Why 16-Year-Old Bitcoin Has a Financial Trajectory While the 112-Year-Old Federal Reserve Doesn’t

Bitcoin leverages open-source ledger technology to enable real-time public verification of all transaction records. Meanwhile, the 112-year-old Federal Reserve, despite publishing regular reports, has never undergone a comprehensive audit. Key details of its emergency lending programs and foreign exchange swap operations, such as those related to the Federal Reserve's operations, have long been withheld from the public. Why? This article, translated by Paofeng Finance and Web3.0 Study Room, is based on Ankish Jain's article "Why 16-year-old Bitcoin has an audit trail while the 112-year-old Fed does not." By comparing their audit mechanisms, market impact, and regulatory efficiency, this article reveals the fundamental differences in the transparency paradigms of central banks and digital currencies, and analyzes the practical implications of these differences for investors, policymakers, and the global financial system. Bitcoin's Self-Auditing Mechanism Bitcoin is often described as a peer-to-peer digital currency, but one of its most underrated features is its self-auditing capability. The network confirms a new block every 10 minutes through a proof-of-work mechanism, validated by thousands of independent nodes worldwide.

Since January 2009, a continuous public record spanning 900,000 blocks and containing nearly 1.2 billion transactions has been created. Anyone with an internet connection can verify the data in real time, without permission.

In contrast, the 112-year-old Federal Reserve, despite being the pillar of the U.S. financial system—managing interest rates, money supply, and economic stability—has never undergone a fully independent audit.

It regularly publishes minutes of policy meetings, balance sheets, and financial statements, but core operations such as details of emergency lending, foreign exchange swap lines, and private banking transactions remain closed to external scrutiny. The contrast is striking: Bitcoin, 16 years old, has fully disclosed its financial history, while the Federal Reserve, a century-old institution that controls the world's largest economy, has consistently avoided the same level of scrutiny. Bitcoin's Self-Verification Logic Bitcoin's continuous auditing is a natural outgrowth of its open-source design. All network participants have equal rights to verify the rules, breaking down the inherent information hierarchy in the banking industry, where insiders enjoy privileged access while the public only has access to information disclosed by regulators. Full nodes are central to the system's operation, acting as independent referees. Nodes require no special permission or political approval; anyone can run them using consumer-grade hardware and access a complete copy of the ledger. This "trustless, verify" principle ensures that the 21 million Bitcoin supply cap can be enforced without relying on trusted authorities. Each newly mined block contains a fixed number of newly minted Bitcoins, which are reduced approximately every four years through a "halving" mechanism. From the initial reward of 50 BTC per block in 2009 to 3.125 BTC after the halving in April 2024, every unit of Bitcoin in circulation can be traced back to its birth block. Blockchain analysis firms such as Chainalysis, Elliptic, and Glassnode have built entire business models around Bitcoin's public ledger. Regulators also use online transparency to track criminal activity. For example, in 2021, the US Department of Justice successfully recovered the 63.7 Bitcoin ransom paid in the Colonial Pipeline cyberattack by tracing blockchain wallet addresses. The reliability of this type of audit stems not only from transparency but also from redundancy. Copies of the Bitcoin ledger are distributed across Europe, Asia, and the Americas. Even if a government shuts down an exchange or data center, data can still be retrieved from elsewhere, ensuring a continuous and censorship-resistant audit process. The Federal Reserve's Global Role The Federal Reserve occupies a unique position in global finance. While it only sets US monetary policy, its influence extends far beyond its borders. According to the International Monetary Fund, the US dollar accounts for approximately 58% of global foreign exchange reserves, and nearly 90% of global trade transactions are conducted in some form in US dollars. Given this influence, transparency at the Federal Reserve is not only a domestic issue but also a global one. The agency regularly publishes its weekly H.4.1 balance sheet, the Beige Book on economic conditions, and detailed minutes of Federal Open Market Committee meetings. It also releases annual, externally audited financial statements disclosing its assets, liabilities, and revenues. However, these disclosures only scratch the surface of its operations, leaving the central bank's most powerful tools beyond independent scrutiny. Take emergency lending programs, for example: During the 2008 financial crisis, the Fed created facilities to lend trillions of dollars to domestic and international banks. The Levy Economics Institute later estimated that the programs provided over $29 trillion in cumulative support. However, the details of these interventions were only released years later, forced by lawsuits and congressional pressure. Similar secrecy also applies to the Federal Reserve's widely used foreign exchange swap lines—a tool that allows foreign central banks to borrow dollars during periods of global liquidity stress. Calls for greater transparency continue. Representative Ron Paul introduced the "Audit the Fed" bill in 2009, which passed the House but was significantly watered down before becoming law. Senator Rand Paul revived the effort in 2015, but it again failed in the Senate. The Federal Reserve has consistently opposed these attempts, with officials arguing that full transparency could politicize its decision-making and undermine its independence. Former Chairman Ben Bernanke warned in 2010 that audits of monetary policy deliberations could "severely threaten the independence of monetary policy and the stability of the financial system." This leads to what some economists call "selective transparency": the Fed discloses enough information to maintain market credibility, but keeps the most sensitive details hidden from public view. The Impact of the Transparency Gap The transparency gap between Bitcoin and the Federal Reserve impacts markets, regulation, and public accountability in three ways: First, at the level of market behavior. Glassnode data shows that in 2023, Bitcoin held for more than a year accounted for over 68% of the circulating supply, a metric used to assess long-term investor sentiment. Unlike Bitcoin, where on-chain data directly reflects the behavior of holders, comparable statistics on the dollar supply are lacking—central bank disclosures focus on macro aggregates rather than individual actions. The Federal Reserve, in contrast, has created the opposite mechanism: monetary policy is communicated through announcements and press conferences, with market participants reacting to guidance rather than verifiable data. Traders rely on dot plots every quarter to interpret the interest rate outlook, even though these represent only the views of committee members, not hard commitments. A discrepancy between expectations and reality can trigger trillions of dollars in global market fluctuations in minutes, highlighting the difference in weight between selective communication and direct visibility. The regulatory landscape also demonstrates the value of this comparison. The complete openness of the Bitcoin ledger allows global regulators to leverage blockchain for compliance. Chainalysis reported that in 2023, US authorities seized $3.4 billion worth of Bitcoin related to criminal cases through on-chain tracing. In contrast, the Federal Reserve's interactions with troubled institutions during the crisis—such as its 2019 overnight repo market interventions—were initially completely opaque, with only the total amount disclosed and the identities of the banks involved remaining secret. The trust gap also impacts international relations. Countries heavily reliant on the US dollar for trade or reserves must accept the Fed's decisions without knowing its full strategy, fueling interest in alternatives. According to the Atlantic Council's 2025 Central Bank Digital Currency Tracker, the BRICS group is discussing reducing its reliance on the US dollar, and over 130 central banks are experimenting with digital currencies. The transparency gap is crucial because it reshapes people's perceptions of financial fairness. Both models have their merits, but the contrast is becoming increasingly stark as digital systems redefine the standards of financial accountability.