The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
It highlights the madness, so here it is again:
https://www.youtube.com/watch?v=ORdWE_ffirg
"Maybe it's time for you to make an entrance on the ARB chat board with that Wired article"
If I did that I would be spamming, even though I am of the opinion that Miners business models will be tested to the limit after the next halving, I did mention as much weeks ago on the QBT chat. If I'd started airing my opinion on ARB chat first, then in all likelihood I'd still be there, but it was QBT that caught my eye.
The markets appear to be rotating into a new cycle. Biden is cracking down on US companies inflating their stock through buybacks, and growth over value seems to be reaching the end of the road. Central Banks have been raising interest rates, and although inflation appears to be stalling it's likely that interest rates will remain high for a long time, so the era of cheap debt is coming to an end. The US is stopping industry from exporting jobs and the decline of globalisation is speeding up.
If the price of Bitcoin doesn't keep rising, post the next halving, it's unlikely the miners will get a decent return on their capex investment and will struggle to profit while paying off debt. ARB demonstrates the struggle for miners, with Galaxy bailing them out and ensuring they survive. The current rise in Crypto prices looks orchestrated to me, the prices appear to fly, then stabilise, before taking another leap. It's in the interest of all the Whales, Exchanges and players for Crypto prices to climb, in order to protect their own investments. Everything Crypto currency has the look and feel of a Pyramid scheme and all Pyramid schemes eventually collapse. Pyramid schemes can last for decades before eventually collapsing, look at Madoff; It's unclear when Madoff started his Ponzi scheme, but it's thought to have started sometime between 1970 and 1990, eventually collapsing due to the 2008 financial crisis. The crypto industry will probably see its demise due to some event making it unsustainable.
https://www.wired.co.uk/article/bitcoin-mining-halving-crypto-winter
I'm surprised to see Germany on the mining map, you'd think they'd have better uses for their energy supplies in light of the Russia/Ukraine war.
The Bitcoin mining network relies on Proof of Work in calculating a hash function for a new block. In simple terms:
Mining
A Hash Function is calculated based on fields including Block Number, Nonce, Transaction Data and the previous block Hash Function. The new Hash function is calculated by trying different Nonce's until a new Hash function is calculated below a certain "hash target" Mining Difficulty level. Basically the miners need to find a Nonce that can produce a hash that's below the "hash target".
Mining Difficulty
The Bitcoin difficulty algorithm automatically adjusts the Bitcoin Network difficulty level every 2016 Blocks, to limit the speed of solving new Hash Function's to around 10 minutes per block, so changes to the "hash target" occur approximately every 2 weeks. The more efficient and faster Bitcoin Mining becomes the higher the hash rate, leading to a corresponding increase in the difficulty level and more leading zero's in the "hash target".
From the previous post:
"testing this approach for the current level of difficulty, the leading zeros of the hash target, is computationally extremely demanding: each time we test at an higher level of difficulty from our current internal difficulty target, the amount of time/computing power needed, increases by 16 times."
What I think he's saying is that difficulty increases, the lower the calculated "hash target", meaning more leading zeros. In simple terms, it's easy to calculate a Nonce to generate a Hash Function with 1 leading Zero, but it gets exponentially more difficult as you add more leading zero's to the "hash target".
https://blog.bitmex.com/bitcoins-lowest-block-hash-values/
The current Bitcoin difficulty is 39,156,400,059,293 and is forecast to increase to 42,267,210,304,458 in 6 days. Bitcoin difficulty increases as the "Hash Target" decreases, so they have an inverse relationship; The current hash target is set as 0x17073039 in Hex.
If you enter 0x17073039 into the "Bitcoin Target Calculator", at the bottom of the page in the following link, you can see the inverse relationship between Difficulty and Target.
https://blockchain-academy.hs-mittweida.de/courses/blockchain-introduction-technical-beginner-to-intermediate/lessons/lesson-14-bitcoin-mining-difficulty/topic/in-depth-explanation-of-bitcoin-mining-difficulty/#:~:text=The%20Bitcoin%20difficulty%20target%20is,the%20lower%20is%20the%20difficulty.
The current Difficulty/Target can be found here:
https://btc.com/stats/diff
https://www.coinwarz.com/mining/bitcoin/difficulty-chart
I think I've been around long enough to learn the difference between reality and hype. I've seen interest rates at over 10%, a dotcom bubble, a financial crisis and everything in between. I've learned my lessons.
"Own what you like there are no rules to seeing value in something"
That's true, no disagreement here, but who are the Kings and the idiots in this Bitcoin Fable? And who are the Weavers spinning this invisible Crypto yarn?
https://www.youtube.com/watch?v=z9mQoJU-6I0
"Gold has value because people assign a value to it
Bitcoin has value because people assign value to it"
Gold originally gained value due to its non reactive properties, and the fact its pliable and easy to make coins and jewelry with. Today it has other uses in electronic and medical applications; Gold has exceptional properties and has stood the test of time for good reason, so gold does have real world value and uses. Bitcoin has no intrinsic value for reasons I gave in the previous post, and proof of work is just a made up concept to try create the illusion of value where there's none. Honestly I really don't understand how intelligent people can be taken in by the bitcoin hype and BS, it's just a huge pyramid scheme built on nothing. I don't invest in gold, I prefer stocks, but I can see the value in gold. When you hold a Krugerrand or Sovereign in your hand, it has a weighty look and feel of something valuable, you don't get that with a Crypto Wallet.
The problem I have with Bitcoin is that its value isn't tied to anything in the real World. The narrative about bitcoin scarcity due to the 21 million limit is false, as I've pointed out previously a Bitcoin can be subdivided into infinitesimally small quantities, or alternative tokens can be created doing the same thing; It's clear the valuation given to a single Bitcoin is based purely on sentiment, with the actual coin having no intrinsic value. In my opinion it's a Bitcon, not a Bitcoin. The reason Jamie Dimon describes Crypto Currencies as pet rocks, is because he's been around long enough to know the difference between hype and substance. There is a case for Crypto Currencies in the form of Central Bank Stable Coins, pegged to a currency and backed by the issuing state, because their value is institutionally back and as stable as the currency they represent.
NFT's, in the form of crypto punks and monkeys, going for 10's of thousands of dollars in Ethereum are another symptom of the madness; The vested interests, pushing these NFT's, probably convert the payment to real dollars as soon as someone comes along naïve enough to buy their worthless jpeg.
All this is my opinion, but any other explanation defies common sense.
"His refusal to allow BTC ETF in the USA he blames on incorrect filing applications LMAO"
The problem with allowing a spot based Bitcoin ETF, is that it would likely lead to Pension schemes and investment funds investing directly in Bitcoin, and since the Crypto market is highly volatile it could cause problems in the wider financial markets. They wont allow something as easily manipulated as crypto to become a mainstream investment.
Typical vested interest positive spin, I took different conclusions from the consultation paper. My view is Central Bank stable coins will kill off other Crypto Coins, and regulation will gently make it happen. Why would anyone put money into a potentially risky and volatile token, once regulated stable coins are issued pegged a country's currency and backed by the respective Central Bank?
"Yeah I'm not really interested in anything any Governments have to say :-)"
You should care, Governments could kill Crypto with a stroke of the regulatory pen.
"At this stage if you still believe in the TV programming, Government propaganda, 'Space missions' and the 'Globe' you are a real life Simple Jack"
I don't see myself as a Simple Jack, after all I haven't invested in QBT and I see Bitcoin for what it really is, a gambling token.
This is more me:
https://www.youtube.com/watch?v=zwiqg_dq1Ek
Anyone interested in Crypto related assets should read the document in the link below:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133404/TR_Privacy_edits_Future_financial_services_regulatory_regime_for_cryptoassets_vP.pdf
The regulation will be rolled out in phases:
Phase 1
"Fiat-backed stablecoins which are used for payment (Phase 1)"
"For the purposes of this consultation, “fiat-backed stablecoins” are expected to include stablecoins that seek to maintain a stabilised value of the cryptoasset by reference to, and which may include the holding of, one or more specified fiat currencies."
"Further details on the government’s approach to fiat-backed stablecoins will be set out in due course. Various types of tokens which are currently marketed or labelled as “stablecoins” might not meet the requirements under these regimes". Checkout "Figure 3.A Scope of regime for fiat-backed stablecoins vs
broader cryptoasset regime"
Phase 2
"In Phase 2, the government’s intention is to introduce a regime to regulate broader cryptoasset activities, such as the trading of and investment in cryptoassets. Phase 2 will be focused on targeting the activity areas associated with (i) a higher degree of risk from a consumer and overall market perspective and (ii) greater opportunities to support the UK’s growth agenda. As a consequence, not all cryptoasset activities are proposed to form part of Phase 2. Chapter 4 sets this out in more detail."
"Table 4.A Proposed scope of cryptoasset activities to be regulated", Is a good place to look; it shows the various phases and references to the relevant Chapters.
In summary
After browsing through the document, my interpretation is that they'll first introduce and regulate Fiat backed stable coins, probably issued by Central Banks. Once Stable coins are established, they'll introduce "Asset-referenced tokens", "a subset of exchange tokens which include commodity-linked tokens and crypto-backed tokens", see Box 2.A. My guess is they're looking for ways to trade commodities, stocks and other real world assets using Asset-referenced tokens, then use Fiat backed stable coins to electronically trade back into Fiat, possibly on Crypto Exchanges built and managed by institutions like the London Stock Exchange.
I don't think any of this bodes well for the current Crypto currency crop, since regulated commodities and stock exchanges will likely trade in things like asset referenced tokens, and the Fiat backed stable coins will likely be managed by Central banks. Why would you need Bitcoin?
The document does mention Crypto's, like Bitcoin and Ethereum, but refers to them as unbacked crypto assets whose price and value is driven by " speculative investment decisions". Regulation will likely kill off unbacked Crypto Currencies in my opinion.
I suspect a lot of Miners will struggle, post the 2024 Halving event, with the future of all of them dependent on the Bitcoin price staying high.
"Crypto Supernova"
That's code for the Crypto crew meeting in a tent in the Nevada desert and puffing on their calumet's; What they're smoking is anyone's guess, because their grip on reality is questionable if the rhetoric is to be believed. They come back to the real world and encourage others to puff on the Crypto hype pipe, in the hope that the calumet crew will get rich from the hype pipe suckers. It's all snakes, Ponzi's and Pyramids in my opinion.
I've watched Raoul Pal video's before and the first 10 minutes made sense, but he then goes on to talk his own book interspaced with waffle. He's obviously an intelligent chap, with good presentation skills, but he's unconvincing in my opinion.
About 25 minutes into the video, he mentions that he's bought NFT's and goes on to mention a Bored Ape and a Crypto Punk NFT he owns, which just confirms what I've said above; Why would anyone buy something so cr4p, for such a ridiculous amount of money? Unless they think they can sell them on to some sucker at a profit down the road. Something else, Raoul Pal is obviously connected within the community and likely knows the originators of the NFT's he now claims to own, how much did he pay for them? Or is he holding and selling them on behalf of someone else for a cut?
Michael Saylor and Raoul Pal both qualify as Crypto snake oil salesmen as far as I'm concerned; I find their banter humorous and entertaining but I wouldn't trust a word they say, as they are heavily invested in the "industry" and should be seen as such.
I wish you luck DS, maybe you'll be one of the one's who get their timing right. I don't see a long term future for Bitcoin and Altcoins. Anything that isn't backed by Central Banks and Governments will end in tears, in my opinion.
"Bitcoin and QQQ pumped on FED speech yesterday. The FED knows they will see better inflation numbers probably as soon as 14th February CPI read thanks to the new way the CPI numbers are being processed starting in January."
There are a lot of warnings questioning the recent rally in growth related stocks, is it a Bull trap? Only time will tell. The market works in cycles, so at some point the current Growth stock cycle will come to an end, proceed with caution.
Just had a quick look at Ault, they describe themselves as a "diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact."
I only invest in big Blue Chips, I don't invest in small companies I know nothing about. My gambles are more about long term hold and wait, preferably with Dividend income. When I see stock valuations double, like recently with QBT, it's interesting but not for me.
Bitcoin is too volatile to act as a hedge against hyperinflation, as was stated in the article. The easiest way to protect against inflation is to invest in stocks, or real commodities, not fake manufactured crypto.