Bitcoin & Markets

This is the first part of two episodes that will cover my recent Bitcoin Fundamentals Report #183, specifically the Market Commentary section. Part A is much shorter than part B.

Bitcoin has generally performed well when compared to gold and stocks since Russian military operations started in Ukraine on 24 Feb. I give a run down of that performance here. Every bitcoin bull should be happy with how stable bitcoin has been despite the massive geopolitical upheavals.

In this episode, I discuss two articles on bitcoin's game theory by Jeremy Garcia, which appeared first on Bitcoin Magazine. I take a critical stance on many parts of his analysis, but I think it is important that there is more discussion on this topic. I thank Jeremy for writing them. I discuss bitcoin's game theory, cooperative games, infinite vs finite games, changing the rules, and the game theory of nation-state adoption.

Article 1: A Look at the Game Theory of Bitcoin

Hypothesis link for my highlights and comments HERE

Article 2: Bitcoin's Game Theory has Endless Possibilities

My highlights and comments HERE

Full show notes: https://bitcoinandmarkets.com/e237/

Part 2 this week is the rest of the news of the week, price analysis and Bitcoin mining news. Bitcoin is becoming a major player in the great game of international politics. I also get into the conflict in Ukraine a bit at the end. Follow along at https://bitcoinandmarkets.com/r179/

Episode post https://bitcoinandmarkets.com/e236b/

This is part 1 of this week's episodes. I'm not going to rehash all that has gone on in the last week, since it is so fast paced. I'm going to concentrate on some takeaways and lessons learned by bitcoin from this situation. Follow along with the Bitcoin Fundamentals Report at https://bitcoinandmarkets.com/r179/

Episode page https://bitcoinandmarkets.com/e236a/

This short episode is the third part of the series examining the current news of the day in the bitcoin mining industry. Intel has announced it will be making bitcoin ASIC computer chips, Lansing Michigan is trying to crush bitcoin mining in their city, and the mempool is rising meaning there is an increase in the demand to receive bitcoin.

Report: https://bitcoinandmarkets.com/r178/

https://bitcoinandmarkets.com/e235c for more links.

Part 2 of this week's report all about the price. I talk about CPI not being a measure of money printing, but of prices and the explanation for 7% CPI due to supply chain issues. Next I introduce the Bitcoin Dormancy Flow. I thought this chart was interesting and will be looking into more in the future. Lastly, I welcome Bloomberg to the bitcoin prediction party, finally. They all of a sudden have what they think is a good model for price based on volatility, but a week later and it's already proving to be wrong.

In this episode I walk through four big news items for the week, starting with Russia saying they will regulate bitcoin not ban it. I then move onto the Bitfinex hackers and the recent news about Blackrock opening up bitcoin investing to their clients. I finish off by discussing Binance's newest investment in Forbes for $200M and the precedence that it might set for the entire bitcoin industry.

Follow along with the Bitcoin Fundamentals Report at https://bitcoinandmarkets.com/r178/

This is part 1 of a series of episodes that will come out this week. Feedback is welcome.

This is a quick episode to address a question I received via Twitter DM from a reader of the weekly newsletter. He was wondering why I was labeling the market cycle timing as a 2-year cycle instead of the commonly understood 4-year cycle.

This is an early cut of the Evergrande podcast episode coming out next week on Fed Watch. I discuss the proper context in which to view Evergrande, and give details on what I see going on over there in China.

Full notes: https://bitcoinandmarkets.com/e233

In this episode I read through some of the ECB's Annual Report and comment on the current state of the Euro, as well as their efforts to create a digital Euro. This is applicable to bitcoin because the ECB is a major incumbent in the current system, and is trying to launch a bitcoin competitor, which they call a Central Bank Digital Currency.

In the first part of the podcast I detail some of the inconsistencies in their Main Findings. Namely, they claim the Euro's currency status has remained "broadly stable" through 2020. Yet, when we read their stats, nearly everything is declining and at a fairly rapid pace. This is very notable, especially since the Euro is already at "historic lows" of importance in the financial system.

Next, I read through the entire CBDC section and comment thoroughly about what they are getting right and wrong. Unfortunately, they are getting most things wrongs, but they are doing better than, say, two years ago. The main issues I see are:

1) Means of payment is not a function of money. Paypal or Visa are not functions of the dollar. They are separate features. We can easily and plainly draw a line between Paypal and the dollar. We don't consider Paypal as part of the dollar. Therefore, means of payment is not a function of money, it is a function of financial infrastructure around money.

2) Features are not additive. Throughout their report, they claim adding feature X will result in Y, and adding feature A will result in B, as if these features are added in isolation without any second order effects or trade-offs. Indeed, they claim there is a positive feedback loop to adding more and more features. In fact, every feature has a trade-off and adds to the complexity of the whole. This dynamic is actually a negative feedback loop.

3) Interoperability and anonymity - central banks can only give lipservice to these two things. They cannot truly be interoperable, because that opens them up to monetary competition and gives sanction to speculative attacks. One thing legal tender laws do is to close down monetary competition. Anonymity as well is an obvious plus, so they consider it here, but it fact central planners cannot offer anonymity else they'd lose control.

4) Many of these things are already possible and don't need a special new solution by the central bank. In the real world, these solutions are squashed by regulation, not some technical limitation. There is a reason those regulations where put in place (whether you agree with it or not), and providing a new solution effectively routes around those inefficiencies that are part of the regulation process. The central banks would be undermining their very own regulations in other words if they solved for these things in a CBDC.

5) Interoperability, anonymity, censorship resistance, and being a bearer instrument are products of decentralization. A CBDC is by definition centralized around the central bank, so cannot provide these things.

ECB 2021 Annual Report https://www.ecb.europa.eu/pub/ire/html/ecb.ire202106~a058f84c61.en.html

Hypothesis link https://hyp.is/go?url=https%3A%2F%2Fwww.ecb.europa.eu%2Fpub%2Fire%2Fhtml%2Fecb.ire202106~a058f84c61.en.html&group=world

Lagarde conviction https://www.nytimes.com/2016/12/19/business/lagarde-imf-verdict-france-questions.html

A

Bitcoin jargon demystified. Over 180 Bitcoin terms, concepts, and idioms.

http://bitcoindictionary.cc

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