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Whether you're brainstorming ideas, generating content, learning at an accelerated pace, or even creating images, ChatGPT is a resource that promises to elevate your capabilities to new heights. However, to truly capitalize on this tool, you must understand how to effectively engage with its features. This guide by AI Foundations aims to illuminate the path to mastering ChatGPT.

Custom Instructions: Personalizing ChatGPT

One of the most potent yet often overlooked features of ChatGPT is the ability to provide custom instructions. This personalization allows for tailored responses that align with your specific needs and preferences. By navigating to your profile and selecting 'Custom Instructions', you can input information about yourself and dictate the style and format of ChatGPT's responses. For instance, you could inform ChatGPT that you have 20 cats, and henceforth, it will incorporate that knowledge into relevant conversations. The use of custom instructions can refine the AI's outputs, ensuring that the guidance you receive is as pertinent and useful as possible.

• Accessing Custom Instructions: Navigate to your profile in the sidebar and select the "Custom Instructions" tab.
• Setting Preferences: You'll find two boxes. In the first, input details about yourself or your profession that you want ChatGPT to consider. In the second, specify the desired tone, formality, and response length.
• Utilization: By inputting "I have 20 cats," ChatGPT will remember this detail for relevant conversations. Additionally, using a custom personas database can enhance role-specific interactions, providing tailored advice.

Plugins: Expanding ChatGPT's Horizons

ChatGPT also boasts a plugins feature that opens up a world of possibilities. By visiting the plugin store, you can browse through a vast array of options that extend ChatGPT's functionality. From generating diagrams to summarizing YouTube videos, these plugins can be combined with custom instructions to create a tailored experience. For example, using the AI diagrams plugin, you can ask ChatGPT to visually map out complex processes like photosynthesis, providing you with a deeper understanding and a visual aid for further exploration.

• Accessing Plugins: Use the model selector to navigate to the plugins section.
• Exploring Plugins: Browse through the plugin store and select from categories or popular choices, like the AI diagrams plugin, which assists in creating visual representations of concepts.
• Using Plugins: After activation, you can directly ask ChatGPT to perform tasks using the plugin, such as generating a diagram to explain photosynthesis.

Web Browsing: Tapping into Current Knowledge

With the web browsing feature, ChatGPT can scour the internet for up-to-date information. This means that even if the AI's knowledge is capped at a certain date, it can still fetch recent data and articles, providing you with the latest insights and developments. Whether you're looking for news articles or specific content, ChatGPT can serve as an efficient research assistant, bringing the most relevant information to your fingertips.

• Enabling Web Browsing: Ensure GPT-4 is active to access this feature.
• Executing Searches: Direct ChatGPT to find articles or information using search commands, which it will execute using Bing.
• Analyzing Results: ChatGPT provides sourced information, offering links to the original articles for deeper insights.

Data Analysis: Embrace Your Inner Data Scientist

The data analysis feature of ChatGPT is like having a data scientist on call. By uploading files directly into the chat, you can ask ChatGPT to perform complex data analysis tasks, such as generating radar charts to identify outliers or trends. This capability makes it possible to glean insights from raw data without the need for extensive data science expertise.

• Initiating Analysis: Click the link icon in the prompt bar and upload a file, such as a CSV.
• Performing Analysis: Ask ChatGPT to create charts or analyze data, which it will process and generate visualizations for.
• Understanding Data: Overlay generated charts to identify trends and outliers in your data.

GPT Vision: Seeing Through the AI's Eyes

GPT Vision is a feature that allows ChatGPT to interpret images, making it an invaluable tool for diagnosing issues or understanding visual content. Simply upload a photo, and ChatGPT can provide a detailed analysis or even suggest solutions. This feature can be particularly useful for troubleshooting or when seeking advice on physical objects.

• Activating GPT Vision: Ensure GPT-4 is selected in the model selector.
• Uploading Images: Click the link icon to upload an image and ask ChatGPT to diagnose or describe it.
• Receiving Insights: ChatGPT provides detailed observations and can also offer step-by-step solutions based on the image content.

DALL-E 3: Unleashing Creativity with AI Art

DALL-E 3 within ChatGPT can generate images from text prompts, offering a creative outlet for visual content. Whether you need an image for a business project or social media, this feature can produce unique and relevant artwork based on your specifications with just a few keystrokes.

• Generating Images: Prompt ChatGPT with a descriptive sentence, such as a golden retriever wearing red shoes on the beach.
• Downloading Results: ChatGPT creates the image, which can be downloaded or further manipulated using the generated prompt.

Custom GPTs: Building Tailored AI Solutions

The ability to create custom GPTs (Generative Pre-trained Transformers) allows you to train and build versions of ChatGPT for specific tasks. This personalized approach can help automate repetitive tasks, provide specialized assistance, and even serve as a training tool for others.

• Accessing Custom GPTs: Go to "My GPTs" in your profile sidebar.
• Creating and Editing GPTs: Design your GPTs with custom instructions and actions for tasks like report generation or problem-solving.
• Utilizing Multiple GPTs: Combine the strengths of multiple GPTs within a single chat thread to address complex scenarios.

Multi-GPT Conversations: Harnessing Collective AI Power

Lastly, ChatGPT offers the ability to use multiple GPTs within a single chat thread, creating a collaborative AI environment. By summoning different GPTs, you can tackle complex problems by leveraging the specialized knowledge and skills of each custom AI, enhancing your problem-solving capabilities.

Conclusion: The Road to Mastery

ChatGPT is a remarkable tool that, when used to its full potential, can be a game-changer in various aspects of life. From custom instructions and plugins to web browsing and data analysis, each feature offers unique benefits that can optimize your tasks and foster creativity. With GPT Vision, DALL-E 3, and the ability to build custom GPTs, the possibilities are endless. By understanding and utilizing these features, you can position yourself at the forefront of the AI revolution, transforming the way you work, learn, and create.

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• GRIID is a uniquely positioned, vertically integrated bitcoin mining and energy infrastructure company and one of the first pure-play bitcoin miners to achieve public listing
• GRIID Chief Strategy Officer Harry Sudock to join Ten31 as Advisor
• Launch of Ten31 Fund III, which has already secured several anchor commitments and strengthens Ten31’s position as the world’s leading bitcoin technology investor
• Launch of Ten31 Tactical Fund, which provides access to individual accredited investors
• Ten31 also announced a grant to independent bitcoin developer calle for bitcoin powered Chaumian ecash

NASHVILLE, January 30, 2024 – Ten31 announced that its portfolio company GRIID Infrastructure has completed its listing on the Nasdaq Global Market stock exchange, representing the first public listing for any bitcoin-focused investment fund’s portfolio company. Ten31 served as GRIID’s exclusive institutional capital partner ahead of its public trading debut, investing in GRIID out of its second institutional venture fund, Low Time Preference Fund II. Ten31 is the world’s leading bitcoin technology investor, having deployed over $100 million through its prior two fund vehicles. Over five years of deploying capital, Ten31 has built an industry-leading portfolio of 36 companies focused on bitcoin and freedom technologies and served as lead investor or exclusive partner in 25 of its investments, including Pre-Seed, Seed, Series A, Series B, and pre-IPO rounds. 

Public Listing Milestone

GRIID’s listing is a notable milestone for the bitcoin mining company, which first announced its intention to go public via a SPAC transaction reported in November 2021. After having successfully navigated a long SEC and regulatory review process, the Nasdaq listing represents not just the first significant liquidity event for any bitcoin-focused venture investor but also the first major equity liquidity event in several years for the greater “crypto” venture landscape, marking a major accomplishment for GRIID, Ten31, and the bitcoin ecosystem as a whole. 

“As a vertically integrated operator, purpose-built for bitcoin mining from day one, GRIID is uniquely positioned to become one of the leading bitcoin mining companies in the world,” said Trey Kelly, Founder and CEO of GRIID. “We believe that listing on Nasdaq will enhance our visibility, liquidity, and broaden our investor base as we continue to strengthen our market position and reinforce our commitment to delivering shareholder value. Ten31’s capital support and strategic guidance were invaluable in helping us reach this milestone. We feel strongly that there is no better partner or investor in the bitcoin space than Ten31, and we look forward to continuing our close partnership.”

Harry Sudock Joining Ten31 as Advisor

In conjunction with GRIID’s Nasdaq listing, Ten31 also announced that Harry Sudock, Chief Strategy Officer at GRIID and a leading voice in bitcoin mining and energy infrastructure, will join Ten31 as an Advisor while maintaining his role at GRIID. “After many years building a bitcoin company, I know firsthand the crucial value of capital partners that both share our understanding of bitcoin and offer proven institutional investment expertise. They embody bitcoin’s proof of work ethos in everything they do,” said Sudock. “I expect GRIID to be the first of many success stories to emerge from the Ten31 portfolio, and I’m excited to help support Ten31 as it invests in the best companies in the rapidly evolving bitcoin ecosystem while serving as a resource to both portfolio companies and their founders.”

Ten31 Building on Its Success with Two New Funds and Continuing Contributions to Open Source Development

Ten31’s major milestone with GRIID coincides with the launch of Ten31’s third institutional fund, Low Time Preference Fund III, which has already secured anchor commitments and established an initial portfolio of investments, as well as the Ten31 Tactical Fund, which provides access to individual accredited investors. As the world’s leading bitcoin technology investor, Ten31 has unmatched reach and expertise across the breadth of the bitcoin ecosystem, driving a leading position in all verticals and all funding stages. Ten31’s investments include leading Strike’s $80 million Series B round in September 2022, leading exclusive Series A rounds for companies such as Coinkite and Upstream Data, as well as leading Pre-Seed and Seed investments in companies such as Mutiny, Primal and Mempool. 

Ten31 has also renewed its commitment to supporting open source development in the bitcoin ecosystem by providing a grant to independent bitcoin developer calle for his work on bitcoin powered Chaumian ecash. Ten31 is the most active investor in open source businesses in the bitcoin ecosystem and is the only investor in the industry which contributes a portion of its management fees to open source development. Ten31 was a founding contributor to OpenSats in 2021 and has supported a variety of open source efforts on a no-strings-attached basis, including making an early grant to Fedimint, a protocol for federated Chaumian ecash. Ten31’s early support of Fedimint, along with contributions from Ten31 Managing Partners Matt Odell and Marty Bent, were instrumental in catalyzing the formation of Ten31 portfolio company Fedi. 

About Ten31

Ten31 is the world’s leading bitcoin technology investor. With a footprint in Nashville and Austin, Ten31 seeks to support the ecosystem's most promising founders and companies, leveraging its deep understanding of bitcoin, extensive experience, and broad reach to create value for its partners. Since the fund's inception, Ten31 has directed more than $100 million in equity to companies focused on bitcoin and freedom technologies. For more information, visit www.ten31.vc/funds. 

About GRIID Infrastructure Inc.

GRIID is a purpose-built bitcoin mining company, founded in 2018, that has operated mining facilities since 2019. GRIID has built long-term power relationships securing affordable, reliable, environmentally responsible power, enabling a vertically integrated self-mining business model with significant growth opportunity. Headquartered in Cincinnati, Ohio, GRIID operates a R&D center in Austin, Texas and a development, deployment and equipment repair center in Rutledge, Tennessee. GRIID currently maintains mining facilities in Watertown, New York; Limestone, Maynardville and Lenoir City, Tennessee. To learn more, please visit www.griid.com.

Contact

ir@ten31.vc

Disclaimer: The information contained herein is provided for informational and discussion purposes only and is not, and may not be relied on in any manner as, legal, tax, or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund managed or sponsored by Ten31 or its affiliates (the “Fund”), or an offer or invitation to purchase or acquire assets, shares, partnership interests or other securities or interests in this regard. A private offering of interests in the Fund will only be made pursuant to offering documentation, including the Fund’s subscription documents (the “Offering Documentation”), which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. The information contained herein will be qualified in its entirety by reference to the Offering Documentation, which contains additional information about the investment objective, terms and conditions of an investment in any Fund and also contains tax information and risk disclosures that are important to any investment decision. No person has been authorized to make any statement concerning the Fund other than as set forth in the Offering Documentation and any such statements, if made, may not be relied upon. This communication has not been approved or disapproved by the Securities and Exchange Commission or by the securities regulatory authority of any state or of any other jurisdiction, nor have any of the foregoing authorities passed upon or endorsed the merits, accuracy or adequacy of the information contained herein. Any representation to the contrary is a criminal offense.

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Last week the team at Bitcoin Park in Nashville, Tennessee hosted the Nashville Energy and Mining Summit. As you may be able to tell by the name of the summit, professionals from across the mining and industries congregated to discuss a wide range of topics. I still have a bunch of the discussions from the end of last week ping ponging in my mind, so I figured I'd write down some of the things I took away from the event and share them with you all here. The summits at Bitcoin Park follow Chatham House rules, so I won't be able to attribute any of the takeaways to particular individuals.

Geographic Distribution of Hashrate

After the Chinese Communist Party decided to ban mining within China in the middle of 2021, a material amount of hashrate migrated to the United States. Current estimates state that anywhere from 35-40% of bitcoin's network hashrate is operating in the United States. With a large chunk of that located in the state of Texas. It was funny that the summit was happening last week because there was a polar vortex that devoured the Southern part of the United States, which spike the demand for energy on grid systems and forced miners accounting for gigawatts worth of power to wind down to ensure the grids remained stable. At one point, ~25% of the total network hashrate came offline, with some saying that Texas miners alone sent 2 gigawatts worth of electricity they would have used back to the grid.

25% of bitcoin hashrate is offline!

Down from 525 EH to 395 EH in just few days. Caused by freezing weather in the US - miners turning off to save the grid.

The grid needs the energy for heating households so miners switch off automatically. Demand response at its best🤌 pic.twitter.com/vVTBN8f545

— Braiins (@BraiinsMining) January 17, 2024

This showed up in the difficulty adjustment over the weekend, which came in at -3.9%.

via mempool.space

While it is exciting to see that miners are playing a crucial role to stabilize grids during periods of peak demand, it is not ideal to have this amount of hashrate concentrated in the United States. This shouldn't be surprising considering the fact that Americans, despite the collectivists who make up our federal government, are extremely entrepreneurial, have access to the most mature capital markets in the world, and the most robust energy infrastructure in the world (again, despite what the collectivists have done to destroy these advantages).

Luckily for those of us who worry about geographic hashrate centralization, the discussions during the summit have made me extremely optimistic that hashrate is about to enter another phase of rapid geographic distribution. It is becoming clear that energy rich countries in the Middle East are becoming well aware of the opportunity bitcoin mining presents for them to take advantage of their cheap electricity and stranded energy sources. At the same time, advancements in ASIC water cooling technology have reached the point where it is becoming viable to run mining operations in extremely hot geographies.

On top of this, bitcoin mining is proving to be a great way to bootstrap energy systems in areas across Africa that do not have the correct economic incentives in place to justify build outs. A consistent buyer of first and last resort solves the zero to one problem.

Expect mining activity to pick up in the Middle East, Africa and South America.

Bitcoin ASIC Wars

With Bitmain's aggressive pricing of their s21 series of miners ($14/Th) out of the gate it is clear that the largest bitcoin miner manufacturer in the world is attempting to use its economies of scale to muscle out their competition. It will be interesting to see if the pricing moves are able to suffocate the smaller ASIC manufacturers. I think MicroBT should be safe, but the others are probably sweating. If the s21 series from Bitmain proves to provide the market with durable and reliable hardware, we could see the bitcoin mining hardware market turn into an entrenched duopoly. Though, it is encouraging to see hardware providers catering to home miners like FutureBit seeing a lot of success in the market.

ASIC Firmware

It is becoming abundantly clear that the stock firmware offered by Bitmain and MicroBT is not meeting the demands of the market. Miners located in different environments and in different economic situations demand different outputs from their machines. The ability to tap into the firmware running on the machines is essential to running a mining operation as efficiently as possible to ensure the long-term health and financial viability of a mining fleet. Miners have had to turn to after-market firmware like Braiins OS+ to reap these benefits.

Unfortunately, to even get after-market firmware like Braiins OS+ to the market it takes a Herculean effort for the firmware producers to jailbreak the machine and make it so their firmware is compatible. I think it is very clear that something needs to happen to create a mining firmware standard of sorts to make it as easy as possible for third party firmware producers to bring better products to market. A return to the open source standards set by a project like CGMiner would be a step in the right direction in my opinion.

Alternative Revenue Streams And Consolidation

As the landscape in mining becomes more cut throat due to the sheer amount of competition that is entering the arena (nation states, utilities companies, power plants), the ability for most miners to depend solely on mining revenues is going to falter. It is imperative for any sizable miner to - if they haven't already - begin thinking about incorporating alternative revenue streams into their business plans. Miners engaged in demand response are already doing a good job of this. The profit margin squeeze is coming as low cost energy producers and nation states who can operate at a loss for longer begin to enter the market at scale. I am more convinced than ever that miners will begin to consolidate with large energy producers and utilities companies to drive their costs down to rates that will ensure they remain competitive. Well actually, it will be a mixture of consolidations, energy companies incorporating their own mining operation, and miners acquiring energy assets.

The Energy Professionals Are Here

The Energy and Mining Summit was particularly exciting for me because it was the first mining event I've been to over the last six years that convinced me that top-notch operators and professionals from the energy sector have fully groked bitcoin mining and see an opportunity to leverage their skills and expertise to throw jet fuel on the mining industry. To date, miners have been fighting an uphill battle against their lack of experience with power markets and infrastructure build outs. Even though the mining industry has matured considerably over the last few years, I believe this has been an outcome predominately driven by pure grit, determination, and a deep understanding of an asymmetric opportunity. Even though miners deeply understand the asymmetric opportunity that bitcoin mining presents in the world of electricity price arbitrage, the last five years or so have been a pure baptism by fire in the energy sector. Filled with miners making mistakes when signing power purchase agreements, not understanding the logistics that go into energy infrastructure build outs, and not knowing the nuances of the power generation side of things that can trip them up at some point.

The industry has certainly learned a ton in a short period of time and the overall level of understanding will continue to increase. However, the reinforcements have arrived on the front lines in the form of power and infrastructure professionals who have come to understand the asymmetric opportunity at play and are now focused on using their decades of experience to teach miners the right way of doing things. Structuring power purchase agreements the right way. Aligning incentives with power producers to ensure long-term partnerships materialize. Cutting down the time it takes to build infrastructure and facilities. All of that knowledge is coming to the bitcoin mining arena and I could not be more bullish.

Regulatory Landscape

Despite all of the vitriol toward bitcoin mining and bitcoin more generally coming out of Washington DC, it doesn't seem that miners are that fazed. Again, they understand a massive opportunity and they aren't going to allow some screeching Karens to make them back away from the action. This is the way. There is too much at stake and the collectivists aren't sending their best. The bitcoin mining industry has more data to combat the baseless FUD than ever before and the vibe shift is well under way. I don't think there is any need to cater to those screeching from their pedestals in DC. In fact, I think the numbers are speaking for themself that the benefits bitcoin mining provides companies, grid systems and energy producers are undeniable. One of the largest power providers in the country attended the summit and made it clear that miners are a net benefit to their operations. We have just reached the point where the benefits have piqued the interest of the power providers where they deem it necessary to lean in and begin working more closely with the mining industry to better understand what we need and where we can be the most beneficial to their operations.

There is no stopping an idea whose time has come.

Final thought...

Modernity is filled with hideous aesthetics.

Use the code "TFTC" for 15% off

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After months of hype and several highly entertaining false starts, the SEC finally approved 11 spot bitcoin ETFs on Wednesday of this week – exactly 15 years after Hal Finney’s iconic “running bitcoin” tweet – with trading commencing the following day. While the dust has yet to settle on exactly how early flows will shake out and the market’s hysterics leading up to the approval were undoubtedly a sideshow, we do expect these vehicles will make it easier for traditional pools of capital to flow into bitcoin, with positive implications for bitcoin’s price over time. More importantly, though, these ETFs represent the latest piece of clear evidence of Ten31’s thesis that bitcoin is eating the world. After years of deriding bitcoin as not just uninteresting but even outright harmful, the leaders of the legacy financial system just spent the last several weeks in a sprint to not only secure approval for their bitcoin ETFs but also to outdo each other in extolling bitcoin’s unique virtues on mainstream news appearances. Most notably, Larry Fink, who just a few years ago called bitcoin an “index of money laundering,” took to multiple broadcasts to promote bitcoin as an “asset that protects you.” 

[

Bitcoin is Eating the World

An Investor’s Case for the Biggest TAM on Earth.

TFTC – Truth for the CommonerJohn Arnold

](https://tftc.io/bitcoin-is-eating-the-world/)

While Larry clearly still doesn’t fully get it, this diametric shift in tone is emblematic of the fact that, sooner or later, every self-interested economic actor will have to embrace bitcoin. We expanded on the derivative implications of this reality in a longform piece out this week titled Bitcoin is Eating the World, where we walk through what growing mainstream acceptance of and interest in bitcoin means for the still highly underappreciated bitcoin infrastructure ecosystem. The ETFs are certainly a bullish milestone and signpost, but they are still just a very early indication of the wave of mainstream adoption we see coming over the next decade, and this wave will have seismic implications for early investors in bitcoin’s enabling technologies. 

Portfolio Company Spotlight

Unchained, Strike, Coinkite, Mempool.space, and AnchorWatch are all great examples of products and services that allow anyone to easily buy, protect, and use bitcoin in a native and optimally secure way. Strike and Unchained provide intuitive and high quality on-ramps for both small and large purchases of verifiable, on-chain bitcoin; Coinkite offers the most secure, battle-tested way to protect bitcoin without the layers of counterparty risk inherent in an ETF and offers product for users of all skill levels; Mempool.space gives users unmatched data to make smart decisions about their bitcoin transactions; and platforms like Unchained and AnchorWatch allow for additional layers of abstraction that combine minimized counterparty risk with an easy, hands-off experience for clients. The technology supporting native use of bitcoin is still in its early days, but many companies in the Ten31 portfolio have already rolled out offerings that can collectively provide the same easy UX of ETF ownership with substantially better security guarantees. 

Selected Portfolio News

Unchained offered an update on its 2024 roadmap:

Unchained also announced a new institutional lending program:

Media

Strike Founder and CEO Jack Mallers appeared on Bloomberg TV to discuss the impact of the bitcoin ETF approvals. 

Parker Lewis, Ten31 Advisor and Zaprite Head of Business Development, joined the Bitcoin Frontier podcast to discuss some of his recent work. 

Market Updates

After ten years since the first filing, months of speculation in 2H 2023, and countless Twitter Spaces discussions by newly-minted ETF experts, the SEC finally approved 11 spot bitcoin ETFs (after an errant tweet fiasco from its account, which apparently did not have 2FA). 

All filings from major issuers including BlackRock, Fidelity, Ark, Bitwise, and more were approved, and those institutions issued late-breaking filings early in the week to reduce fees to near-zero levels, presumably indicating expectations for substantial flows over time. BlackRock and Fidelity lowered their fees to 25bps, and most issuers are offering no fees for the first 3-6 months. 

As expected, the products broke records for day one ETF launches, with total volume across the vehicles exceeding $4.6 billion (and ~$2.5 billion net of GBTC activity). 

Multiple legacy finance executives took to mainstream airwaves to promote bitcoin, with Larry Fink calling it “an asset that protects you” and WisdomTree CEO Jonathan Steinberg noting its 15-year track record is “superior to every other asset class.”

The week also saw a few notable updates on the macro front, as the CPI reading for December 2023 came in above expectations, potentially complicating the recently growing consensus around near-term Fed rate cuts. 

That said, New York Fed President John Williams indicated earlier in the week that, in the Fed’s view, rates are now sufficiently high to get price inflation back to the central bank’s ostensible 2% target. 

In the latest negative headline for commercial real estate, vacancy in US offices hit a new record of nearly 20% last year, the highest level on record since 1979. 

Banks’ use of the Fed’s BTFP Facility – allegedly set to expire in March – soared to another high this week, as banks continue to arbitrage the spread between BTFP borrowing costs and interest paid on reserves at the Fed.

Regulatory Update

In its latest effort to make itself as irrelevant to global finance as possible, the UK’s Financial Conduct Authority (FCA) enacted new regulations that will require retail investors to pass a series of certifications and tests before being able to use centralized cryptocurrency exchanges. 

Noteworthy

BitWise, issuer of the BITB spot bitcoin ETF, announced it would donate 10% of its profits from ETF fees to OpenSats for the next 10 years to help fund bitcoin and open source software development. VanEck, issuer of the HODL ETF, announced a similar 5% donation to Bitcoin Core development through Brink. 

Multiple new Nostr-based media hosting applications have been released over the past several weeks, including an image hosting service and a video-sharing and directory application called Flare.

While BlackRock executives were busy pumping their bitcoin ETF this week, the Financial Times noted its various ESG initiatives have experienced a “catastrophic” decline in support among asset managers. 

Travel

• Nashville BitDevs and Bitcoin Meetup, January 16-17
• Nashville Energy and Mining Summit, January 18-19
• Austin BitDevs, February 15

Learn more about Ten31, our investment thesis, portfolio companies, and funds by visiting our website.

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In the dynamic world of digital transactions, especially within the realm of cryptocurrencies like Bitcoin, the emphasis on security and flexibility is unparalleled. Multi-signature, commonly known as multi-sig, emerges as a pivotal technology in this context. It enhances transaction security by necessitating the approval of multiple parties before execution. Drawing a parallel to the physical world, multi-sig in the digital domain is akin to requiring several keys to unlock a bank vault, with the distinct difference of involving cryptographic keys.

Understanding Digital Signatures and Bitcoin Wallets

Digital signatures form the backbone of cryptocurrency transactions. They are cryptographic mechanisms that enable individuals to prove ownership of digital assets, such as bitcoin. A typical cryptocurrency wallet operates by using a private key to sign transactions, effectively granting control over the assets to the key's possessor. Understanding the intricacies of digital signatures and private keys is crucial for comprehending the mechanics of multi-sig.

What is a Multi-Sig Wallet?

Multi-sig stands for the requirement of multiple keys to authorize a single transaction. It's an advanced feature present in certain cryptocurrency wallets and platforms, characterized by an 'm-of-n' arrangement. Here, 'm' denotes the minimum number of signatures required for a transaction, and 'n' represents the total number of participants in the agreement. For instance, a 2-of-3 multi-sig setup would imply three possible signatories, with just two needed for transaction authorization.

Applications of Multi-Sig Wallets

The applications of multi-sig are diverse and impactful:

• Enhanced Security: By distributing key control, multi-sig significantly diminishes the risk of asset theft.
• Shared Control: It facilitates consensus-based control over assets in partnerships or organizations.
• Escrow Services: Multi-sig can be used to create trustless escrow services, where a buyer, seller, and a third-party agent each hold a key.
• Parental Control or Corporate Governance: In scenarios involving family or corporate wallets, multi-sig can enforce specific spending or investment policies.

How Multi-Sig Wallets Work

The operation of a Multi-Sig setup involves several steps:

1. Setup: Agreeing on the 'm-of-n' configuration and generating private keys.
2. Address Generation: Creating a multi-sig address that requires 'm' out of 'n' signatures for spending.
3. Transaction Initiation: Signing the transaction by one of the key holders.
4. Additional Signatures: Accumulating the necessary number of signatures.
5. Broadcasting the Transaction: Once the required signatures are collected, the transaction is broadcast to the bitcoin network for validation by miners.

Types of Multi-Sig Wallets

There are various forms of multi-sig wallets, each with its unique features:

• Software Wallets: These are applications or programs capable of creating and managing Multi-Sig addresses.
• Hardware Wallets: These are physical devices that store private keys offline and can partake in Multi-Sig setups.
• Web Wallets: Online platforms offering user-friendly multi-sig functionalities.

Collaborative Custody Setups

• Collaborative Custody: There are companies, like Unchained, that allow customers to set up collaborative custody multi-sig quorums in which a client and a company hold keys. Unchained’s vault product allows a client to hold two keys in a 2-of-3 quorum while Unchained holds the third key.

Security Considerations for Multi-Sig Wallets

When employing multi-sig, several security aspects need consideration:

• Key Management: The loss of a key can pose challenges, particularly in configurations like 2-of-2. Hence, robust backup strategies are vital.
• Choice of ‘m’ and ‘n’: This should strike a balance between convenience and security, as too many required signatures can lead to operational delays, while too few may compromise security.
• Participant Trust: Trustworthiness of participants is essential in multi-sig arrangements.
• Software Reliability: Selecting a multi-sig wallet coordinator should be based on its security history and operational reliability.

Legal and Regulatory Considerations for Multi-Sig Wallets

The use of multi-sig wallets can have significant legal and regulatory implications, especially in corporate settings or escrow services. It's imperative to understand the legal jurisdiction and regulatory landscape to avoid potential legal complications.

Conclusion

Multi-sig technology stands out as a robust solution for enhancing security and flexible control over digital assets in the cryptocurrency domain. By mandating multiple approvals for transactions, it reduces the risk of unauthorized access and theft, establishing itself as a crucial tool for both individuals and organizations. Its versatility extends from personal finance management to corporate governance, underlining its indispensability in the evolving digital financial landscape. However, a thorough understanding of its operational dynamics, security implications, and legal context is key to its effective and secure usage.

Multi-Sig Wallets FAQs

1. What is Multi-Sig? Multi-sig, or multi-signature, is a technology in bitcoin that requires multiple keys to authorize a transaction.
2. How does Multi-Sig enhance security? By requiring multiple approvals, multi-sig minimizes the risk of theft and unauthorized access to funds.
3. What are some common applications of Multi-Sig? Multi-sig is used for enhanced security, shared control in organizations, escrow services, and in parental or corporate governance scenarios.
4. What types of wallets support Multi-Sig? Multi-sig is supported by software wallets, hardware wallets, and web wallets.
5. Are there any legal considerations for using Multi-Sig? Yes, the use of multi-sig wallets can have legal and regulatory implications, particularly in corporate and escrow contexts.

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In the world of Cryptocurrency, "cold storage" refers to keeping a reserve of bitcoin offline. This method is often used to reduce the risk of cyber thefts and hacks. Unlike "hot wallets" (bitcoin wallets that run on internet-connected devices), cold storage wallets are not susceptible to online attacks. This feature makes them an appealing choice for long-term investors or those holding large amounts of bitcoin.

Understanding Bitcoin and Wallets

To appreciate the importance of cold storage, one must understand how bitcoin works. Bitcoin is a decentralized digital currency, operating without a central authority. Transactions are recorded on a public ledger called the blockchain.

A bitcoin wallet doesn't store physical coins. Instead, it holds the cryptographic information needed to access bitcoin addresses and send transactions. This information includes private keys, essentially unique strings of numbers and letters that allow bitcoins to be spent.

Types of Bitcoin Wallets

1. Hot Wallets: These are connected to the internet. Examples include software wallets (like those on smartphones or computers) and online wallets. While convenient for transactions, they are vulnerable to online threats.
2. Cold Wallets: These are offline and not connected to the internet. They provide a higher level of security, protecting funds from online hacks.

What is Cold Storage for Cryptocurrency?

Cold storage refers to any method used to hold bitcoin and other cryptocurrencies offline. By keeping private keys in an environment disconnected from the internet, cold storage reduces the risk of unauthorized access. The main types of cold storage are paper wallets, hardware wallets, and multi-signature wallets.

1. Paper Wallets

A paper wallet is a physical document containing a Bitcoin address for receiving Bitcoins and the private key for spending or transferring Bitcoin stored in that address. Paper wallets are often printed in the form of QR codes, allowing quick scanning and adding the keys to a software wallet to make a transaction. While novel, paper wallets are not recommended.

Advantages: Inexpensive, immune to online hacks.

Disadvantages: Susceptible to physical damages like water or fire, risk of losing the paper.

2. Hardware Wallets

Hardware wallets are physical devices (similar to USB drives) designed to securely create and store bitcoin keys offline. They can connect to a computer and interact with bitcoin software without exposing the private keys to an internet-connected device. While hardware wallets improve on the physical shortcomings of paper wallets, they are still single points of failure.

Advantages: Secure, portable, can create private keys offline, can easily back up private keys generated using the device.

Disadvantages: More expensive than paper wallets, risk of hardware failure, recognizable.

3. Multi-signature Wallets

Multi-signature wallets leverage bitcoin’s unique native properties to create a cold storage custody solution that reduces the risks that come with storing your bitcoin a single signature paper or hardware wallet significantly. Bitcoin multi-signature wallets require multiple private keys to authorize a transaction, enhancing security by distributing control among several wallets that can be controlled by an individual or multiple parties. This setup is ideal for scenarios requiring consensus, such as shared accounts or enhanced security measures for individual users.

Advantages: Secure, geographically distributed, can create private keys offline, can easily back up private keys generated using the devices involved.

Disadvantages: Harder to move the bitcoin, more data needs to be backed up and saved.

Security Practices for Cold Storage

1. Backup: Ensure backups for cold storage, especially for paper and hardware wallets. In case of physical damage or loss, backups help in recovery. Backups can be represented as a string of 12 or 24 human readable words in a specific order.
2. Secure Environment: Keep cold storage devices in a safe, secure environment. Consider fire proof safes.
3. Multiple Cold Storage Options: Using different cold storage methods and different wallets can diversify risk.
4. Check Compatibility: Ensure the cold storage method is compatible with various software wallets and cryptocurrencies, if necessary. Generating a private-public key pair using a BIP-39 compatible wallet will make it so you are compatible with most wallets.
5. Avoid Physical Theft: Physical security is as important as digital. Safeguard against theft.

Risks and Considerations for Cold Storage

1. User Error: Cold storage methods require a basic understanding of how they work. User errors, like misprinting a paper wallet or incorrectly writing down the private key backup can lead to a situation where it is impossible to recover your funds if your wallet is lost.
2. Physical Risks: Physical damage or loss of the device or paper.
3. Inheritance Planning: In the event of the owner's death, beneficiaries might find it difficult to access the stored Bitcoins without proper instructions and keys. There are companies that leverage collaborative multi-signature custody, like Unchained, that offer inheritance planning protocols for customers.

Conclusion

Cold storage is an essential method for anyone looking to secure their bitcoin from online threats. While it offers higher security, it also requires careful handling and planning. Users must balance the security benefits against the risks and inconveniences of handling and maintaining physical devices and private key material. With the right practices, cold storage can effectively safeguard bitcoin, providing peace of mind for long-term holders and serious investors in the cryptocurrency space.

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In the ever-evolving world of cryptocurrency, the Lightning Network has emerged as a groundbreaking solution to the scalability challenges faced by Bitcoin. This innovative protocol operates atop the Bitcoin blockchain, offering faster, cheaper, and more efficient transactions. Its significance lies in its potential to transform Bitcoin from a digital gold into a viable medium of exchange for daily transactions, paving the way for broader adoption of bitcoin in everyday commerce.

What is the Lightning Network?

At its core, the Lightning Network is a "layer 2" payment protocol, designed to facilitate instant, low-cost transactions, bypassing the limitations of Bitcoin's block size and transaction speed. By setting up payment channels between users, it enables the exchange of funds without the need for confirmations on the bitcoin blockchain, resulting in almost instantaneous transactions.

Key Features

1. Speed: Transactions are processed in milliseconds to seconds.
2. Low Cost: Significantly reduces transaction fees.
3. Scalability: Can handle millions to billions of transactions per second.
4. Privacy: Offers improved privacy compared to regular bitcoin transactions.

The Importance of the Lightning Network

Enhancing Bitcoin's Usability

Bitcoin's original design, while revolutionary, is not without its limitations. The blockchain’s capacity to process only a limited number of transactions per block led to congestion and increased transaction fees. The Lightning Network addresses these issues, making bitcoin a more practical option for small, everyday transactions.

Promoting Bitcoin Adoption

By improving transaction efficiency, the Lightning Network enhances the overall appeal of bitcoin. This fosters greater acceptance and use of bitcoin in mainstream financial transactions, which will lead to a more inclusive global financial system.

Major Advances in the Lightning Network

1. Increased Network Capacity

Over the years, the Lightning Network has seen a substantial increase in its network capacity, enabling it to handle a larger volume of transactions. This expansion signifies growing confidence and adoption among users.

2. Improved Routing Efficiency

Advancements in network routing algorithms have optimized the path that payments take through the network, thereby increasing efficiency and reducing costs.

3. Integration with Existing Financial Systems

Efforts to integrate the Lightning Network with traditional financial systems are underway. This includes the development of user-friendly wallets, payment gateways, and other tools that bridge the gap between bitcoin and conventional money.

4. Enhanced Security Protocols

As the network evolves, so do the measures to secure it. Continuous updates and protocol improvements are being implemented to safeguard against potential vulnerabilities.

5. Wider Commercial Adoption

More businesses and merchants are beginning to accept payments via the Lightning Network, thanks to its lower fees, faster processing times and final settlement assurances. This trend is crucial for the mainstream adoption of Bitcoin as a method of payment.

Major Risks in the Lightning Network

1. Routing Node Centralization

The engineering and capital resources that are currently necessary to run a highly performant and reliable Lightning Network routing node are significant. Unless the ability to easily maintain a routing node becomes less burdensome, the Lightning Network could become dominated by centralized actors with higher compliance requirements for users. While this isn't ideal, it does not affect the censorship resistance of bitcoin's base layer.

2. Onchain Fee Congestion Pricing Users Out

If the costs to open and close a channel, as determined by the onchain bitcoin fee market at any given point in time, become prohibitively expensive the Lightning Network may be negatively affected. If onchain fees rise too high it could make it uneconomical to open and close channels.

3. Lack of Adoption

It is totally possible that the nature of the liveliness that is necessary for interacting with the Lightning Network proves to be too burdensome for end users, which may lead to a lack of adoption. This can be mitigated with better and more intuitive UX design that abstracts user pain points and automates the management of a Lightning Network node.

Conclusion

The Lightning Network represents a significant stride in addressing Bitcoin's scalability challenges. By enabling faster, cheaper, and more efficient transactions, it not only enhances the functionality of Bitcoin but also accelerates the integration of bitcoin into the global financial landscape. As this technology continues to mature, its role in shaping the future of digital transactions remains a key area of interest for investors, technologists, and consumers alike.

In summary, the Lightning Network is not just an upgrade to Bitcoin; it's a transformative step towards realizing the full potential of cryptocurrencies in our daily financial transactions. As it continues to evolve, its impact on the world of digital finance is likely to be profound and far-reaching. Despite the many hurdles the network faces, we here at TFTC are optimistic that those building out the protocol and the application layers above will solve the critical pain points that currently exist.