Bitcoin uses open-source ledger technology to achieve real-time public verification of all transaction records; while the Federal Reserve, which has been established for 112 years, publishes reports regularly but has never undergone a comprehensive audit.

Key details of its emergency loan programs and foreign exchange swap operations have long been kept secret. Why?

This article is translated by Pao Ben Finance·Web3.0 Study Room from Ankish Jain's "Why 16-year-old Bitcoin has an audit trail while the 112-year-old Fed does not."

By comparing the audit mechanisms, market impact and regulatory efficiency of the two, the article reveals the essential differences between central banks and digital currencies in the transparency paradigm, and analyzes the actual impact of this difference on investors, policymakers and the global financial system.

1. Bitcoin’s self-audit mechanism

Bitcoin is often described as a peer-to-peer digital currency, but one of its most underrated features is its self-auditing ability. The network confirms a new block every 10 minutes through a proof-of-work mechanism, which is verified by thousands of independent nodes around the world.

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

In contrast, the 112-year-old Federal Reserve, which serves as the backbone 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 loans, foreign exchange swap lines and private banking transactions remain closed to external scrutiny.

The contrast is dramatic: Bitcoin, which has been in existence for 16 years, has disclosed its entire financial trajectory, while the Federal Reserve, a century-old institution that controls the world's largest economy, has always avoided the same level of scrutiny.

2. Bitcoin’s self-verification logic

Bitcoin’s continuously audited nature is a natural outgrowth of its open-source design.

All network participants have equal rights to verify the rules, breaking down the information hierarchy inherent in the banking industry – insiders have privileged access and the public can only access what is disclosed by regulators.

The concept of full nodes is 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 mined 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 the currency in circulation can be traced back to its birth block.

Blockchain analysis firms like Chainalysis, Elliptic, and Glassnode have built entire business models around Bitcoin's public ledger. Regulators are also leveraging 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 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 elsewhere, ensuring a continuous and censorship-resistant audit process.

3. The Fed’s global role

The Federal Reserve occupies a unique position in global finance. While it only sets U.S. monetary policy, its influence extends far beyond its borders. According to the International Monetary Fund, the U.S. dollar accounts for approximately 58% of global foreign exchange reserves, and nearly 90% of global trade transactions are conducted in some form using the dollar.

Given this influence, the transparency of the Federal Reserve is not only a domestic issue, but also a matter of international concern. The Federal Reserve regularly publishes weekly H.4.1 balance sheets, the Beige Book on economic conditions, and detailed minutes of Federal Open Market Committee meetings. It also publishes annual financial statements audited by external institutions to disclose assets, liabilities, and revenues.

Yet these disclosures only scratch the surface of operations, leaving the central bank's most powerful tools beyond independent scrutiny.

Take emergency lending programs, for example: During the 2008 financial crisis, the Federal Reserve created facilities to lend trillions of dollars to domestic and international banks. The Levy Institute for Economic Research later estimated that the programs provided over $29 trillion in cumulative support. However, the details of these interventions were only revealed years later, due to lawsuits and congressional pressure.

Similar secrecy also occurs in the Federal Reserve's widely used foreign exchange swap lines, which allow foreign central banks to borrow dollars during times of global liquidity shortages.

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 Federal Reserve 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 its credibility in the market, but keeps the most sensitive details out of public view.

4. 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 Bitcoin held for more than a year will account for over 68% of the circulating supply in 2023, a metric used to assess long-term investor sentiment. Unlike Bitcoin, where on-chain data directly reflects holder behavior, comparable statistics on U.S. dollar supply are lacking—central bank disclosures focus on macro aggregates rather than individual actions.

Instead, the Fed 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 the dot plot each quarter to interpret the interest rate outlook, even though these are merely views, not hard commitments, from members. A gap between expectations and reality can ripple trillions of dollars in global markets in minutes, highlighting the weighting of selective communication versus direct visibility.

The comparative value also applies to regulation. The complete openness of the Bitcoin ledger allows global regulators to leverage blockchain to achieve regulatory compliance.

Chainalysis reported that in 2023, US authorities seized $3.4 billion worth of Bitcoin related to criminal cases through on-chain tracking. In contrast, the Federal Reserve's dealings with troubled institutions during the crisis—such as its intervention in the overnight repo market in 2019—were initially completely opaque. Only the total amount was disclosed, and the identities of the banks seeking assistance remained confidential.

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

According to the Atlantic Council's 2025 Central Bank Digital Currency Tracker, the BRICS group is discussing reducing dependence on the US dollar, and more than 130 central banks are experimenting with digital currencies.

The transparency gap is crucial because it reshapes perceptions of financial fairness. While both models have their merits, the contrast is becoming increasingly stark as digital systems redefine the standards of financial accountability.