Crypto swoons on rumors about this tweet from Coinbase CEO Brain Armstrong:
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I'm concerned that this would have unintended side effects, and wanted to share those concerns.
The Financial Action Task Force may be imposing Travel Rule regulations sooner than later. This could mean a lot of things but the short version is in addition to KYC you may need to show proof of funds on HOW you acquired any crypto you already own. That will be a mess, but it’s not so different than traditional finance regulations. The catch is, imho, it’s easier to hoodwink fiat institutions than to fool anyone about how you acquired your coins on a publicly auditable global ledger. But that’s only an issue for those with something to hide.
For the technical folks, I imagine you may be required to register a KYC linked pubkey with your exchange. Then you will only be able to withdraw to addresses generated from the pubkey. You’ll be legally compliant but the tradeoff is you are fully visible to the exchange and likely the IRS.
Again, this isn’t so different from banks.
Worst case is laid out by Ian Grigg here:
Which is endgame.
Bc of how compliance & regs work, this will drive a barrier between on-exhcange crypto and off-exchange crypto.
The above scenario is much more draconian. The Travel Rule potentially forks Crypto and taints any coins that are not cleared by exchanges. Owning your own keys becomes criminal. This probably won’t happen but no one knows.
Many BSV wallets already include the ability to sign transactions and/or prove identities. Example:
This embedded KYC feature is simple but surprisingly novel in today’s crypto world because most Coin value propositions include avoiding banks, taxes and government oversight. Reality is often disappointing and I think a lot of crypto is about to be very disappointed.
Humans evolved to develop language to describe our experiences and Science to describe all matters of the Universe.
However, there are a few concepts that still boggle the mind, e.g., exponential growth and unbounded scale. Our brains have difficulty processing the concepts exponential growth and unbounded scale.
This video example of Exponential Growth by Chris Martenson is worth watching as a warm up to the rest of this discussion:
If you can grasp the concept of exponential growth then you’re primed for a discussion on unbounded scale.
What does unbounded scale look like? Every grain of sand on Earth is a limited number. Every atom in the universe is a limited number. We don’t know how to conceive of the Infinite.
Now, I’ll say something that will be surprising. BSV is designed to operate at Unbounded scale. In a BSV powered world every flick of a light switch or liter of gas pumped, any transfer of value no matter how small, would be recorded on the BSV blockchain.
Bitcoin was designed to be unbounded with NO limits. Bitcoin was designed to grow exponentially with unbounded blocks.
Simply put, Bitcoin was designed to serve the entire world.
BSV is the protocol for the new Internet. We don’t measure the number of TCP packets processed worldwide. In 10 years we won’t measure BSV transactions either. At unbounded scale throughput will be a non issue.
This is the goal, and it’s a big one. There is a lot of work to be done.
But let’s assume for a moment we are living in this future and BSV is our single global digital ledger for the transfer of information and value.
What does that world look like?
BSV is processing billions of near zero fee transactions every 10 minutes.
You own your data. All of it.
Producers of valuable information are rewarded without middlemen. Incentives shift worldwide.
Fraud is no longer profitable. A global ledger leaves a trail of every criminal activity.
Due to volume your transactions are practically untraceable, but still visible.
The Fed is dead. Honest money means honest governments.
FUD and dishonesty are no longer profitable. Trust is restored.
In my humble opinion, humanity would evolve under these conditions. A global system to reward honest pay for an honest day’s work means humanity will be off to the races towards a new and brighter future.
Today, Money equals Power and we know absolute power corrupts absolutely. Example: our current financial system. This system has led to booms and busts. To an imbalance in work vs reward. To a system prone to increasing levels of fragility vs one that is strengthened with every transaction.
We must separate Power and Money.
We must destroy the modern day financial Ring of Gyges. Plato’s fable tells of a magic ring that makes the wearer invisible:
Suppose now that there were two such magic rings, and the just put on one of them and the unjust the other; no man can be imagined to be of such an iron nature that he would stand fast in justice. No man would keep his hands off what was not his own when he could safely take what he liked out of the market, or go into houses and lie with any one at his pleasure, or kill or release from prison whom he would, and in all respects be like a god among men.
Bitcoin acting as honest money resolves this dilemma. No man can be invisible in his dealings with another on a global digital ledger. Privacy? Yes, but not invisible.
When Money equals Work then we rebalance the global system for the improvement of the human race. Let that sink in for a moment to get the impact of that statement.
Corruption is the lid on our global society. The check on corruption is honest money.
How do we get to honest money? Bitcoin at unbounded scale.
So why is there so much focus on BTC which doesn’t scale vs BSV which does scale?
To paraphrase Ron Paul when he was speaking about Gold:
“Because Bitcoin (gold) is honest money it is disliked by dishonest men”
Unbounded, Honest money is the invention of the century.
Like the PreCogs in Minority Report, I am reporting a murder.
The murder will take place sometime in 2021 and the victim will be Tether. The murderer will be the US Government. The motive, this weekly chart of ~15B of Tether created out of thin air with no USD backing:
The resolution of Tether’s money printing is going to be a shock to the system.
I have a Fear and Greed indicator that has been very useful in bubble assets. This indicator has called tops and bottoms in BTC, ETH, XMR and TSLA.
Here is BTC, Greed indicator sitting around 28k:
This indicator produced this signal in January when BSV was under $90:
If only there was someone who was sharing buy signals on BSV when it was under 100.
BSV has been on the FEAR side of the Fear and Greed equation for the second half of 2020. After hitting a 110:1 ratio it’s come back to 90:1 at current prices of BTC: 19300 and BSV 210. If this ratio comes back to the 200DMA around 60:1 and BTC does push for 28k that would put BSV around it’s ATH of $460.
The USA is in day 2 of an election that may end up being decided by the Supreme Court.
In my opinion, the election is a good news / bad news scenario.
Whoever loses, that’s the good news.
The bad news is the other guy won.
I was struck by the mundane items that were on the California mail in ballot. In total the ballot addressed spending a few billion on very forgettable propositions while the Federal Reserve is printing Trillions.
It’s all an illusion of Democracy while the Federal Reserve and Military Industrial Complex pillage the wealth of the Nation.
Bitcoin can be used to enable every person on earth to vote on any topic in real time with 100% integrity. Think about what that would make available.
This is just one use case of an unbounded Bitcoin. The future is coming.
(the video below is over 40 years old and just as relevant today was it was in the 70’s)
Brief weekend update on BTC. Network Hash has collapsed by 30+% resulting in high fees and very slow transactions. The reason for the hash collapse? Chinese miners who rely on hydro power are no longer receiving plentiful cheap energy as China enters the dry season. The increase in energy cost results in less profitable miners shutting down and a collapse of hash rate. This seasonal adjustment recurs every year although you can see the cycle is more dramatic each time.
If miners turn their machines off because electricity is more expensive this results in less processing power, delayed transactions and higher fees. Examples below:
BTC vs BSV fees. While BTC fees are over $8 for a 20 minute transaction BSV is running zero confirmation instant transactions for less than a penny.
While this issue on BTC is temporary and relief should come in ~3 days when the network adjusts for the new lower hash rate the problems shows the precarious nature of the BTC network and small blocks. Any increase in transactions or reduction in hash results in a slow and expensive network that is unusable for all but the super rich or super patient.
Shockingly, the BTC team thinks this is what Satoshi intended when he designed Bitcoin.
Never interrupt your enemy when he is making a mistake.
Finally, here is a rich bit of comedy gold showing how disconnected the BTC crowd is from Bitcoin.
12 years ago, Satoshi Nakamoto dropped a 9-page bomb on the global financial system.
If you had 1 billion dollars how much due diligence would you do before opening 8 or 9 figure positions?
I’m curious because some of the largest investments I see in BTC defy logic. Sure, if you’re a crypto kid in your mom’s basement YOLO’ing BTC is fine, but if you have 9 figures in a public company’s treasury I think *some* caution would be in order.
The quickest way to become a millionaire is to start with a billion dollars and invest in BTC.
Let’s start our examples with quotes by Michael Saylor and Raoul Pal.
Some have asked how much #BTC I own. I personally #hodl 17,732 BTC which I bought at $9,882 each on average. I informed MicroStrategy of these holdings before the company decided to buy #bitcoin for itself.
That’s $175M in personal money put into BTC. But this investment is based on what?
#Google is what happens when we pool information energy on a software network. Everyone understands this. #Bitcoin is what happens when we pool monetary energy on a software network. Few understand this.
Ah, the classic “Few understand this” ending to a crypto tweet. Very sage. This guy must really know what he’s doing and is definitely not succumbing to meme cults!
But wait, let’s do a few minutes of due diligence on this “monetary energy on a software network”. Let’s start by taking a look at BTC and it’s 1MB blocksize capping throughput at 7 transactions per second.
At 7 transactions per second the maximum number of transactions per year is: 220,752,000
7 x 60 x 60 x 24 x 365 = 220,752,000
Between his personal and business holding Saylor has ~$600M invested in BTC. So, Saylor has nearly $3 invested for every transaction that could possibly be transacted on BTC operating at maximum capacity in an entire year! If 1 billion people wanted to make one BTC transaction it would take almost FIVE years. I guess he must really understand network effects! Maybe I am not included in the “few understand this” group, but I’m trying!
Which scenario has a greater network effect:
One person sending $1 billion for a $3 fee
One billion people sending a penny for 1/1000th a cent each?
Contrast 7 transactions per second BTC with BSV’s unlimited scale. Two different models, two very different futures.
Despite my being confused by Saylor’s love of BTC I like Saylor’s style. He’s all in on BTC between 9800 and 11,100 with a big stack and he is a relentless shill. I don’t think his investment will last long but I give him style points aplenty.
Let’s see what Raoul Pal at RealVision has to say:
Bitcoin's performance is SO dominant and SO all-encompassing that it is going to suck in every single asset narrative dry and spit it out.
Never before in my career have I see a trade so dominant that holding any other assets makes almost no sense.
I like Raoul. He’s a smart guy and I agree with most of what he says about Bitcoin, except that he thinks BTC is Bitcoin. Has he not done his homework? He’s a Macro guy, shouldn’t he have a full picture before diving in and advising his clients to be committed to BTC?
Maybe some due diligence into this area and how to reconcile the problem with mass adoption would be in order before dropping your entire portfolio into BTC?
~ The Mempool ~
The Bitcoin Mempool has been a hot topic of discussion lately, as transaction volumes have been increasing, causing congestion in the network, and driving fees higher.
Bitcoin was designed with a very specific economic model. Mess with Bitcoin, as BTC had done, and that model breaks. If these money guys don’t get the technical aspects I’d assume they’d at least understand the economics.
But let’s give these Billionaires some more time to get the big picture. They are early. They’re completely wrong, but early, so they’ll be fine. Bitcoin is a complicated subject. It draws on many areas of expertise. I had the technical background to get the gist of Bitcoin from the start and I spent over a year in 2012 ridiculing Bitcoiners before I saw the bigger picture. There is a steep and never ending learning curve to Bitcoin and IMHO Saylor and Raoul have a lot to learn.
I am a contrarian on BTC. I’ve been unabashed about this for 2 years. It’s not easy being the contrarian when I wake up and BTC has gone up the entire market cap of BSV, times two, overnight. But there’s nothing about BTC that makes sense as a dominant world currency. It’s crippled.
As a comparison, from my view most of the world is holding NKLA while I’m sitting on a bag of TSLA.
Let’s turn to Mike Novogratz:
On a risk adjusted basis, $BTC is an easier bet today than it has ever been. It’s being de-risked daily.
Is that so? BTC just implemented Schnorr signatures and Taproot to increase “privacy” and scaling. But in reality this adds more technical debt to BTC and takes it further away from the genius design of the original Whitepaper. The BTC devs took a once in a lifetime invention and turned it into a Frankenstein so they could force your transactions through their second layer transports (for a small fee of course).
There is mounting legislation addressing privacy and money transfer. Just about any “privacy” feature runs afoul of these regulations. How does a money guy like Novogratz not know this? It beats me.
Satoshi saw all of these pitfalls and designed Bitcoin to be publicly traceable, pseudonymous, honest money.
But I digress.
Let’s address the popular Store of Value argument:
Oh boy, this is a good one. Let’s take all of the features and advantages of digital money and smart contracts and NEVER use them. Thinking BTC becomes more valuable because no one uses it is a special kind of logic. And guess what, BSV has the same scarcity features as BTC plus scalability/usability.
BTC may have a great bull run to finish the year but it’s not a long term solution. It doesn’t scale.
With these institutions and billionaires lining up behind BTC you’d think it’s game over for BSV, right? Probably.
Oh, and one more thing…. Peter McCormack, who was sued for libel for calling Craig Wright a fraud, has declared intent to stop defending his case. What did his legal team see that had them drop their vigorous defense?
“SCA ONTIER LLP, Dr Wright’s solicitors, have confirmed that Mr McCormack’s legal representatives have informed them of their client’s intention not to continue defending the libel proceedings, which proceedings will now continue to their natural conclusion.”
Fri Oct 9, 2020 11:47am ESTComments Off on One Chart
This chart presented by TAAL’s Jerry Chan at last week’s Coingeek conference sums up the investment thesis for Bitcoin SV. Full presentation here.
This chart represents the point when the BSV mining network is being sustained by transaction fees rather than by block rewards. Keep in mind, the block rewards in Bitcoin are programmed to decrease every four years. Sustaining the network with a massive volume of low fee transactions is crucial to the design of Bitcoin.
This moment when transaction fees exceed block rewards underpins the entire economic model of Bitcoin. If the network cannot be sustained by transaction fees it is doomed to fail. There can be two models for this: low transaction volume and high fees or high transaction volume and low fees. Which of those two models do you think has a future?
In a few decades when the reward gets too small, the transaction fee will become the main compensation for [mining] nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume.
– Satoshi Nakamoto
There were several businesses at the Coingeek event that shared their views on running BSV as their global database due to scalability. Here’s one example:
Note the chart above indicates the crossover happening in Q1 2021 at roughly 75 million daily transactions. That’s ~100x the daily transactions on BSV today. Is this foreshadowing something we don’t know?
Let’s say it like it is: it’s been a tough six months for bullish BSV traders.
I am reminded of the market adage:
The market can remain irrational longer than you can remain solvent.
Irrational is an understatement.
We are living in an upside down financial world: Black is white. Buying bankrupt company stock is a foolproof money maker. TSLA valuations are greater than the rest of the auto industry combined. Closed economies are bullish. Staked DeFi tokens can pay 75% returns in perpetuity. Public company CEO’s are buying mass quantities of BTC.
This is Idiocracy applied to the Financial World. Like frogs in a slowly boiling pot of water we have are numb to how crazy the markets have become. Fool’s Gold indeed.
Fear, uncertainty and doubt are an investor’s worst enemy. I’ve had all three in ample quantity the past few months.
Fundamentals are difficult to keep in focus when the world is upside down. In the face of this I have double checked my math and reviewed the models. The fundamentals for BSV remain sound.
BSV is definitely battered but not beaten.
The Mayer Multiple indicator for BSV is nearing a buy signal again. I have written about the Mayer Multiple signal here and tweeted about it multiple times during the last down cycle of BSV.
The CEO of MicroStrategy shared this info on Twitter today:
On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.
This amounts to an acquisition cost of ~$11,111 per BTC.
The strategy of putting cash reserves into one of the most volatile assets in existence is questionable for a public company. It’s even more questionable when all that money is thrown into a coin that is limited in blocksize to 1MB, dependent on non existent 3rd party solutions for scaling and recently had transaction fees exceeding $1,000.
But don’t take my word for it. Here is an excellent video series that any serious investor, including MSTR, should watch before throwing money into Crypto.
Last night Mad Money’s Jim Cramer was redpilled by Anthony Pompliano (Pomp doesn’t understand Bitcoin but he can talk in reasonable soundbites from a financial background). I viewed this as a bullish event as I expected post redpilling Cramer would be using his daily pulpit on Mad Money to urge viewers to move 1-2% of their portfolio into crypto. Say what you want about Cramer, he’s a hell of a salesman and has a large viewership. Unfortunately, less than 24 hours after his Bitcoin epiphany, Cramer called the Speaker of the House “Crazy Nancy” then went full Boomer mode defending himself on Twitter. Welp, I expect he’ll be in the penalty box a while. Let’s see if he feels like sticking his neck out on Crypto when CNBC deems it safe to put him in front of a camera again.
Looking at market technicals, I am skeptical on a BTC rally. BTC must break $11,400 to avoid putting in a lower high. If that happens then I’ll sit up and take notice. Sentiment seems to be all over the map.
While BSV fundamentals destroy BTC head to head the price action has been disappointing. BSV has a big conference starting end of September. This will be the opportunity for BSV to disclose some of the secret projects that have been held close to the vest. Or, a nothing burger. Flip a coin.
The wild card, as always, is our completely ridiculous stock market bubble and fiat printing. Anything is possible.