In America, we call the monster in our closet, “the Boogeyman.” In China, those things that go bump in the night are called, “Mogwai.”

But what may scare the Chinese even more than the presence of gremlins, is Bitcoin hiding under their bed.

Hold our hand, cause in this newsletter, we’re going on a terrifying journey to the root of all fear.

Oh, and if you haven't yet, be sure to check out our latest episode of the Coffee and Crypto Podcast! We're going deep on NFTs 😤

Espresso Shots

☕️ Binance USD Freeze 💵 🥶

Binance will freeze all USD withdrawals this week.

Though official spokespeople have assured the market that no other currencies will be affected and only a very small percentage of Binance’s customers use USD and those “affected customers are being notified directly.”

Just to clarify, Binance is an international company, its US company, Binance.US has not announced a similar freeze and is operating normally.

Despite CEO Changpeng Zhao’s calls for more transparency across crypto, Binance has yet to explain the move, only calling it "administrative."

Hopefully, after this week operations will return to normal and there won’t be any sort of catastrophic turn of events that reach a fever pitch with a 49-tweet thread.

☕️ FTX CEO's First Day in "Hell" 🔥 😳

John Ray, the current CEO of FTX, took to the stand this week in United States Bankruptcy Court to describe his less-than-ideal first days at the firm.

After the news of FTX’s instability broke, as Ray tells it, there were near-constant attempts from outside parties to hack into FTX and steal crypto.

“Your normal first-day petition is chaotic as sometimes can be– this was something that I have never experienced,” said Ray. “Those hacks went on virtually all night long… It was really 48 hours of what I can only describe as pure hell.”

Of course, the fun didn’t end there for Ray as he entered into a high-stakes situation with alarmingly little information. “There was not a single list of anything,” whether that be employees, banking information, or missing funds.

Ray’s suffering is very different from the old CEO’s version of hell, which is when the League of Legends servers would go offline for 4-6 hours of maintenance.

☕️ Riot Mining Hits Summit 🏔️ ⛏️

Riot, the crypto industry’s top mining firm, just broke its own record this month.

Riot reached an all-time high with 740 Bitcoin mined during the month of January. That’s up 62% from the 422 BTC mined in January 2022.

Despite the Texas-based Bitcoin mining op having to pause several times throughout the past year due to extreme weather conditions, Riot persisted and continued mining with the hunger of dwarves digging for rare gems.

Unfairly, when our riot reached its peak, instead of being praised we were tear gassed by the National Guard.

Spilling the Beans

Why China is Terrified of Bitcoin 🇨🇳

A Chinese news clip resurfaced on Twitter this week bringing new light to one of the more fascinating conundrums of our time.

In the clip, dating back to May of 2021, Qu Qiang, a Chinese Economist goes on CGTN, China’s central news channel, to warn China of the dangers of widespread Bitcoin adoption.

Qiang was asked the question:

“Can you give me the worst scenario, what kind of a systemic shock it will give the current financial system if Bitcoin is widely used in China or the rest of the world?”

And Qu Qiang’s reply:

“I can tell you exactly what’s going to happen… We’re all going to die. This is not a joke."

What? Did you think it was gonna be a normal response? Not in this newsletter! China has long been terrified of Bitcoin, first banning it nearly a decade ago.

Qu Qiang’s reasoning is that Bitcoin has a very, very strict finite amount of tokens: 21 million to be exact. He believes that makes Bitcoin built for deflation.

Qu Qiang worries that as human population increases, Bitcoin could never rise to meet demand as opposed to a centralized currency that prints money forever. (Like the US and China.)

Qiang goes on to warn this could lead to, “a death spiral of deflation. The whole society is going to shrink and self-explode. That’s what happened at the end of the Ming dynasty when they were short on silver.”

Okay, let’s break that down for those of us that aren’t as familiar with the history of China’s ancient dynasties:

The Ming dynasty ruled China from 1368 to 1644 and had the largest economy in the world during that period.

That economy was almost entirely due to international trade surrounding the export of Japanese silver.

Silver was so bountiful in Japan that it was used by the entire country as currency.

When an entire country is using silver that is reaching astronomical prices abroad, it was only a matter of time before it became unsustainable.

So, what did the government of the Ming Dynasty do? Well, just like Qu Qiang warned, they all died.

No, not really. They just removed the silver from circulation as a currency and returned to paper money.

It would seem that even the largest economic snafu can be solved with a little bit of human ingenuity.

But there's two pretty pretty massive errors in Qiang's calculus.

The first is that Bitcoin isn't used to purchase bread, the way silver was in ancient China.

Today, Bitcoin is used more as a store of value than as a currency. People usually buy Bitcoin and lock it away, not unlike putting gold bars in a vault.

The other error is that Bitcoin doesn't need to be spent or purchased in large chunks. In fact most people don't log onto an exchange and buy one whole Bitcoin.

Exchanges allow us to buy Bitcoin in incredibly small fractions, making it incredibly easy to own and trade small portions of it.

In fact, what our global economy is most at risk of today is inflation. Bitcoin prevents that. You can't run off and print more Bitcoin, that's a feature, not a bug.

Don’t worry, Qu, Bitcoin is safe. It won’t kill you. In fact, floating around $23,000 currently, Bitcoin’s actually doing pretty great.

So why is China actually terrified of Bitcoin? Well, it's a decentralized financial tool that can't be easily controlled by a government or financial institution.

In short: Bitcoin makes you free. But that’s just our silver lining. 😉

Meme of the Day

You can run but you can't hide...

Crypto 101

Satoshi Nakamoto: The pseudonym used by the founder or founders of Bitcoin. There have been many suspected Satoshi Nakamoto’s throughout crypto’s history, many of them British rather than Japanese, but nobody has been proven to be the creator of Bitcoin.

Mysterious. 🤔

The Last Sip

If Chinese Economists are so scared of Bitcoin, we thought we’d make a list of our top fears that can’t really hurt us:

• Elevator Eye Contact

• Farting in the Elevator

• Accusational Eye Contact After Farting in the Elevator

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.