strive to build an open system that is not owned by a company, that is not owned by a government, and that can truly be built upon by the people.” One such system is Bitcoin, a new monetary system owned by individual users, not governments or corporations. This is an engaging conversation between a technologist and a social activist well worth watching.

Oslo Freedom Forum | Reserve Your Spot

Human rights advocates from around the globe will take the Oslo Konserthus stage on June 3-5, 2024, to share their efforts to defy repression and speak out against injustice. This year’s theme, Reclaim Democracy, emphasizes the pivotal role every individual plays within the global movement for democracy. The Financial Freedom team is looking forward to creating a program track exploring the role open-source money plays in preserving our human rights and civil liberties. Use the code 2024OFF to get an early bird discount on your ticket.

RESERVE YOUR TICKET

Until next time,

Ayelen Osorio

Financial Freedom Specialist

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