Bitcoin achieves real-time public verification of all transaction records through open-source ledger technology; while the 112-year-old Federal Reserve regularly publishes reports, it has never undergone a comprehensive audit.
Key details such as its emergency loan plans and forex swap operations have remained undisclosed for a long time. Why is this the case?
This article is translated from Ankish Jain's (Why 16-year-old Bitcoin has an audit trail while the 112-year-old Fed does not) by Benpai Finance · Web3.0 Reading Room.
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 actual effects these differences have on investors, policymakers, and the global financial system.
1. The self-auditing mechanism of Bitcoin
Bitcoin is often described as a peer-to-peer digital currency, but one of its most underrated characteristics 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. Any connected user can verify the data in real-time without permission.
In contrast, the 112-year-old Federal Reserve, while being a pillar of the U.S. financial system—managing interest rates, money supply, and economic stability—has never undergone a complete independent audit.
It regularly publishes minutes of policy meetings, balance sheets, and financial statements, but core operations such as emergency loan details, forex swap limits, and dealings with private banks remain exempt from external scrutiny.
This comparison is striking: Bitcoin, which has been publicly audited for 16 years, has a completely open financial trajectory, while the Federal Reserve, which controls the world's largest economy, has consistently avoided the same level of scrutiny.
2. The self-validation logic of Bitcoin
The characteristic of Bitcoin's continuous auditing is a natural product of its open-source design.
All network participants have equal rights to validate rules, breaking the inherent information hierarchy of the banking industry—insiders have privileged access, while the public can only obtain what regulators disclose.
The concept of full nodes is the core of the system's operation, acting as independent arbiters. Nodes do not require special permission or political approval, and anyone can run them with consumer-grade hardware to obtain a complete copy of the ledger. This "trust but verify" principle ensures that the cap of 21 million Bitcoins can be enforced without relying on trust in authoritative institutions.
Each newly mined block contains a fixed number of new Bitcoins, approximately halved every four years. From an 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 block of origin.
Blockchain analysis companies such as Chainalysis, Elliptic, and Glassnode have built complete business models around the public ledger of Bitcoin. Regulators also use the network's transparency to track criminal activities, such as when the U.S. Department of Justice successfully recovered 63.7 Bitcoin in ransom paid during the Colonial Pipeline ransomware attack by tracing blockchain wallet addresses in 2021.
The reliability of this audit not only stems from transparency but also depends on redundancy. Copies of the Bitcoin ledger are spread across multiple regions in Eurasia and America, ensuring that even if a government shuts down exchanges or data centers in one area, data can still be obtained from other places, ensuring that the auditing process is 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 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 Federal Reserve'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, and it releases audited financial statements annually to disclose assets, liabilities, and income.
However, these disclosures only involve surface operations, and the central bank's most powerful tools remain outside independent scrutiny.
Taking the emergency loan program as an example: during the 2008 financial crisis, the Federal Reserve created tools to lend tens of trillions of dollars to domestic and foreign banks. The Levy Economics Institute later estimated that the total support amount from all programs exceeded $29 trillion. However, the details of these interventions were only forced to be disclosed years later due to lawsuits and congressional pressure.
Similar secrecy has also appeared in the Federal Reserve's widely used forex swap lines—this tool allows foreign central banks to borrow dollars during global liquidity crises.
Calls for increased transparency have persisted. Congressman Ron Paul introduced the "Audit the Fed" bill in 2009, which passed the House but was significantly amended before becoming law. Senator Rand Paul attempted to revive the effort in 2015 but again failed in the Senate.
The Federal Reserve has always 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 impact markets, regulation, and public accountability in three aspects:
First, at the level of market behavior.
Glassnode data shows that in 2023, Bitcoins held for over a year accounted for more than 68% of the circulating supply, a metric used to assess long-term investor conviction. Unlike Bitcoin, where on-chain data directly reflects holder behavior, the dollar supply lacks comparable statistical data—the central bank's disclosures focus on macro totals rather than individual behaviors.
The Federal Reserve, on the other hand, created the opposite mechanism:
Through announcements and press conferences, monetary policy is communicated, and market participants react to guiding opinions rather than verifiable data.
Traders rely on dot plots to interpret interest rate prospects each quarter, even though these are merely the committee's views rather than firm commitments. Discrepancies between expectations and reality can trigger trillion-dollar fluctuations in global markets within minutes, highlighting the difference in weight between selective communication and direct visibility.
The regulatory field also reflects comparative value. The completely open Bitcoin ledger allows global regulators to achieve compliance through blockchain technology.
Chainalysis reports that in 2023, U.S. authorities seized $3.4 billion in Bitcoin linked to criminal cases through on-chain tracking. In contrast, the Federal Reserve's interactions with troubled institutions during crises—such as the overnight repo market intervention in 2019—were initially entirely opaque; only the total amount was disclosed, while the identities of the banks seeking help 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, which has fueled interest in alternatives.
According to the Atlantic Council's 2025 Central Bank Digital Currency Tracker, BRICS nations are discussing reducing dependence on the dollar, and over 130 central banks are experimenting with digital currencies.
The significance of the transparency gap lies in its reshaping of people's perceptions of financial fairness. Both models are effective, but as digital systems redefine standards of financial accountability, this contrast is becoming increasingly pronounced.
