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.
Sun Sep 13, 2020 12:06pm ESTComments Off on BORING
The daily 200 EMA of BSV has moved $10 in six months, from 180 to 190. This is a difficult environment for short term trades. Due to this, the BSV price has been pretty boring to watch but the progress on development continues rolling forward. From a technicals standpoint, BSV is flirting with support at 160. Seems a visit sub 140 is back in the cards even if temporary. Potentially a bigger dip if broader markets continue downward.
The biggest BSV focused conference in NY gets underway Sept 30. I was planning to attend but it’s now moved to being mostly virtual. Big announcements expected.
Eventually the market will catch up and be pricing BSV for its forward potential.
On the comic relief side, here is a 3 day chart of Yearn. Yearn is a DeFi project that went from $3,000 to just under $40,000 in a month. When DeFi crashes I think it will affect the entire market, including BSV.
In other news, I’m visiting Southern California (San Diego). Future plans are to return to Puerto Rico and travel in the future. My passport is expiring soon so I am entering the queue for renewal. State Dept is quoting turnaround times in months. This may not matter if borders remain closed for rest of the year.
Bitcoin SV price has under-performed BTC by 20% in the month of August. This price lag has caused a few interesting comments and articles to be published pondering what is holding BSV back.
Bitcoin SV is a protocol on which developers have built a competitive ecosystem of applications. BSV is designed to comply with legal requirements while scaling with near zero fees. Many people don’t know this approach is novel and unique in Crypto. Most coins are avoiding the work of legal compliance and have taken the shortcut of building an ecosystem on top of Ethereum. It’s the “go fast and break stuff” mentality of dotcoms where developers are king. However, this doesn’t work when building Money 2.0 and a new Internet.
The Bitcoin SV road is not short or easy.
Part of this development process has been the interaction of independent developers and nChain, the 800lb gorilla in Bitcoin SV development. nChain has been building a patent fortress. Craig Wright, the nChain Chief Scientist, has filed filed copyright claims on the Bitcoin whitepaper and is in litigation with multiple parties to prove he is Satoshi Nakamoto. Legal proceedings move at a glacial pace and Bitcoin lives in the fast paced intersection of finance and tech. The legal proceedings have dragged on for over a year and we haven’t even seen our first patent battle. Like it or not, the uncertainty of these proceedings has had an effect on Bitcoin SV.
Despite the patents, copyrights and lawsuits independent developers continue to build new applications that can only run on Bitcoin SV. Just today I discovered this:
While new applications like this are becoming a common occurrence there is still a feeling of frustration on Twitter regarding Bitcoin SV’s place in Crypto. BSV is like a Ferrari tied to a tree.
Several BSV bulls have publicly made statements about where BSV is falling short.
This article by Joshua Henslee examines why tokenization on BSV has been a non starter despite the transaction capacity, ease of token creation and low fees. For those who don’t know, tokens can represent anything on BSV, from Chuck E Cheese game tokens to fiat backed stable coins to land titles.
It seems to me the developers in Bitcoin SV have been focused on the right things: creating profitable businesses. However, it also seems BSV has not been a friendly environment for projects like DeFi. Personally, I view DeFi as a short lived financial instrument to extract money from plebs but it certainly brought a lot of attention and volume to Ethereum. And whatever DeFi’s long term prospects or legal issues projects like DeFi are better off on a scalable and affordable platform like BSV than on ETH.
Developers and investors are asking why BSV is the bridesmaid and not the bride. In response to Henslee’s article cited above BSV investor Calvin Ayre tweeted:
This is not an open revolt or a dissolution of the foundation of Bitcoin SV like we see happening on Bitcoin Cash (BCH). BSV is evolving. The unwritten rules are being questioned. This is a good thing.
BSV already has the most diverse application ecosystem but now there is a new willingness to have every project welcome to use BSV as their underlying protocol without judgement.
In short, we’re not in Kansas anymore Dorothy.
Now the question that remains is….
BSV may be ready for the world but I don't know if the world is ready for BSV.
The current throughput of BTC is 7 transactions per second. That’s 420 tx a minute. ~600,000 a day. For a global network? How do 7 Billion people use a payment network that can only process 600,000 transactions a day?
Ethereum is doing nearly double that number of daily transactions but is also having a lot of problems with scaling and transaction costs. Ethereum tx chart here.
Here is a log chart of BSV transactions in red:
Twice BSV has exceeded 2.2M transactions for a day. This is still not enough and BSV needs exponential growth. The war is not won but the daily battles of transactions and blocksize are starting to tilt one way.
BTC does not scale and other than a few handwaves at Liquid and Lightning Network there is no plan for BTC scaling.
The importance of scaling and recognition of BSV as the King Without a Crown is not a popular opinion but you can’t dispute the numbers and the facts.
And that is the investment thesis of the decade put as simply as possible: BSV scales.
There is a lot to unpack in this post. Let’s begin with addressing a few world events and a brief discussion of money.
There are volumes of books about monetary theory. For this conversation I am going to sum money up as “the product of any one person’s work”. You may store that work product (accumulate money) or use that stored work product to purchase other products (spend it). In essence, money is the result of your work product, or the value you provide in the world.
So what happens when the Government prints money and gives it to banks, companies and individuals? After all, aren’t they issuing money to people without them working for it?
The answer is the Government is counterfeiting your work product. You work for your money but the Government prints it for free. When the money presses go BRRRRR they are counterfeiting work product. Think about it. GDP stands for Gross Domestic Product. As a Nation our GDP is based on the product we produce. It’s that simple.
The value the Government claims for free by increasing the money supply without a link to production occurs in the devaluation of the dollars you earn. They have counterfeited your work product.
In ancient Rome the Roman emperors would clip edges off of coins as a way to collect taxes. Then they would take those clipping and melt new coins. This was not taxation, this was monetary manipulation. This was the original counterfeiting! They took your stored labor and used it to counterfeit new money without a link to production. In the digital age we have replaced coin clippings with quantitative easing.
This fundamental issue of money is underlying the public unrest. People understand they are stuck in place or backsliding in quality of life but it’s been difficult to pinpoint why. Wages are stagnant, consumer prices are up but the markets are doing great! Something stinks, but we didn’t know exactly what it was. That dead fish smell is the deepening money pit we are falling into as a nation. The Government has been counterfeiting your work product for decades. It’s worse than that though. Since the USD is the world’s reserve currency the Fed has counterfeited the entire planet’s money supply. For every laborer that digs a hole the government prints the equivalent money and disburses it to those in power directly or via subtle means. Except now in this late stage game it’s becoming less subtle!
You may have recently heard of the Cantillion Effect. This simple rule states that when new money enters a system it is not evenly distributed. Those who touch the money first gain the greatest benefit. The average Joe Citizen suffers as the benefits of the counterfeited labor (new money) the Government created is redistributed unevenly. Your earned dollars are paying for the counterfeited dollars the Government gives to banks, corporations and slush funds.
Your work harder for less in return. Meanwhile, those nearest the Cantillion effect build wealth at a pace that matches the counterfeiting. Given the recent 6 trillions stimulus these must be good times for those banks, corporations and funds nearest the Government printing presses!
As a friend of mine once said, “If I had your money I could burn mine”. That about sums it up. Your tax dollars and earnings, your entire stored wealth, is a mirage. It’s all tied to and controlled by the Government who use your life’s work to steal value for themselves and their cronies. You are nothing but coin clippings to be melted into new gold bars for the elite.
OK, that was bit over dramatic, but you get the idea. The issue is that money is not tied to work. Without this correlation those who can print money can control the world. This is human nature and why empires eventually collapse. An empire may start out on a solid foundation but eventually enough entropy enters the system that the system falls apart. Given our iterations of money over the centuries an the repeated rise and fall of empires we have not been able to separate money from human nature.
We don’t have an honest system to reward one for the value provided that is not also subject to the booms, busts and cycles of human nature.
Many people consider Bitcoin to be an Internet meme or the latest Internet ponzi. I was a Bitcoin skeptic for years. I followed Bitcoin for a few years but only as a technological curiosity before buying. I was blinded by the mockery of this new Magic Internet Money and it prevented me from doing the due diligence to understand Bitcoin for myself until years later.
Once I began studying Bitcoin I fell down a very deep rabbit hole and have been there ever since.
The information available on Bitcoin is biased depending on source, including my own blog posts.
Do your own research. Bitcoin is an IQ test.
Meanwhile, here’s your theme song for stocks in 2020.
Notice the columns in red. Inputs and fees are correlated. BTC users are paying ~$2 per input used in a BTC transaction.
BTC is a shared ledger. Every BTC transaction has a number of inputs and a number of outputs. If you want to spend BTC your inputs are sent as outputs and the fees (currently) are ~$2 per input spent. The more inputs used to spend your BTC the more space your transaction takes on the BTC blockchain and the higher the fee.
Think about it as you have a wallet with three $20 bills. Each $20 bill is an input in your wallet waiting to be spent. If you want to spend those three $20 bills (three inputs) it will cost you ~$2 in BTC fees per bill (input) spent. Let’s say you want to buy an item for $50. You give the cashier three $20 bills (three inputs) and there are two outputs, the $50 you paid and the $10 in change you receive. Using BTC, this would result in ~$6 in fees to spend $50. This is not sustainable.
BTC proponents like to point out when millions of USD are moved on BTC for a transaction fee of $2 but they never mention when someone pays $6 to move $50, or $1,000+ for a single transaction that consolidates a large number of inputs.
This is a very expensive fee to use a very small amount of data on the BTC blockchain.
Why does this happen? Because BTC has a 1MB blocksize. This means BTC can only process ~1MB in data roughly every 10 minutes. The cap creates a fee market where users compete to pay for the privilege of using the 1MB BTC blocksize. This fee market makes BTC expensive to use in majority of cases and completely broken in times of heavy usage.
You’ll hear that BTC is a “Store of Value” and “digital gold”. Many talking heads in BTC claim these fees are good for the network. But look behind the people promoting this narrative. Their companies (or themselves) are financially tied to BTC operating in a limited fashion with high fees. Blockstream, the main company responsible for BTC’s direction the past several years, is based on selling products that take advantage of these expensive BTC fees.
Read the Blockstream whitepaper for yourself: https://blockstream.com/sidechains.pdf
What did Blockstream say when BTC fees last exceeded $100?
Personally, I'm pulling out the champaign that market behaviour is
indeed producing activity levels that can pay for security without
inflation, and also producing fee paying backlogs needed to stabilize
consensus progress as the subsidy declines. - Greg Maxwell, Blockstream CTO
Translation: high fees justify limiting BTC to create a marketplace for Blockstream products.
Here are your Blockstream products:
If what I’m saying is true, why does BTC continue to appreciate in price? I don’t know, but I have a hunch it has something to do with this Tether chart.
Don’t trust anyone, including me. Fact check what I’m saying.
Summary: the investment thesis of BTC is that this artificially limited and expensive to use network will be adopted globally because BTC is a Store of Value and/or digital gold. Please ignore that BTC cannot scale without third party products that financially reward those in direct control of BTC development.
Let’s compare BTC to BSV. First, here’s a comparison of BTC fees vs BSV from coin.dance
BSV fees are generally under 1 cent vs BTC fees of ~$2 per input spent.
But how can BSV operate with such low fees? BSV is scaling to millions of transactions per 10 minutes. The goal is exceed Visa volumes in the near future. At scale anyone can spend BSV, includuing making micropayments on the Internet, for nearly zero fees. At scale BSV will survive off fees as the Bitcon block reward continues to halve every four years. BSV is scaling for the world to use, no third party products needed.
This makes BSV a stable and inexpensive platform for commerce and application development.
Let’s look at transactions (algorithmic chart). BSV in red. BTC in yellow.
BSV can handle orders of magnitude more transactions than BTC at orders of magnitude lower fees.
Summary: BSV is positioning for high volume and low fees. BTC is positioning for high fees and low volume.
One of these approaches has a future and one does not. Let’s see who wins.
Mankind is shifting into a new era I am calling The Information Renaissance.
The Renaissance was the period in Europe between the 14th and 17th centuries when there was a surge of interest in and production of art and literature. … In Old French renaissance means “rebirth.”
You can see the need for a rebirth of information all around us. Misinformatoin has been a weapon of armies, politicians and elites for hundreds of years. Propaganda flyers dumped from planes are now Twitter bots manipulating Twitter trending topics. News organizations are no longer impartial. Newspapers and networks are a means to spin the political agendas of their billionaire owners. Deep fake videos are now very difficult to spot and increasingly easy to create.
Information is power. Enron was able to fake the books, even as a public company, because they could manipulate information. Madoff kept investors in the dark for years while running a billion dollar ponzi scheme. Epstein was able to pretend to be a savvy investor while doing little more than buying index funds. The most powerful organization in the world, The Federal Reserve, operates in an information black hole. No one knows who owns the Federal Reserve!
Today, there is much debate about the veracity of the Corona Virus numbers in China and other countries. In all the cases above there is no way to verify the truth due to manipulation, censorship and misinformation. This misinformation is costing untold billions of dollars and many lives.
Those who control the information wars control the story. As they say, “history is written by the victors.”
How does society cope with this explosion of information both real and fake? If we can no longer trust what we see with our own eyes how do we operate safely and free from control?
What’s been missing is a single source of truth for humanity. A source that records the time information is created as well as the author. A global immutable ledger of transactions and events. Could bad actors still record false information? Yes, but it would not be profitable long term. Today, entire companies exist to spread misinformation because it is profitable. This is a worsening problem that must be stopped.
This single source of information is possible on Bitcoin SV. BSV is a truth machine. Here’s how this works.
How did Enron get away with so much fraud given they must disclose immutable financial records? Easy, they kept two copies and auditors only saw what Enron wanted them to see. According to financial regulations Enron’s financial records were permanently burned onto a CD that cannot be altered but there was no way to audit what they provided was true. Enron controlled the information from start to finish. It was trivial to manipulate.
This is the problem of double entry accounting. I can not verify that the information you provided is true.
As the fable Ring of Gyges illustrates absolute power corrupts absolutely. In this fable a man discovers a ring that grants invisibility and then succumbs to temptation eventually killing his King and marrying the Queen.
…asks whether any man can be so virtuous that he could resist the temptation of killing, robbing, raping or generally doing injustice to whomever he pleased if he could do so without having to fear detection.
In today’s world having power over information is a ring of invisibility. If a person can act immorally, illegally or unethically with no consequences then eventually they will abuse that power. The key to that power is control of information.
Enter BSV and the triple entry accounting ledger.
Triple-entry accounting can be thought of as a way of agreeing on objective economic reality…placed side by side, the bookkeeping entries of both parties to a given transaction are congruent. The third entry in the system, entered into the blockchain, is both a receipt and a transaction. It’s proof that something happened between two parties, which goes beyond the receipts that each party holds in double entry.
Think about all the scandals you hear about Government waste. If triple entry accounting were available for tax money the Government would be accountable for every penny they spend in real time. Imagine this for the Federal Reserve. Open books where Fed funding facilities could be audited at a moment’s notice. Where is 6.6 trillion in stimulus (tax dollars) going? We will likely never know.
If information is power then those who hold the information are powerful. In a triple entry accounting system the power is distributed. The “truth machine” cannot be fooled.
Now, here’s where things get really interesting. Google, Facebook, Apple and others are mass collectors of information. So much information they call it Big Data. I’m going to simplify this example for brevity’s sake.
An Artificial Intelligence is built on data. Processing speeds are so fast now that several months to you and me are a millisecond to a computer in computational power. Processors are not the bottleneck. What Google et al need to build an AI is data. Lots and lots of data. And we are giving it to them, for free.
Now imagine one of these companies has a breakthrough in AI. Overnight they could be the most powerful company that has ever existed. A functioning AI grants mind boggling power over information. Google protects their data so they can use it as a competitive advantage to build AI.
This is the next frontier in technological development. How do we counter a company from gaining AI capabilities and using it to further their own gains? The first company to develop a working AI would have the Ring of Gyges.
To counter this, we use an independent source of truth. We use Bitcoin SV. The blockchain as a single source of truth in a triple entry system that is immutable and uncensorable. The data it not owned by any company. It’s public.
All of the examples of fraud and abuse of power above cannot happen if BSV is used as a global ledger.
Truth wins and the Information Renaissance begins.
It’s been a very busy couple of days so I will keep it light.
BSV is screaming to the upside as Craig Wright has confirmed online he has received the bonded courier information to access 1.1M BTC. Further, the court sanctions in his lawsuit were mostly overturned.
There is currently a battle at $330 for who will retain #4 on the coin market cap list between BSV and BCH.
This is all going according to what I’ve posted here in the past.
Here’s a few recent tweets to catch you up since my last posts:
Posted original chart Jan 6 saying BTC holders could make 40% by converting to BSV.