Why does a 16-year-old Bitcoin have an auditing mechanism, while the 112-year-old Fed does not?

Bitcoin, leveraging open source ledger technology, enables real-time public verification of all transaction records; while the Fed, established for 112 years, regularly publishes reports but has never undergone a comprehensive audit. The key details of its emergency loan program and foreign exchange swap operations have long been kept confidential. What is the reason for this? This article is a selection translated by Benpao Finance · Web3.0 Research Room from Ankish Jain's "Why 16-year-old Bitcoin has an audit trail while the 112-year-old Fed does not." The article reveals the essential differences in transparency paradigms between central banks and digital currencies by comparing their auditing mechanisms, market impacts, and regulatory efficiencies, and analyzes the practical effects of these differences on investors, policymakers, and the global financial system.

1. The self-audit mechanism of Bitcoin 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, and is validated by thousands of independent nodes around the world. Since January 2009, a continuous public record has been formed that spans over 900,000 blocks and includes nearly 1.2 billion transactions. Anyone connected to the network can verify the data in real-time without permission.

In contrast, the Fed, which has a history of 112 years, has never undergone a complete independent audit, despite being the cornerstone of the American financial system—managing interest rates, money supply, and economic stability. It regularly publishes the minutes of policy meetings, balance sheets, and financial statements, but core operations such as details of emergency loans, foreign exchange swap limits, and dealings with private banks still refuse external scrutiny. This contrast is highly dramatic: Bitcoin, which has been around for 16 years, has a fully transparent financial history, while the century-old institution that controls the world's largest economy, the Fed, has consistently evaded the same level of scrutiny. 2. The self-verification logic of Bitcoin The characteristic of continuous auditing of 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—insiders have privileged access, while the public can only obtain content disclosed by regulatory agencies. The concept of full nodes is the core of the system's operation, acting as independent referees. Nodes do not require special permissions 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 trusted authorities. Each newly mined block contains a fixed number of newly created Bitcoins, which are halved approximately every four years through the "halving" mechanism. From the initial reward of 50 BTC per block in 2009, it will be reduced to 3.125 BTC after the halving in April 2024, and every unit of currency in circulation can be traced back to its originating block. Blockchain analysis companies such as Chainalysis, Elliptic, and Glassnode have built complete business models around the Bitcoin public ledger. Regulators also utilize network transparency to track criminal activities, such as when the U.S. Department of Justice successfully recovered 63.7 Bitcoins paid as ransom in the Colonial Pipeline attack by tracing blockchain wallet addresses in 2021. The reliability of this audit comes not only from transparency but also from redundancy. Copies of the Bitcoin ledger are spread across various regions in Europe, Asia, and America. Even if a government in a certain area shuts down exchanges or data centers, the data can still be obtained from elsewhere, ensuring that the audit process is continuous and resistant to censorship. 3. The global role of the Fed The Fed occupies a unique position in global finance. Although it only formulates US monetary policy, its influence extends far beyond national borders. According to data from the International Monetary Fund, the 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 Fed's transparency is not only a domestic issue but also concerns the international community. The institution regularly publishes the weekly H.4.1 balance sheet, the Beige Book on economic conditions, and detailed meeting minutes of the Federal Open Market Committee. It also releases audited financial statements each year to disclose assets, liabilities, and income. However, these disclosures only involve surface operations, and the central bank's most powerful tools remain outside of independent scrutiny. Taking the emergency loan program as an example: During the 2008 financial crisis, the Fed created tools to lend tens of thousands of billions of dollars to domestic and foreign banks. The Levy Economics Institute later estimated that the total support amount from various programs exceeded 29 trillion dollars. However, the details of these interventions were only forced to be disclosed several years later due to lawsuits and congressional pressure. Similar secretive behavior also appears in the foreign exchange swap lines widely used by the Fed—this tool allows foreign central banks to borrow US dollars during times of global liquidity stress. The call for increased transparency continues unabated. Congressman Ron Paul introduced the "Audit the Fed" bill in 2009, which passed in the House but was significantly reduced before becoming law. Senator Rand Paul revived the effort in 2015, but once again fell short in the Senate. The Fed has consistently opposed these attempts, with officials claiming that complete transparency could politicize its decision-making and undermine independence. Former Chairman Ben Bernanke warned in 2010 that auditing 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, while keeping the most sensitive details out of the public eye. 4. The Impact of the Transparency Gap The transparency differences between Bitcoin and the Fed impact the market, regulation, and public accountability from three aspects: 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 the beliefs of long-term investors. Unlike Bitcoin, which directly reflects holder behavior through on-chain data, the supply of dollars lacks comparable statistics—central bank disclosures focus on macro totals rather than individual behavior. The Fed instead created an opposing mechanism: Market participants respond to guidance rather than verifiable data through announcements and press releases conveying monetary policy. Traders rely on the dot plot to interpret interest rate outlooks every quarter, although these are merely the opinions of the committee and not hard commitments. The gap between expectations and reality can trigger trillions of dollars in global market fluctuations within minutes, highlighting the difference in weight between selective communication versus direct visibility. The regulatory field also reflects comparative value. The fully open Bitcoin ledger allows global regulatory agencies to achieve compliance through blockchain. Chainalysis reported that in 2023, U.S. authorities seized $3.4 billion worth of Bitcoin related to criminal cases through on-chain tracking. In contrast, the Fed's dealings with troubled institutions during the crisis—such as the 2019 overnight repo market intervention—were initially completely opaque, only disclosing the total amount, while the identities of the banks seeking assistance remained confidential. The gap in credit also affects international relations. Countries that severely rely on dollar trade or reserves must accept Fed decisions without being able to know the overall strategy, which has fueled interest in alternatives. According to the Atlantic Council's 2025 Central Bank Digital Currency Tracker, the BRICS nations are discussing reducing reliance on the dollar, with over 130 central banks experimenting with digital currencies. The reason why the gap in transparency is crucial lies in its reshaping of people's perception of financial fairness. Both models are effective in their own right, but as digital systems redefine the standards of financial responsibility, this comparison is becoming increasingly pronounced. #Web3 Reading