Rocks, animal skins, glass beads, copper, silver, and gold were each seriously coveted by people, at certain times and places.

Just one example, is that Indian princes built warehouses to store their cowrie shells.

Each of these moneys had certain characteristics that made it good money.

But over time, it became clear that one of those things was the best money.

That thing was gold, and its value increased tremendously over time against everything else.

Even the second best money, silver, lost over 90% of its value to gold in the last thousand years or so.

So, why couldn’t all those moneys live happily together?

Why did one have to decimate the value of all others?

The answer is network effects.

Network effects pushed the world towards one language: and english won.

Network effects pushed the world even harder towards one money: and gold won.

But there was a problem with gold.

Storing gold safely was hard, so people trusted it with someone else, who issued a paper promise or IOU.

Soon people simply started trading the paper promises, which had many names including dollars, as if they were gold.

Eventually, almost all the gold became centralized in places like Fort Knox.

But the authorities who had the power to print the promises, printed so many promises, that they broke the promises.

In the last 150 years, the broken paper promises lost 99% of their value against gold.

The broken paper promises are a terrible money. Garbage. Shit.

But because of network effects, we have no choice but to keep using them….

Enter, Satoshi Nakamoto, our hero!

Satoshi created code for a new money he called bitcoin, and released it to the world, for free.

It’s similar to digital gold, but even more scarce.

And Satoshi made sure that unlike gold, bitcoin would be easy to store, so there would be no reason use bitcoin-promises instead of bitcoin.

In the last 13 years bitcoin has improved to become easy to send, verify, transport, and hide.

It’s become the ideal money.

Bitcoin’s only real problem has been its small network.

Although we can all see that it’s not a real problem, because the network keeps getting bigger.

It is clear that the network effect of dollars is inadequate to protect it from the vastly superior money that is bitcoin.

It is clear that dollars and euros will go down in history along side silver, cowrie shells, and rocks, as near-worthless memorabilia.

Bitcoin’s small network is not only not a problem, it is an incredible opportunity.

For over the next 5 to 20 years the whole world will switch to a bitcoin standard.

This is inevitable. And those who recognize that inevitability have an incredible investment opportunity.

The price of bitcoin has been in an absolute funk, hovering down around $3400 US. But bitcoin funks are strange ones, and in the four years since the previous funk, bitcoin is up 19x! That’s equivalent to 200% per annum. Not bad!

A lot has changed in the ten years that bitcoin has existed. Chances are good that your grandmother has heard of bitcoin. Chances are good that you know someone who’s done well in bitcoin. Chances are good you still don’t have any!

The big question is if a new bull run will happen, but rather, what group will drive it?

Unconfiscatable

One strong candidate group is Venezuelans. President(?) Nicholas Maduro, and controller of the bolivar printer, has declared bitcoin illegal. But the combination of a horrible bolivar and cheap power has spawned a decentralized community of bitcoin miners running small underground operations. For Venezuelans living abroad, bitcoin is an easy way to send wealth to family inside the beleaguered country.

Juan Guaid, who tweeted about bitcoin in 2014, is claiming the Venezuelan presidency and is backed by many nations including the US. In response, Nicholas Maduro has locked down Guaid’s bank accounts, which sucks for Guiad, but it also means bitcoin becomes more desirability. In twist of fate, The Bank of England has denied Maduro’s request to bring back $1.2 billion from its vault. I bet Maduro wishes he’d sold his gold for unconfiscatable bitcoin!

Uncensorable

The Venezuelan story dovetails nicely with another group that could stampede bitcoins next: defenders of free speech. This latter group includes a large number of controversial and personalities such as Alex Jones and Jordan Peterson, as well as businesses such as forum gab.com and online casinos. These people and businesses are deplatformed and underserved by Paypal, banks, and web service companies like Patreon. They understand that freedom of speech is only possible with uncensorable money. Gab.com puts it very well: “bitcoin is free speech money.” People whose financial payments have been censored could form the next group of hodlers.

Canadian News

Finally, in Canadian Bitcoin News, exchange Quadrigcx announced that their CEO, Gerald Cotton, died while traveling in India. Quadrigacx is down, and it is unclear if it will come back to life. Quadrigacx has been struggling with lost funds and banking problems for over a year. And just like Mt. Gox, which declared bankruptcy five years ago, Quadrigacx had inflated bitcoin prices for months, tempting hodlers to deposit BTC, but processed withdrawals very very slowly.

The disaster for those who had coins on Quadriga serves as a good reminder of bitcoin rule #1: Not your keys, not your bitcoin!

Performing this kind of “51% attack” on bitcoin would be far more difficult and expensive, primarily because mining bitcoin uses roughly 170x more power than BTG. It is bitcoin’s great power consumption that makes its blockchain so very hard to mutate. As far as anyone I know knows, such an attack has never occurred on the bitcoin blockchain. (If you are transacting large amounts you could wait 20 or 30 minutes for two or three confirmations to be sure.)

Blockchains are touted as panacea for the problems of online reputation, smart contracts, and even supply chain management. Block chain and supply chain — seems like a perfect match! In last volume of Business Edge, we read that, “Blockchain is a technology that permanently records transactions in a way that cannot be amended, altered, edited, or erased.” The recent BTG episode demonstrates that this is not always true.

Even the second most powerful blockchain, Ethereum, was altered after The DAO attack of June 2016, re-assigning $50 million worth of ETH. Ethereum, of course, is the blockchain most-hyped to solve all the worlds problems. So far, however, the most useful applications to emerge from it are digital Beany Babies called Crypto Kitties, and digital Canadian Tire money issued in unsanctioned IPO’s known as “ICO’s.”

Blockchain sounds cool, but its only real use case right now is with boring old bitcoin: nerd money that tends to increase in value by 10x or so every few years. SO BORING!!!

If someone starts their own blockchain to make their own “immutable database” or ledger, that person is either scamming or ignorant. Their blockchain won’t be any less mutable than an Excel spreadsheet. Be careful out there.

Two types of demand on metals:

1. Industrial
2. Wealth storage

In order for a thing to become money, it must be desirable, both now, and in the foreseeable future.

The more a commodity is desired, the higher its price will climb. A higher price increases the incentive to produce.

Greater production reduces desirability and price. This is negative feedback loop keeps prices stable, for the most part.

Gold has the same negative feedback loop, although for wealth storage gold has been preferred vs copper since it does not decay. Thus, it has been more sought-after for thousands of years, thus it it harder to mine, and thus its negative feedback loop is weaker:

Bitcoin does not have a negative feedback loop, because rate of production is virtually independent of mining effort. This creates positive feedback, as demand for wealth storage leads to an increase in price which leads to more demand for wealth storage.

Based on wikipedia numbers:

3,100,000 kg of gold was mined in 2016 @ $42,900 per kilo = $132b

19,100,000 kg of copper was mined in 2015 @ $7 per kilo = $134b

Disclaimer: My crypto-portfolio is 98% bitcoin and 2% bitcoin cash

Jordan Peterson points out that as the greatest book club ever: The Bible, has much wisdom. While this idea seems true, I couldn’t see how to apply it, until Daniel Krawisz compared bitcoin branches with the languages, as explained in the Tower of Babel: the bible story that explains why we don’t all speak the same language.

In the story, all the people spoke the same language, and this allowed them to build a tower as high as the heavens, which (for some reason) made God angry. God said:

~“Let’s confound their language, so they can’t understand each other.” — Genesis 11:7

The story is ridiculous, but it shows that multiple incompatible protocols has been an ageless frustration.

Why doesn’t everybody speak the same language?

Why doesn’t everybody use the same money?

My initial analysis suggested the network effects of money and language should incentivize people who use minor protocols to switch to a dominant protocol. And in general, this does occur: people stop using rare languages like swahili and Babine-Witsuwit’en and use English. Copper and silver moneys faded away to be replaced by a gold standard. And (after an initial pump) many alt-coins diminish in price as people sell them for bitcoin.

But desires and beliefs confound dominant protocols. In cryptocurrency, most of these desires and beliefs are backed by ignorance and/or terrible logic, but that is inconsequential. What matters is that those desires and beliefs exist, and that they result in buy orders. They are:

1. A desire to minimize risk
2. A desire to minimize volatility
3. A desire to buy coins at a cheaper unit price (Litecoin)
4. A desire for cheaper transactions (many)
5. A desire to side with the establishment (Ripple)
6. A desire to be in on the next big thing (Ethereum)
7. A desire for anonymous transactions (Dash, Monero?)
8. A belief that bitcoin should scale on-chain (Bitcoin Cash)
9. A belief that bitcoin mining is too centralized (Bitcoin Gold)

— -

• Personally, I want to minimize risk. (Most of my wealth is in bitcoin and, in the small chance it were to fail, I don’t want to be broke!)
• I am 99% certain those who guide bitcoin’s path to mass scaling will succeed… which makes me 1% certain they’ll fail!
• I like bitcoin because it has the potential to destroy the unjust current monetary paradigm in which authorities continually create money for free at the expense of regular people. Bitcoin cash increases that potential.
• I don’t think on-chain scaling will ever enable the entire planet to buy their daily coffee. Bitcoin ideologues derisively point out there are less than 100 bcash transactions per block, but 100 is a whole lot better than zero! Bitcoin cash is an unexpected kind of side chain that increases the ability of all bitcoiners to transact cheaply.

Like many people I invested in Index Funds — swaths of stocks in swaths of industries. I knew full well that I was on the bottom of a corporate pyramid and that middle men were siphoning money from me but what option did I have…

Until bitcoin. A capped and trade-able token that is clearly on the way to becoming digital gold. My goals are to store my wealth and to grow my wealth and I can’t imagine anything that could achieves those better than bitcoin.

A complex and inefficient copy of bitcoin that lacks a capped supply is clearly inferior.

Peer-to-peer decentralized tokens that represent shares in a company are uninteresting for the same reason that traditional stocks are uninteresting.

I want to enjoy life! I want to eat good food and play volleyball and sail and ski and be with my friends and family. I don’t want to be looking at charts and trying to predict what stock X is going to do next week.

Bitcoin is all I need.

Barbed wire made building fences exponentially easier. Simply drive some stakes into the ground and wrap the wire around them. Low weight. Low wind resistance. Hard for people and animals to get across.

The invention allowed ranchers claim more land, prevent their livestock from running away, and prevent other animals from eating their grass. Soon all the best land was protected and being a nomad went from being hard to being impossible.

It’s not like ‘private property’ is not some kind of edict from god, it is just the natural state of a world in which barbed wire exists.

As barbed wire made life tough for nomads, bitcoin sucks for socialists. Socialist want a strong central government that taxes the rich and provides services and redistributes money to the poor. But in order to effectively collect taxes the government needs to surveil people’s finances and/or create new money. The invention of bitcoin holds the potential to eliminate both of these actions.

For this reason, libertarians love bitcoin, and they’re buying as much of it as they can. On the other hand socialists are sense that bitcoin threatens their world view. They are proud of their country’s flag and have little reason to question their traditional state money. As socialists are less-likely to buy bitcoin, their relative wealth is expected to shrink.

It’s not like ‘taxation is theft’ or ‘money should not be create-able for free’ are edicts from god, they are just the realities in a post-bitcoin world.

:)

Here’s the link to my original tweet

Later he says, “Many scholars see cultures as a kind of mental infection or parasite.” Why does he not mention of the idea that cultures could be beneficial to us, acting in a symbiotic relationship?

If we take Christianity for example, it is clear (from the crusades, residential schools, etc.) that its existence has resulted in harm. However, without a second parallel world we can’t see the harm that Christianity helped us avoid.

Harari agrees: “There is no proof that history is working for the benefit of humans because we lack an objective scale on which to measure such benefit.”

Although we can’t compare alternate universes, we can measure energy consumption over time (roughly). And we can look at individual story systems and look at how they’ve enabled us to harness more energy.

Whatever story system allowed us to peacefully co-exist in cities allowed much greater energy consumption because it enabled specialization of production and increased trade.

Certainly, bitcoin is a story system that lives inside the head of millions of people. Without those believers, the millions of kWh of energy that is spent mining for bitcoin every day would go to zero. Additionally, many economies that rely on bitcoin, such as gambling and drug and sex sales would decrease.

So yeah, bitcoin is a symbiotic animal that lives in our heads.

(Seems like Barry Silbert and GBTC found a loophole?)

Not only is this a unnecessary infringement on people’s freedom, but it’s also unenforceable; regulators can’t stop individuals from trusting others with their money.

This post explains how “Alice” can use cryptography to prove to “Bob” that she controls his bitcoin.

Cryptography can’t prevent Alice from losing Bob’s money. Neither can it prevent her from stealing Bob’s money and flying to Ecuador. (Social bonds between Alice and Bob can help reduce those risks.) However, cryptography can prevent Alice from pretending she controls Bob’s money. Cryptographic audits can prevent Bernie Madoff-like and Charles Ponzi-like situations.

Alice can prove to Bob that she controls bitcoin at a particular address by signing a message with the corresponding private key. Wallets with this feature include Electrum, Blockchain.info, and Mycelium (shown below.)

Alice can send the following to Bob:

Message:held by Alice for Bob

Address:1ErYdrukXj4JruhaosnjzndGJvLscay4P6

Signature:H0oguaCCDGR+D7JktuGYQeBbKH1wKwcwOGEm3CYJpxk1Qs5peI+hWO3cjFbl19iohLWy/7JIuQqerINpG3e+RiI=

Bob can use a block explorer to see how many bitcoin are at the address:

And Bob can use a tool such as that at coinig.com to verify that the message was signed by the corresponding private key:

Of course, a verified signed message does not rule out the possibility that Alice has sent a second message to Charlie saying the same bitcoin are his. For Bob to ensure that the money is truly his, he needs to ask Alice to move those funds at a specific time, and then have her sign and send a second message.

Links:

How to sign a message in Mycelium

How to verify a message signed at www.coinig.com