2021.34 - Pay Me
TLDR:
Bitcoin is already unrivaled as a long-term savings technology and settlement network for large payments. The era of lightning-enabled payments is about to officially kick off.
Can you see where this is going?
THE STANCE
My personal opinion on where the ball might be heading.
Stance
The use cases for Bitcoin are, in some sense, emergent properties that come into focus as people continue to subscribe to its incentive structure, helping it bootstrap itself into existence. Some are buying and holding, others are mining, others are trading and others are building on top of it.
Understanding this makes it easier to understand why some early adopters got it so wrong, like Roger Ver dying on the heal of cheap, fast payments. It may have made sense at the time given Bitcoin’s scale at the time but he ultimately lacked the vision to grow out of his position.
Right now Bitcoin is unrivaled as a long-term savings technology, and as settlement network for large payments, both of these features rest on the reliability of on-chain transactions on its base layer
But Bitcoin use cases are about formally to jump into a new phase. Ironically, fast, cheap and easy payments are coming to Bitcoin. Just not on the base layer.
I highly recommend this thread by Gigi for a thoughtful exploration of the contrast and tension between Bitcoin as a payments technology VS Bitcoin as a savings technology
The adoption of Bitcoin as a savings investment technology is still in its early stages. Most people have not yet made the leap into this alternative system —many of them out of mistrust or fear of these new rails. I see it all the time; people who are interested in the asset but struggle with the idea of digesting an entirely new financial ecosystem.
Add to the mix that the loosely regulated state of crypto-exchanges attracts many but probably repels the more conservative types.
The cherry on top is the fact that most people don’t yet know how to value Bitcoin (there are people out there who still think it could go back to $10k).
I favor a “Keep it simple” approach. Look at some of the stores of value that Bitcoin is competing against and arbitrarily assign a reasonable percentage that you feel it could absorb off that market.
For example, absorbing 100% of the Gold market would put Bitcoin around $500,000 per coin, but 100% is unlikely. Plug in a number that you feel is reasonable.
Below is this same exercise applied to the global debt market with a 10% as a target:
You could do the same for real estate and a number of other asset classes and the one thing that you’ll immediately realize is that Bitcoin is still massively undervalued.
It will be interesting to see how Bitcoin’s next chapter as an everyday payment phenomenon will impact valuation.
There’s bound to be bumps in the road, a look at the infrastructure behind El Salvador’s Chivo Wallet (see below) makes it clear that it will be a sophisticated challenge to operate at a national currency level, but great things have never been easy.
A recent leak of the alleged architecture behind El Salvador’s soon-to-be-released “Chivo” Wallet:
If you can see the path that Bitcoin is on you have one of the most “unfair advantages” in history. If you can’t yet, book a call with me.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
One Year Later
The Gigachad keeps stacking relentlessly and virtually unchallenged. It’s hard to believe that other corporations have not yet started taking pages from Saylor’s well-publicized playbook. I for one think this year-long victory lap —in which he has managed to accumulate a staggering 0.5% of the total Bitcoin supply— is well deserved.
Billions and Billions!
Altcoins are the noise distracting you from the signal. Pay attention:
DEX’d
A DEX is a Decentralized Exchange, ie. one that depends on a network of participants to run (like Bitcoin). Centralized services have the advantage of having no single head to cut off, no server to shut down, no headquarters to raid, ie they are censorship resistant.
The fact that Jack Dorsey (of Twitter and Square fame) is thinking of enabling one and open t conversation with one of the most established DEXes out there (Bisq) is incredibly hopeful.
Centralized (normal) exchanges are subject to legal / political pressure in ways that DEXes may not be. Giving the growing whiff of totalitarianism in the air and the particularly the evident hunger for monetary control displayed by global authorities, DEXes need to be pushed to the forefront.
Institutions Bitcoining
The groundwork for mass adoption keeps advancing as legacy players continue to bake Bitcoin into their offerings
Billionaires Bitcoining
It’s no secret that Ricardo Salinas Pliego, one of Mexico’s richest men, is a Bitcoin enthusiast (he claims to have 10% of his liquid assets in Bitcoin). But still it’s nice to wealthy people actually doing their homework and taking the time to understand what they’re getting into. Bravo Don Ricardo.
Countries Bitcoining
For different reasons and in different ways, nation states are sarting open up to Bitcoin.
Cuba just announced is will be working to regulate Bitcoin as an accepted payment method.
El Salvador is leading the world in being the First Nation to adopt Bitcoin as legal tender less than two weeks from now, on September 7th.
Trading Africa
Africa is leading global peer-to-peer trading volume for Bitcoin, not as part of a government’s plan but despite of it.
Getting Down To ASICS
Further integrating its wide array of offerings, Blockstream will now be producing mining ASICs —the specialized, single purpose computers designed to mine Bitcoin.
Manufacturing ASICs out of China seems like a wise strategic move.
You Are Early
Sometimes people don’t believe me when I tell the they’re still early to Bitcoin…
Substacking Sats
Popular newsletter platform Substack announced it’ll be allowing creators to charge in Bitcoin using Lightning.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Real ETH, Please Stand Up
The Ethereum blockchain split last week, but you wouldn’t know it from looking at the price.
ETFs - ETH
Speaking of Ethereum, two applications for two Ethereum ETFs were quietly withdrawn leading some to speculate whether SEC’s Gary Gensler’s recent comments in Aspen (which included labeling most alts being securities) rattled some nerves and sparked hope that a Bitcoin Futures ETF could be approved sooner rather than later
And if you’re wondering about all the crypto ETFs that have ever been filed and their status, here you go:
Iran No ban
It was announced that the ban on Bitcoin mining will be lifted near the end of September
Visa Apes In
In what could probably be called a great advertising move, Visa bought an NFT to show it’s one of the cool kids.
China: MOAR Crackdown
Not content with the damage already inflicted, China decreed there would be more crackdowns and declared Bitcoin worthless. Bold move.
Of course, China’s definition of “valuable” may not be the same as yours.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Losing the Faith
The majority of financial executives think fiat will be replaced by digital assets which could mean cryptos or CBDCs (Central Bank Digital Currencies). If you’ve done your homework you know it means Bitcoin
Seize This
I remember it took me a while to understand why some people pitched Bitcoin as a technology empower people through property rights.
If you’ve ever struggled with the concept ask yourself how many Berliners are thinking they should have bought Bitcoin instead of that rental unit:
Muh Stonks
The market has been on a historically long upward tear.
Or has it?
Turns out, much depends on how you measure it. If you subtract inflation, then not so much and if you measure it in Bitcoin definitely not. Here’s a chart of the S&P:
I recommend you visit the site above (Inflationchart) and play with the “As Measured In” parameter at the top to compare S&P performance against different assets/commodities.
Dinosaurs Yell At Meteors
Surprising no one, the IMF doesn't’t think Bitcoin can / should be a national currency. Alex Gladstein picks the argument apart in this thread.
Out with the Old
Pour one out for Gold, the venerable hard money of antiquity. I forgone still like and appreciate Gold, but I also believe it will cede much of its monetary premium to Bitcoin (if Bitcoin were to eat ALL of Gold’s monetary premium it would be priced close to $500k)
PRICE DISCOVERY
This is the section where I talk about price with an updated weekly price chart. If this is your first time here, there’s a “how to interpret” guide below the chart.
Bitcoin surfing
Bitcoin managed to keep itself above water (currently $46k) and
How to interpret the Bitcoin Surfing chart:
Think of Bitcoin's price-action as a kite-surfer:
Bitcoin uses its board to stay above water and wants to catch some air.
When it catches air, it tends to keep rising but if it rises too fast (it's feet no longer touch the board) it can stumble.
If it falls off the board, it tends to keep falling until it regains its footing (may need to touch water or sand for that).
Water and sand arrest the fall and help it push itself back up.
If it goes up so much that it gets close to (or into) the Stratosphere, it will probably crash down all the way into the sand and may need to tap the bedrock level before pushing up again.
The Blowoff
Previous parabolic advances in Bitcoin have culminated in blowoff tops (in the Bitcoin Surfing chart that would mean one or more candles penetrating the stratosphere) and many expect this bull run to end in one as well, which is why it’s worth familiarizing yourself with them.
A blow-off top is a chart pattern that shows a steep and rapid increase in a security’s price and trading volume, followed by a steep and rapid drop in price. —Investopedia
David P. Ellis brings the analysis:
Dip Fishing
Bitcoin made a half-hearted attempt at $50k this week and was rejected. It’s currently bound between $46k and $50k We’ll see if it manages to breaks out in either direction.
The Calm Chart
Below is a great description of the Calm Chart:
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