Bitcoin, through its open-source ledger technology, achieves real-time public verification of all transaction records; meanwhile, the 112-year-old Federal Reserve, despite regularly publishing reports, has never undergone a comprehensive audit.

Key details of its emergency loan programs and foreign exchange swap operations have long remained undisclosed. What is the reason for this?

This article is a selection translated from Ankish Jain's "Why 16-year-old Bitcoin has an audit trail while the 112-year-old Fed does not," by Benpaocai · Web3.0 Reading Room.

By comparing the auditing mechanisms, market impacts, and regulatory efficiencies of both, the article reveals the essential differences in transparency paradigms between central banks and digital currencies, and analyzes the practical implications of this disparity for investors, policymakers, and the global financial system.

1. 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 has formed, spanning over 900,000 blocks and containing nearly 1.2 billion transactions. Anyone connected to the network can verify the data in real-time without permission.

In contrast, the 112-year-old Federal Reserve, as a 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 from policy meetings, balance sheets, and financial statements, but core operations such as emergency loan details, foreign exchange swap limits, and dealings with private banks remain resistant to external scrutiny.

This comparison is striking: Bitcoin, which has existed for 16 years, has a fully public financial trail, while the century-old institution controlling the world's largest economy, the Federal Reserve, consistently avoids the same level of scrutiny.

2. Bitcoin's Self-Verification Logic

The characteristic of continuous auditing in Bitcoin is a natural product of its open-source design.

All network participants have equal rights to verify rules, breaking the inherent information hierarchy of the banking industry—where insiders have privileged access, and the public can only obtain what regulators disclose.

The concept of full nodes is central to the system's operation, acting as independent referees. Nodes do not require special permission or political approval; anyone can run them using consumer-grade hardware and obtain a complete copy of the ledger. This "don't trust, verify" principle ensures that the supply cap of 21 million bitcoins can be enforced without reliance on authoritative trust.

Each newly mined block contains a fixed number of newly created bitcoins, approximately halved 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 currency in circulation can be traced back to its originating block.

Blockchain analysis companies like Chainalysis, Elliptic, and Glassnode have built complete business models around Bitcoin's public ledger. Regulators also utilize network transparency to track criminal activities; for instance, in 2021, the U.S. Department of Justice successfully recovered 63.7 bitcoins paid as ransom in the Colonial Pipeline attack by tracing blockchain wallet addresses.

The reliability of this auditing stems not only from transparency but also from redundancy. Bitcoin ledger copies are distributed across multiple regions in Europe, Asia, and America; even if a government shuts down exchanges or data centers in one location, the data can still be accessed from elsewhere, ensuring that the auditing process remains continuous and resistant to censorship.

3. The Global Role of the Federal Reserve

The Federal Reserve occupies a unique position in global finance. Although it only formulates U.S. monetary policy, its influence extends far beyond national borders. According to data from the International Monetary Fund, the U.S. dollar accounts for about 58% of global foreign exchange reserves, and nearly 90% of global trade transactions use the dollar in some form.

Given this influence, the transparency of the Federal Reserve is not just a domestic issue but a matter of international concern. The institution regularly publishes its weekly H.4.1 balance sheet, the Beige Book on economic conditions, and detailed minutes from the Federal Open Market Committee meetings, and it releases audited financial statements each year to disclose assets, liabilities, and income.

However, these disclosures only cover surface operations, while the most powerful tools of the central bank remain outside independent scrutiny.

Take the emergency loan program as an example: during the 2008 financial crisis, the Federal Reserve created tools to lend trillions of dollars to domestic and foreign banks. The Levy Economics Institute later estimated that the total support from these programs exceeded $29 trillion. Yet, the details of these interventions were only disclosed years later due to lawsuits and congressional pressure.

Similar secrecy has also been observed in the Federal Reserve's extensive use of foreign exchange swap lines—tools that allow foreign central banks to borrow dollars during global liquidity crises.

Calls for increased transparency have been persistent. In 2009, Congressman Ron Paul introduced the "Audit the Fed" bill, which passed the House but was significantly amended 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 claiming that complete transparency could politicize its decision-making and undermine its independence. Former Chairman Ben Bernanke warned in 2010 that auditing monetary policy deliberations could "seriously threaten the independence of monetary policy and the stability of the financial system."

This has led to what some economists call "selective transparency": the Federal Reserve discloses enough information to maintain market credibility while keeping the most sensitive details out of public view.

4. The Impact of the Transparency Gap

The differences in transparency between Bitcoin and the Federal Reserve affect markets, regulation, and public accountability in three ways:

First, at the level of market behavior.

Data from Glassnode shows that in 2023, bitcoins held for over a year accounted for more than 68% of the circulating supply, a metric used to assess the confidence of long-term investors. Unlike Bitcoin, where on-chain data directly reflects holder behavior, the dollar supply lacks comparable statistical data—central bank disclosures focus on macro totals rather than individual behaviors.

The Federal Reserve, in contrast, has created an opposite mechanism:

By communicating monetary policy through announcements and press conferences, market participants respond to guidance rather than verifiable data.

Traders rely on dot plots to interpret interest rate prospects each quarter, even though these are merely the opinions of committee members rather than firm commitments. The gap between expectations and reality can trigger trillions of dollars in global market fluctuations within minutes, highlighting the weight difference between selective communication versus direct visibility.

The regulatory field also reflects this comparative value. The completely open Bitcoin ledger allows global regulators to achieve compliance through blockchain.

A Chainalysis report states that in 2023, U.S. authorities seized $3.4 billion in bitcoins related to criminal cases through on-chain tracking. In contrast, the Federal Reserve's interactions with troubled institutions during crises—such as the 2019 overnight repo market intervention—were initially completely opaque, with only the total amount disclosed while the identities of the banks seeking assistance remained confidential.

The credit gap also affects international relations. Countries that heavily rely on dollar trade or reserves must accept Federal Reserve decisions without knowing the full strategy, fueling interest in alternatives.

According to the Atlantic Council's 2025 Central Bank Digital Currency Tracker, BRICS nations are discussing reducing their dependence on the dollar, with over 130 central banks experimenting with digital currencies.

The significance of the transparency gap lies in its ability to reshape perceptions of financial fairness. Both models are effective in their own right, but as digital systems redefine standards of financial accountability, this comparison is becoming increasingly pronounced.

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