Bitcoin Unlocked: Recent Episodes
Andrew Keir
“War... Huh…
What is it good for?
Absolutely nothing, say it again!“
Good Morning Everyone,
German electricity prices are hitting fresh all time highs and at the same time Poland’s largest chemicals company has halted production of nitrogen fertilisers and reduced output of ammonia due to soaring gas prices. As we know you can print more fiat, but you can’t print more energy. The complacency that exists in respect to the energy crisis really is profound to witness and it’s hard not to see this situation becoming exponentially worse.
German Electricity:
Dutch Natural Gas:
While Germany is definitely toward the eye of the storm, most others throughout Europe are entangled in this mess and depending on each countries individual energy production capabilities, should expect to be impacted in similar ways to varying degrees.
This image below from Javier Blas shows electricity costs throughout Europe with many nations paying in excess of €600 per MWh. Where as pre 2020 anything above €75-100 was considered expensive! Incredible.
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This tweet from @MacroAlf helps hammer the point home even further if it weren’t already brutally clear.
This madness is a direct result of insane and catastrophic centrally planned energy policy and it very likely leads to a widespread famine throughout Europe. It also has the potential to be the event that breaks the European Union apart and kicks off monumental conflicts between the neighbouring states, and in turn potentially, the world, as the effects of this begin to really hit home for individuals and families.
Absolutely everything is downstream of energy. Once energy costs increase enough the predictable dominos begin to fall. We are starting to see this play out with Poland’s fertilizer production being halted. The dominos do not stop there, however.
Nitrogen fertilizer is necessary for food production. If the production of this continues to be impacted or more production comes off-line, this naturally leads to less supply being available. It means the price goes up as there is less supply to meet demand. This leads to reduced food production which only further amplifies the problem. And would trigger further disruptions to the already shambolic food supply chains and even more acute price increases for consumers. Once again, i see a negative feedback loop and the scent of Moloch at play.
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This forces governments even further into a corner; the likely output of this is rationing!
It’s hard to believe that over the last 30 years we’ve gone from having widespread abundant and reliable energy to now staring down the barrel of the most phenomenal energy crisis of our life time.
Having written about the potential of a mass starvation event eight months or so ago, it’s absolutely bizarre to see this playing out, almost like it is some kind of train wreck happening in slow motion. On one hand I’m bewildered as to to why governments would not pivot and adjust course more evasively in the face of what, at this point, appears to be the most likely outcome, but then i’m reminded it is just humans at scale following the paths of least resistance. It is simply the incentives manifesting into human behaviour.
This problem is not likely to be fixed by the people who have created it. This is a systems level issue, and the issue has been cause by the people with the admin privileges. Awarding them further administrative privileges in the face of this would be akin to the definition of insanity - which is to do the same thing, and expect a different outcome.
This issue will not be solved by following morons in perceived positions of power off the cliff. It is certainly not solved by printing more fiat money, which will almost certainly happen in the event rationing and price controls are initiated to attempt to treat the symptoms instead of the root cause, in the typical naive interventionist fashion we have come to expect.
Personal responsibility and a bitcoin standard is at the core of our solution. Adopting a monetary standard free of those who have either a bizarre desire to intentionally drive us toward catastrophe, or who are simply cognitively deficient and should be appropriately ignored. We must focus on building circular economies based on the superior monetary standard bitcoin provides and cultivate community. Connecting producers direct with consumers in a peer-to-peer fashion, and work to be as energy and food independent as possible in an effort to insulate ourselves, our families and our communities from the actions of malevolent or mere incompetent actors.
You never want to wait to buy the option when you need it. You need to buy the option before you need it!
Community is the ultimate hedge against uncertainty.
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
Published Block Height: 750 848
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
“The panopticon is a type of institutional building and a system of control designed by the English philosopher and social theorist Jeremy Bentham in the 18th century. The concept of the design is to allow all prisoners of an institution to be observed by a single security guard, without the inmates being able to tell whether they are being watched.
Although it is physically impossible for the single guard to observe all the inmates' cells at once, the fact that the inmates cannot know when they are being watched means that they are motivated to act as though they are being watched at all times. Thus, the inmates are effectively compelled to regulate their own behaviour.”
— Wikipedia
Good Morning Everyone,
We have discussed many times, the dynamic between money and power, and highlighted the risk and harm caused by centralising such power. This is the fundamental problem bitcoin solves. It is money without a center. And it is money that provides the most fair issuance possible and avoids the common pitfall to disproportionately reward any one entity over another. That is not to say distribution is even or equal. Certainly not. Distribution of anything is never going to be even, and to attempt to do so is at its core a deeply unfair act.
To evenly distribute something amongst a cohort of people means that individuals are not rewarded for deploying more effort, for being more skilled, more competent and capable and ultimately doing a superior job than someone else. And likewise for those who are underperforming they would have no incentive to work harder or learn new skills as there would be no reward available incentivising them to do so. This would dissolve and distort the incentives that would otherwise exist and it would seem to be the case from past historical examples, to produce highly undesirable outcomes.
At the same time, if instead of distributing evenly, certain individuals or entities were disproportionately favoured and awarded an outsized percentage of issuance due to their proximity to the center of supply, this would install a deeply unfair standard at the core protocol level. If applied to the technology of money this unfair issuance creates a catastrophic dynamic where those who are closest to the center of that distribution have outsized power over all others within the network and this dynamic only accelerates over time.
This last example describes the issuance of Ethereum. As Nik Bhatia explains in the below clip. Where bitcoin has no center and has no preferential issuance and you can simply buy, mine or earn bitcoin at a market rate and by doing work; Ethereum does have a center, and It is more like a company than anything resembling a truly decentralised protocol.
To quote Nik (who also has a great paid substack publication called The Bitcoin Layer)
“Ethereum began in 2015 with a pre-mine. This is a sale of Ethereum tokens in exchange for bitcoin. 72,000,000 Ethereum tokens were issued in this pre-mine. 60m of the coins were sold to the investment public and 12m coins were given to insiders. The supply of Ethereum today is above 120m, which means that almost 60% of today’s total supply was part of that pre-mine process. Data shows that 40% of that pre-mine went to the top 100 customers giving us indication that the ownership of Ethereum is highly centralised. This resembles the issuance of an equity in which the majority of the shares go to the management and the ownership.”
The bottom line is the two (bitcoin & ethereum) are just not the same. Most Ethereum supporters seem to either not know this, simply not care, or not understand the significance of it. However it is fundamentally important to grasp. As I mentioned earlier, such an issuance schedule is at it’s core deeply unfair, especially when you consider the profound impact of money on our lives, and with Ethereum posturing to move to a Proof-of-Stake system in September, this significance is only acerbated further whereby those with the most amount of eth staked have an outsized voting right and thus influence on the network.
We already have this system. It’s called fiat, and ethereum is just a shinier new version of it. Nothing close to the paradigm shifting technology of bitcoin.
Many in the community have been surprised at the SEC’s allowance of protocol’s like Ethereum, when they have been clearly and unequivocally exposed as what are considered securities. This is not to suggest I want the SEC or any government to do anything, just that one can only be curious why they would not have enforced their mandate, in the face of the obvious. At the end of the day we don’t need any central body to assert their authority - the market should be able to work itself out. I have postulated for some time, that I believe the reason for this is because this experimentation of permissioned, centralised “crypto digital assets“ provide central banks and government with the single best opportunity to obtain the technology to install their Central Bank Digital Currencies (CBDC).
They can basically let the grifters continue along in their grift, and allow them to siphon funds from the public to do so while they improve the technology, until such time as the technology is suitable to be captured by government and installed more broadly directly by central banks. The risks posed by CBDCs cannot be over stated. They are in my opinion to be considered the most significant threat to freedom and civil liberties, possibly ever, and would be very likely over time to move us toward some kind of digital panopticon.
The below tweet from Brandon Quittem demonstrates exactly this.
Joseph Lubin who is the co-founder of Ethereum that you’ve likely never heard of, published the document attached specifically for The World Economic Forum in 2020. The document is a “concrete proposal” to those in Davos about the benefits of a CBDC, and why it should be built on Ethereum. It is basically a word salad full of blockchain buzzwords suggesting we should remove cash, enable central banks more control and greater surveillance and that those in less developed nations should be forced to use them. To be honest the whole proposal is gross, but a few of the takeaways from the document are as follows:
“Our intention is to give the reader an overview of the potential advantages and the challenges in a CBDC as well as, through a concrete proposal for a specific approach, to move the debate beyond the theoretical.“
“CBDC can give the central banks more effective, future-oriented tools to allow them to implement monetary policy in more direct and innovative ways and keep pace with technological change.“
“Widespread use of CBDC instead of private payment tokens could also help central banks retain sovereignty over monetary policy in tokenised assets markets, an important consideration should such markets come to represent significant portions of the economy. Other benefits include potentially new regulatory monitoring and enforcement tools, cheaper cross-border remittances, improvements to the interbank payments infrastructure and innovation in retail markets. CBDC could also be a superior replacement to physical cash, helping alleviate some of the risks and costs associated with banknotes.“
“Finally, if structured in a way that allows the CBDC to be traced, it could be useful in more efficient sanctions and AML enforcement contexts.“
“Tokens are powered by smart contracts, which are software applications that live in a distributed fashion in the network. These smart contracts can be programmed rules and business logic that are automatically enforced by the network and can restrict CBDC transfers in any way deemed suitable by the central bank and the regulator. This could make it possible to for instance “hard wire” KYC/AML procedures into the tokens themselves, greatly simplifying and improving the effectiveness of regulatory compliance mechanisms. Tokens could also be pre-programmed with rules that determine exactly under what conditions a transfer can be reversed or assets recovered. Last but by no means least, proof-of-authority (PoA) consensus on Ethereum is not energy intensive and would support a large-scale network at low energy cost and environmental impact.“
As you can see, a CBDC would very likely be the end of any notion of privacy in the digital age. Central Banks would be granted full and total control over the technology of money, which to a large extent means to have control over you and I. Regardless of how they first begin you can be assured that over time, even if initially they were not exerting outsized control over your decision making, how and when you spend your slave coin tokens, that over time, there is only one way for a system with absolute power to go. Absolute power corrupts absolutely.
This kind of power would be used to silence dissenting voices, it would be used to impose the will of central banks on other entities, it would enable full and total control and surveillance of money and would lead to the increasingly centralised control of all essential infrastructure and resources over time.
There is no reason however as we move further into the digital age, that we need lose the fundamental rights that mechanisms like cash have afforded us. It really does come down to individuals voting with their actions. It is critical that the dangers that CBDC’s pose, be made clear to people everywhere. I’m confident that once armed with the information the downside becomes impossible to ignore.
There are a number of incentives that could be used to onboard people to the digital slave-coin and lure them into opting into this predatory system. A few that come to mind are 1) Coercion as we saw with the “no jab, no job” vaccine policy in Australia (For all those in the US and abroad - Yes. That really happened!); 2) a one-off initial payment; 3) leverage a UBI-like handout or; 4) leverage the fact that people are deeply indebted and provide some kind of relief in exchange for their joining the network.
It is the case, that as of this moment, our only genuine alternative to this digital dystopian communist techno-state installation is the truly free and open market of bitcoin. Where a CBDC would be slave money, Bitcoin is freedom money. Bitcoin (while not perfect) provides us with a far superior alternative where we do not need to be slaves to the central bank in order to eat beef, or use electricity. It allows us to continue to build upon the underlying protocol in the open and to improve our privacy instead of accepting the rule of others and relinquishing it. A CBDC would give the total ability for our transactions to be censored, and could be used to penalise us for any kind of wrong think or to attack dissenting voices. Bitcoin on the other hand gives you the complete freedom to interact and send value to anyone anywhere, and no one can stop the transaction from being processed.
One enables top-down total control, and the other allows for the beautiful bottom-up flourishing of human potential.
It’s not even a choice.
Get educated, and a help those around you do the same. Share these letters around with at least one other person to help amplify the signal.
We are going to win.
Hope you all have a great day. I’ll talk to you tomorrow.
AK
Published Block Height: 749817
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
There was an incident last week in Lebanon that is worthy of further enquiry. I’ve spoken about it with many people offline, but hadn’t written about it at all and feel it’s important to do so. It’s important first of all to retrace our steps a little before we do, so we can maintain the thread through time, and obtain a clear recognition of the order of events leading to this most recent situation.
Eight months ago i first wrote about the situation in Lebanon where the local political money was failing. Basic food and energy costs were skyrocketing due to the rapid loss in value of the Lebanese Pound. Some four months later, the situation in Lebanon again hit my radar having descended further in chaos with the Government & Central Bank capitulating and waving the white flag. The Government & Central bank announced they were bankrupt.
Both these letters are worth quickly revisiting if you missed them to get a strong sense of the how the dynamic has evolved over time. Both are linked below.
This sequence of events has lead to the most recent development, where a man has been pushed to absolute breaking point. The man tried to withdraw his money from the bank in downtown Beirut and that request was denied. The man is said to have had $210,000 held with the bank, and had requested to withdraw $50,000 to cover medical expenses for his fathers surgery.
After being denied to withdraw his “own money”, the man took control of the bank with a firearm taking the bank staff hostage in the process. This hostage situation lasted 7hours and was eventually resolved with him being said to be given $30,000 and he exited with no further escalation or injury. Outside the bank the man was being celebrated as a hero for his actions, and offers a glimpse into the level of distain that exists amongst the citizens of Lebanon and the deeply unstable dynamic currently in the country.
The thread below by Joyce Karam covered the situation with many updates if you would like more details.
This unfortunate situation highlights how fundamentally toxic fiat really is. He literally had to rob the bank to get his own money!
This man doesn’t want to have to rob a bank. He simply wants what is his. He had a significant amount of funds, and like most, doesn’t realise the true IOU nature of banking. His father is unwell and he simply wants to support his family. The fact that he could be pushed in such a way where he would be willing to hold people hostage at gun point serves to highlight how pathologically insane this fiat system really is. This is the level to which fiat is corrupting us and the societies in which we are a part.
This system is so morally and ethically derelict at its core. It is programmed into the fiat system at the base layer. Where bitcoin operates based on the most profound truth, fiat operates on falsehoods and lies. It is a system that is predicated on deception. That anyone would consciously choose a system that harms us so deeply is absolutely unfathomable. This man should never have been forced into this situation, nor should any of the beautiful people of Lebanon or any other nation that have fallen victim to fiat. And we haven’t even considered the implications such actions could have on ones family and the higher order effects which could follow.
So many people still cannot see the problem, and thus they cannot see how bitcoin fixes this, but this is going to change. This disease and the symptoms we exhibit as a part of it are not exclusive to Lebanon. Lebanon is just further down the road compared to some others. This is a kind of de-civilization and these symptoms can be expressed in every country that is on a fiat standard. Every country that uses a money with no anchor to physical reality where it empowers a small few to control this technology are over time destined for a similar fate.
But where fiat fails, Bitcoin will succeed.
If this man understood the predatory nature of banking. If he knew about fractional reserve banking and understood that once you hand over control of your money, once you relinquish custody, that it fundamentally ceases to be yours - he most likely would never have given it the bank in the first place. There would have been no need for him to be pushed to the extent he was, and take the level of risk he was forced to take for him and his family. There would have been no violence toward others, and no one would have ever been taken hostage. But when the system of banking works on the surface, it appears to work. It is not obvious that once the broader dynamic changes and we enter adversarial conditions these IOU’s are unlikely to be redeemable. That they become worthless.
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The people of Lebanon are learning this lesson right now, with 80% of the population now living in poverty. At the core of this is a deeply flawed system of incentives. A system we have called money. But this system is doing more harm than it is good. This system is like that of a casino. It is not our system. When we enter the casino we should do so, knowing the house always wins. We can win a few hands, but if we get too powerful the casino management will take over and assume control. They will either capture us and pull the strings behind our actions or they will forcibly remove us from the building. The same is true for fiat and the government.
Bitcoin provides a new system. A system that is built on truth. Not on lies. Bitcoin maintains an ultimate record of truth and of time. A pristine historical record that is indisputable. A record that is no one person or sides opinion, or point of view. It is a system that is no one else’s. It is everyone else’s. A system that empowers you to take responsibility, and to custody what is yours without needing to trust a third party. Without giving that outsider the opportunity to lie to you and to deceive you. A system where your asset is no ones liability. If you hold and use bitcoin in the right way, it can never be taken from you and no amount of violence changes this. It is a system designed for a world where we acknowledge our deeply flawed nature. A world where we seek to illuminate what is real and deploy humility in the face of our failings. A world consisting of a species of mammal with the ever present potential to behave in an adversarial manner.
Fiat empowers those who wish to behave in such a way. It provides a system where those who do so, can be rewarded for such behaviour and this distorts our perception of reality in a foundational way. It blurs the line between what is right and wrong, and short circuits our moral compass and the way in which we orient ourselves in the world.
Bitcoin disincentivizes any such behaviour. It is the antidote to the fiat disease that is currently tearing us apart. It provides us with the most powerful and transformational opportunity. An opportunity to be empowered and take it upon ourselves to assume responsibility and to course correct as a result of its existence. To rebuild and recalibrate our moral compass, and to enable us to reorient ourselves within the world where someone else does not have to lose for us to gain. To embark together on a co-exploration in search of the highest truth and toward a future where we can flourish together. Where we work to serve one another and that allows us to gain the clear recognition of the value of such pursuits, and the sense of meaning is both obvious and profound to all those operating as a part of such a system. It is the mechanism for a better world. One that i want for my children, and my children’s children, and one that they deserve.
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Fiat is predicated on the idea that we can endlessly take from the future, postponing any need to address the implications of such an action and where we can figure out a way to settle the bill at a later stage. The idea that we can defer accountability into the future. And it is a future we may not even be here to reckon with. It offers the potential to completely evade accountability and creates the potential for this to be redirected to someone else entirely. It is a system that not only allows for it, but directly incentives us to do so. It is directly taking from the future of others, and stealing from the very people we care most about. It is the leveraging of our children’s future to enable us to enjoy the present.
Bitcoin holds a giant mirror up in the face of fiat. It diametrically opposes this idea and instead of siphoning from the future, it pushes value into the the future. It assures the future for those we care most about, instead of deferring our decision making to others and to an uncertain potential future moment. It forces us to acknowledge reality in the present and take responsibility for it. A kind of radical responsibility. It forces us to align ourselves with the truth, and orient ourselves in alignment with it. We will be provided the opportunity to be better for having done so.
Fix the money, fix the world.
Hope you all have a great day. I’ll speak to you tomorrow.
AK
Published Block Height: 749487
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world.
A Cypherpunk’s Manifesto - Eric Hughes - March 9, 1993
Good Morning Everyone,
Freedom of the individual is currently under siege. The war on privacy has been escalating for decades, arguably centuries, and it is heating up massively as we speak. Not only have we seen the the US treasury sanction open source software in the form of tornado cash by placing it on the OFAC sanctions list, the developer of the smart contract software has now been arrested in Amsterdam.
According to the Fiscal & Information Investigation Service (FIOD) of The Netherlands, which is basically the Dutch IRS, the developer was arrested on Wednesday and a statement by the organisation begins as follows:
“On Wednesday 10 August, the FIOD arrested a 29-year-old man in Amsterdam. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash. Multiple arrests are not ruled out. These advanced technologies, such as decentralised organisations that may facilitate money laundering are receiving extra attention from the FIOD. Also in the cryptocurrency domain, the FIOD stands for a safe financial Netherlands and investigates with effect and impact. Today the suspect is brought before the examining judge.”
The idea that a software engineer would be arrested for writing code is wild, and it highlights the critical need for privacy in the digital age, and the extent to which governments will go to in order to ensure you don’t have any.
It can’t be said enough, but the notion that writing code could be considered criminal, is truly reflective of the upside down world we are living in. If a developer is being arrested because the software facilitated so-called money laundering, why hasn’t anyone from the Federal Reserve and the US Government been arrested yet for creating the US Dollar and allowing it to continue to operate and endlessly creating more of it, given the IMMENSE amount of “money laundering” it has been used to facilitate.
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There are endless examples which highlight the hypocrisy and absurdity of this. And they help to clarify the true intention behind this arrest, As Stephan Livera pointed out in the tweet below:
Anyone that has defragmented their cognitive o/s and doesn’t have their head in the sand can clearly see that this has nothing to do with money laundering. It is about control. And in order to control you, your privacy has to go.
There are two primary themes i want to tease out.
That privacy could possibly be considered criminal, illegal, undesirable or be an act that in isolation implies anything untoward or really anything at all is an evil and deeply malevolent proposition.
Privacy is foundational and fundamental in the digital age. Everyone is entitled to it, and from a value perspective one should respect another person’s desire for it. As I’ve mentioned previously, everything is downstream of privacy. You cannot be free without it. This idea must be vigorously condemned and this framing categorically rejected. As Allen Farrington outlines below - Words matter.
- The battle over our right for privacy will not be won through self-censorship. Governments are among the most corrupt and fraudulent institutions we have. They would love nothing more than to gaslight people into believing that they are not entitled to privacy. If developers the world over decided it’s too dangerous to write privacy preserving software, users were too scared to use it, and the vast majority of people believed that you have no right to it because you must be an evil money laundering psychopath - it would be game over. We must use privacy preserving software more than ever and create more tools than ever in the face of this attack. This war will be won with more speech. More code. More cryptography. More privacy.
To quote from from Eric Hughes’ A Cypherpunk Manifesto:
“We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor's younger, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor.
We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.
We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.
Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can't get privacy unless we all do, we're going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don't much care if you don't approve of the software we write. We know that software can't be destroyed and that a widely dispersed system can't be shut down.
Cypherpunks deplore regulations on cryptography, for encryption is fundamentally a private act. The act of encryption, in fact, removes information from the public realm. Even laws against cryptography reach only so far as a nation's border and the arm of its violence. Cryptography will ineluctably spread over the whole globe, and with it the anonymous transactions systems that it makes possible.
For privacy to be widespread it must be part of a social contract. People must come and together deploy these systems for the common good. Privacy only extends so far as the cooperation of one's fellows in society. We the Cypherpunks seek your questions and your concerns and hope we may engage you so that we do not deceive ourselves. We will not, however, be moved out of our course because some may disagree with our goals.
The Cypherpunks are actively engaged in making the networks safer for privacy. Let us proceed together apace.
Onward.“
So Powerful. And the fact this was written almost 30 years ago should speak volumes.
The mission that bitcoin embodies has been underway for decades. This story is not new. Only new to some.
Many have fought for the incredible opportunity that bitcoin presents, and many of those people may not get to enjoy those benefits themselves. Bitcoin has always been about more than just number go up. More than a mere investment. Obviously for many of us there is a journey that must be undertaken to learn this. You must do the work. This most recent attack, while not on bitcoin directly, serves to demonstrate the intent of government and those closest toward the center of power. These entities do not want a free humanity. They fear it, when really they should embrace it.
We must stake our claim, and oppose this tyranny and anyone who wishes to keep us captive. We must reject the idea that anyone would have the right to control the free flow of information in the world. The trajectory has been set for many decades. The commitment to it is unwavering. The right to privacy is non negotiable.
As Eric Hughes states, a free and open society is not possible in the digital age without it.
So let us defend our own privacy in a way that demonstrates we expect to have it.
Onward.
Hope you all have a great weekend. I’ll talk to you next week.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The US senate has just passed a bill to fight inflation by creating a program to spend $430 Billion dollars on climate and health care initiatives named the Inflation Reduction Act.
I linked to the summary document above which begins as follows:
“The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will also finally allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.“
I’ve never seen a more apt example that demonstrates how democracy is a 51% attack on the network, as with this this vote. All 50 Democrats voted for the bill, and all 50 republicans voted against it, with Kamala Harris, as president of the Senate, casting the tie-breaking vote and initiating a $430 billion dollar 51% attack on the American network.
Check out the clip above to watch the completion of the vote, and the pleasure these people derive from “winning“ and beating their enemy which ironically is their countrymen.
You would think if the government wanted to spend almost half a trillion dollars then they would need to have that money, but not in a fiat world. Remember the Federal Reserve’s balance sheet is just below $9T and government debt is around $30T. To facilitate this bill they (for the most part) will simply take on more debt.
What’s particularly absurd about this bill is that they think reducing carbon emissions by 40% in 7 years is in any way realistic, and they plan to increase their taxing capabilities, which is to prey even further on their population, by increasing the head count of IRS agents by 87,000 and increasing the level to which they can capture your proof-of-work.
This bill is a wolf in sheep’s clothing. It’s aimed more toward stripping value from the populace by the rent-seeking unproductive class than doing anything meaningful about TheClimate™️ or for peoples health. Give me a break! They do not care about anyone’s health. It is masquerading as something that they think the mindless majority will support while further enabling them to suck blood from their hosts.
This insanity really is as upside down as it sounds. This tweet from James Lavish really hits the nail on the head in my opinion in regard to this failed fiat monetary experiment and the obsession by the supporters of it with central planning.
This is the fiat disease. The idea that to “fix“ the problem that has been created in the first place by increasing of the money supply is to impact every other node in the fiat network by increasing this magical number. Essentially forcing a contraction in economic value expression across the network. It negatively impacts the profitability of many businesses which creates many other higher order effects and often leads to less jobs being available. It leads to a concentration in wealth and allows the larger and richer to accumulate and further accelerates the wealth divide which harms society broadly, and ultimately it makes life more difficult for an increasing majority of people.
That’s not to say people would not experience difficulty if we removed fiat today, but it wouldn’t be as insanely unfair as what it is today. Fiat is fundamentally zero-sum. It is taking from many and allowing a few to swallow it up. And it is enabled by a small group of corrupt liars who celebrate winning above all else, and completely ignore the truth about how destructive, short sighted and immoral this system really is.
It truly flaws me how upside down this clown world has become, and that anyone would consciously support such a parasitic drain on human potential. The idea that a small group of pseudo-elites have this level of control over all other people because of their outsized influence over the monetary protocol is fundamentally wrong, however in the fiat clown world, this is a feature of the system, not a bug.
This bill should be named the Inflation Creation Act, because in order to spend this money the government doesn’t have, money will need to be borrowed and thus created. You can see Moloch at work here. Bad incentives, enabling bad outcomes, stuck within a nasty feedback loop enabled by the Moloch that exists inside us all.
Bitcoin is the mechanism to enable us to course correct. The paradigm shift, that can enable us to break free of this perpetual negative feedback loop and it begins by disabling the outsized influence of these central planning parasites. Get educated and take custody of your keys - these people would 6102 rug pull you without hesitation.
Bitcoin is the mission.
Hope you all have a great week. Wishing you well, and i’ll talk to you tomorrow.
AK
Published Block Height: 748496
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
“Fool me once, shame on you. Fool me twice, shame on me.“
Good Morning Everyone,
The concept of truth is far more complex than is generally acknowledged. There is a level of complexity in determining what is true which our monkey brains tend to find difficult. We are often hamstrung by cognitive biases and rush to join a tribe that validates our dogmatic beliefs and provides us with the illusion of safety and acceptance. Given the current nature of life for most, the perpetual acceleration of the hamster wheel, that is the ongoing devaluation of our money and thus the inability to save and store value across time, most aren’t afforded the luxury of time to dive deeply enough into such things to arrive at the realisation that it is less obvious than we would often like to believe.
Wikipedia describes truth as:
“the property of being in accord with fact or reality.”
But what is fact, and what is reality? These terms that once seemed so certain, continue to be exposed as being far more temporary assessments of what we would consider either to be. We’re constantly learning more, and gaining deeper levels of understanding, realising that previously held beliefs, concepts and ideas that appeared to have a consensus acceptance, may infact not be factually accurate and in accord with this thing we call reality.
In an attempt to counter our primitive cognition we developed the scientific method. This process can be much more messy than most would imagine, and the potential for error remains. In 1921 the polygraph machine was invented in an attempt to determine whether or not an individual is relaying the information obtained by them from a point of experience and doing so truthfully - without distorting the information.
Are they “telling the truth?”.
The polygraph machine was created by a Berkeley (California) police officer and was based on a systolic blood pressure test pioneered by a psychologist named William Marston who later become a comic book writer and created the fictional character Wonder Woman. Modern polygraph machines measure a range of physical changes such as pulse and breathing as well as blood-pressure, yet the efficacy of such a device has remained in question almost since it’s inception.
Such a technique depends not only on the actual machine and the capturing of physiological information but also on the analysis of this information. But to go even a layer deeper, the information captured by such a machine depends on the beliefs, values and characteristics of the individuals internal dimension of awareness. A space that we understand very little about.
The idea that this could have been used and accepted to obtain “the truth“ shows how primitive and dogmatic we are capable of being. We are designed to simply ‘want to believe stuff in our search for certainty.
Clown world continues to leverage this deep human desire to believe, whether it be that inflation is good for you, that cow farts are boiling the oceans or that so-called “renewable“ sources of energy are a realistic substitute for the densest form of energy ever known to humans, being that of hydrocarbons.
The entire religion of Keynesian economics is built upon the ability to obfuscate the truth, and change the units of measurement used to determine whatever it is the high priests (economists) deem necessary, and to ensure it aligns and supports whatever political objectives are focal at the time. But now we have bitcoin.
We now have a tool that calls b**t on this class of rent seekers who intentionally conceal the truth and actively work to gaslight and mislead. A tool they cannot capture. A tool they cannot change the units of measurement of to suit their agenda. A truly decentralized unit of measurement with a supply that cannot be altered. 21m. Never more.
While bitcoin very specifically shows the inaccuracies of monetary information embedded in fiat over time as well as the attempts by specific individuals and groups of humans to conceal such information, it also acts as a mechanism to bring into question many other ideas we may have previously accepted as truths. When you identify bad actors and realise a certain cohort of people are nefarious and their intentions are malevolent, you cannot help but enquire more deeply about what other misinformation has been installed in the operating system of societies around the world.
Having a tool to expose the misinformation in money is just the beginning.
Amplify the signal. Open Networks Win.
Hope you have a great weekend. I’ll talk to you next week.
AK
Published at Block Height: 748018
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As we have discussed many times, incentives are everything, and most people given the choice will follow the path of least resistance. This is culturally impressioned upon us from a young age, and perhaps we’re even biologically configured to do so.
In listening to a conversation between Liv Boeree and Tim Ferris, Liv introduced me to the ficticious character named Moloch.
Moloch according to the now highly questionable wikipedia is:
“a name or a term which appears in the Hebrew Bible several times, primarily in the book of Leviticus. The Bible strongly condemns practices which are associated with Moloch, practices which appear to have included child sacrifice.“
I have followed the rabbit hole to a paper she recommended which goes deeper on the idea titled: Inadequate Equilibria: Where and How Civilizations Get Stuck (Chapter 3: Moloch’s Toolbox). It’s a relatively short read, and highly recommended for anyone interested. Liv explains an easy way to think of Moloch is as the god of unhealthy competition. Moloch is referred to as a fictitious character due to its historical origins as a God or a diety, but i think it is less valuable thinking within the frame of a god and simply paying more attention to what the actual characteristics are, that are associated with this thing called Moloch.
From what I’ve managed to ascertain so far; Moloch is a dynamic that can manifest within a system and is built upon bad incentives; and these incentives create a feedback loop which creates compounding sup-optimal, or negative outcomes which then create a new set of sub-optimal incentives and subsequent outcomes. These incentives lead to behaviours being expressed by humans that are typically short cited and obsessed with winning and and they infect the very systems of which they are a part.
This flywheel of bad incentives creates a stream of negative-sum games and ultimately leads civilizations to become stuck in an extremely low Nash Equilibria.
Nash equilibria is a concept within game theory defined by John Nash and is defined as the combination of strategies in a game, one for each player, where there is no incentive for players to deviate from their current strategy.
So a civilization becoming stuck in a bad Nash Equilibria is to become stuck within the grooves of a system of bad incentives, whereby noone can win by changing their strategy and thus everyone remains playing bad games and remaining within a system that continues to assure sub-optimal results.
Jeff Booth has talked about this conundrum of being stuck in a system of bad incentives in relation specifically to fiat and central banking and he frames it as a system level issue. One that cannot be solved from inside of a system; rather only an entirely new system that replaces the previous can break the cycle and free us from Moloch’s trap.
Bitcoin is this systems level change. It is the mechanism that resolves this feedback loop. It is the mechanism that defeats the ficticious god of bad incentives, and allows humanity - us - to reach an entirely new Nash Equilibrium.
It is a complete reimagining of what the technology of money is, and what it can be in the future. It dissolves all the existing power structures that have been errected, and provides us with an entirely novel system that not only breaks us out of the negative feedback loop of negative-sum games, but thrusts us into an entirely new dynamic. Not only one that supports long-term positive sum games, but a system that directly incentives such pursuits and compounds the positive-sum outputs creating new incentives to continue to play positive-sum games.
This is a complete and fundamental reorienting of the human spirit and the way in which we orient ourselves in the world. Both individually and also how we organise ourselves collectively as part of the larger whole. Bitcoin not only defeats Moloch; bitcoin turns Moloch upside down and does the complete opposite. Bitcoin is the anti-Moloch device. A system of optimal incentives built upon a system of pure informational clarity.
Grateful as ever to be here to witness it.
Hope you all have a powerful start to your week. Wishing you well, and look forward to talking to you tomorrow.
AK
Published at Block Height: 747 454
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The concept of trend is a critically important one. A trend is like an object in motion. When thinking in probabilities, a trend is much more likely to continue than it is to reverse. That’s not to say it can’t reverse, simply that it’s less likely. Whether you are starting a business, changing careers, playing poker or are a trader within financial markets, understanding the probabilities or the odds, is of supreme value, and in most cases you would prefer to get on the side of the probabilities. That is to say if something had a 60% hit rate, meaning 6/10 times you will “win“ with a given strategy, you would much prefer that than something with a 30% hit rate. The human brain typically struggles with this, but we’re often best served by viewing success over a series of attempts rather than just a single one. Just like at the gym, you don’t go to the gym once, fail to get a six pack and then give up. The process of conditioning the body is one that is an accumulation of sustained effort over time.
A common turn of phrase amongst many traders is “The Trend Is Your Friend“. Understanding trends is one of the most important things to grasp as a trader. Trends can exist in multiple time frames, from a 1minute or 5min chart, to a monthly or quarterly chart. There are much larger patterns and trends at play that extend far beyond these, and extend over hundreds of years like the long term debt cycle and the Fourth Turning.
Patterns are an artefact of nature, and thus they are an artefact of human behaviour. We are nature. Just as any other animal or organism that exists is too. The longer a pattern or trend has existed for, that is the higher the timeframe the trend can be confirmed on, the higher the signal typically is, and the higher the probability the trend would continue.
“An object in motion tends to stay in motion.”
A major reason why it’s so valuable to properly understand trend is because of the psychological disposition we have to be anticipating its eventual end, and fading it early. There is no shortage of people who have bet against a trend by shorting it and been absolutely rekt. As i said, it’s not that it can’t reverse, but the probabilities are not on your side. Which means over time you lose given enough attempts. Being able to identify this enables a trader to verify once that dynamic has switched around, and then reconfigure their psychological biases to be in alignment with the change.
With all that said, US GDP data is out and despite the Ministry of Truth’s attempt to gaslight their own citizens, even going to the extent of redefining what they consider a recession to be, the US has most certainly entered a recession.
Along with confirmation of the US entering recession, we also have updated monthly inflation prints which saw inflation in Australia increase from 5.1 to 6.1 - a 20% increase month-on-month, while the US nears ever closer to double digits printing 9.1%. (Yes, as discussed many times. These numbers are as bogus as Nancy Pelosi’s insider trading - the real numbers are waaaaaay higher!)
The Aussie inflation chart however is a fascinating one to look at; especially when we zoom in a little and consider the trend and the previous structure. As you can see from the lows which i’ve highlighted below; Every low is a higher low structurally which shows the pressure to the downside is decreasing with each low that has been printed and indicates some what of a consolidation is taking place. The other point of interest is that the previous long term resistance which goes back to the 90’s has been breached and we are now seeing the highest levels of inflation for 32 years in Australia. The final data i’ll highlight is the level around 7% where you can see i’ve drawn a horizontal line. If Inflation data increases and confirms with a further increase beyond this level if i was simply following the trend I would put the probabilities in favour of inflation pumping its way up toward the previous local high toward 10%, and very likely higher over time. But the overriding point i’m wanting to make is simply that until we can confirm otherwise, the trend of higher inflation is not going anywhere. That is not to say it cannot change, but until there are clear signs of a reversal in the data, the this looks more like a major breakout than anything else, and much higher levels are more probabilistically likely. Breaking out of a 32year period of consolidation is not an insignificant thing, and the worst thing we could do downplay it’s significance. It should be best thought of as a coiling spring or a building of pressure. The longer and further the spring is held down, the more significant the expansion is likely to be when that pressure is released.
This is what we are currently seeing -a major expansion off the lows.
Meanwhile the broad trend with fiat is well established - it trends toward zero in value while the supply of units continues to expand over time. Bitcoin does the opposite. The supply is fixed and the issuance continues to halve every four years until the supply cap is reached somewhere around 2140.
Political monies trend toward zero, while Bitcoin will trend up and to the right into infinity. Act accordingly.
Wishing you all well. Hope you have a great day. Talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The ability to solve problems that we face, is perhaps one of the most important capabilities we can posses. In many respects life is simply a series of problems or challenges. While some may associate the word problem as a negative, it’s perhaps better framed as a series of barriers reached that in order to progress to some next potential point, which we deem an improvement from our current position, or even just to maintain our current position, we must resolve some underlying point of friction. It is much more productively viewed as an opportunity.
One of the most common mistakes when trying to solve a problem, or series of problems, is failing to correctly understand it in the first place. Depending on the scope of the problem faced, this can lead to a host of undesirable outcomes and potentially be catastrophic. One of the most likely errors one can make when trying to solve complex problems is we can attempt to solve it by mistaking the symptoms for the underlying root cause. This can be disastrous. Not only would we not solve our problem in this case, we would create a host of undesirable outcomes as a result of these actions and create an entirely new series of problems.
In this scenario the best possible outcome that exists now, is to accept how and why we failed to solve the problem, and acknowledge the side effects from incorrectly addressing it, go back to the beginning to correctly understand the root cause of the issue and begin again.
Unfortunately as is so often the case, humans tend not to like being wrong and in now facing the next problem, instead of deploying humility and doing what is necessary as mentioned above, often people will make excuses as to why it didn’t work, and conjure up reasons why it wasn’t our fault. This is often done by people blatantly lying and completely muddying the waters of what really happened and why we achieved the outcome we did.
This is often the case when the incentives are lined up in such a way that we stand to lose significantly from the situation. This is especially true where money is concerned.
The topic of whether or not the US economy (and many others) is in a recession has been hotly discussed for months, but critics and commentators have been waiting for the second quarterly GDP print which is due July 28th in order to confirm this. That’s because the term recession had been defined as two consecutive quarters of declining GDP. That date is quickly approaching, and in preparation the Ministry Of Truth™️ have decided that instead of acknowledging reality and accepting the mistakes they have made, that the reaction to COVID and the monetary policy as part of it was wreckless, irresponsible and completely insane, that instead they will take the opportunity to redefine what a recession is. Genius. You can’t be in a recession if you change the definition of a recession.
Below is the introduction to the blog post from the White House and it begins:
Incredible. Janet Yellen was questioned about it, and urged listeners not to characterise it as a recession, if the Q2 print was to come in negative.
“A common definition of recession is two negative quarters of GDP growth, or at least that’s something that’s been true in past recessions. When we’ve seen that, there has usually been a recession and many economists expect second quarter GDP to be negative. First quarter GDP was negative, so we could see that happen and that will be closely watched. But I do want to emphasise what a recession really means is a broad based contraction in the economy and even if that number is negative, we are not in a recession now and I would warn that we should not be characterising that as a recession.“
As you would imagine the twitter army had a few things to say about the actions of these delusional central planners. Below are a couple that i enjoyed.
Jokes aside though, because this really is beyond a joke. There is a problem, infact there are many problems. What is abundantly clear is that the incentives that exist are not going to sufficiently motivate the unproductive central planning class to miraculously obtain any kind of conscience and acknowledge it. These people are pathological liars and will continue playing games of word salad to confuse and mislead people if it means avoiding acknowledging truth. These people are morally and ethically bankrupt. They are self serving rent seekers wishing to remain attached tightly to the flesh of their host, and to feed on the life source of it. Just like a parasite does.
They will continue to gaslight you about definitions of vaccines, and definitions of recession.. These people would redefine what it means to murder someone if they needed to.
These are not leaders. They are frauds. Continue to adopt their system at your peril. Fiat is evil, and the fiat pushers that benefit are a burden on humanity. Central planning is toward the core of our problem, and it is not going to be fixed by the very people who continue to benefit disproportionately from it. This system is not going to be fixed from within the system.
If only we had a neutral monetary protocol that these space cadets couldn’t touch, and couldn’t redefine.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
By now most will have seen the situation faced by farmers in the The Netherlands. The Dutch government of central planning lunatics took the WEF Olympics tyranny baton from Canadian Supreme Leader Trudeau in an effort to “fix“ the so-called “climate” - like it’s something you get from Ikea. But this is only on the micro level.
Given the significance of Dutch food production (2nd largest on earth) the implications of these actions are far more significant and impact the broader human population in extreme ways.
It seems that Supreme Leader Trudeau does not like to be one-upped in the WEF-ONIZE-THE-FOOD-SUPPLY Olympics, and he wants his baton back.
The Canadian Government published a paper outlining the WEF plan back in May titled: “Reducing emissions arising from the application of fertilizer in Canada's agriculture sector” and at a recent meeting with provincial agricultural ministers confirmed he plans to move forward with the plan to reduce ferilizer use by 30%.
The plan is similar to that of the Dutch (surprise, surprise), to reduce overall greenhouse gas emissions by reducing the use of fertilizer in producing food. To quote the document:
“net human caused emissions of CO2 need to fall globally by about 45% below 2010 levels by 2030 and reach net-zero around 2050.“
So basically the plan is to bankrupt a bunch of smaller farming operations, ensure those small operations are swallowed up by larger ones, and ensure a lot of people are starved of nutrient dense food sources in the process.
“You will eat bugs, own nothing, and be happy“
The farmers in The Netherlands could see how catastrophic this WEF relay race is, and so too can the Canadian farmers:
While local municipalities in Canada have expressed concern and highlighted the obvious issues with this insanity, the Federal overlords wish to continue their reign of terror on the peasant class, and do whatever Papa Klaus instructs. Remember, Klaus runs Canada. Don’t take my word for it - watch the clip below to hear it from the man himself.
Anyone with their eyes open can see where this is going, and that it is simply about money and control. Bitcoin may be the most important weapon we have in this fight, especially if CBDCs come to bare, as it provides us with the means to strengthen local communities and enable producers and consumers to interact without all the intermediaries in the middle and trade peer-to-peer and strengthen local communities from the unproductive central planning class.
It’s important to realise that no one is coming to save us. It is critically important the individual acts to secure the world we wish to live in. Initiatives like that of the The Texas Beef Initiative are essential and can be pivotal in insulating local communities from being malnourished at the hand of these tyrants.
2030 is not far away. It is 7 short years.
These governments, and very likely others, are waging a full blown assault on essential infrastructure in alignment with the WEF Food Hub plan and their 2030 Agenda. But it is more significant than that, they are installing a tyrannical authoritarian regime which subverts your rights and the rights of many by capturing political leaders and short-circuiting local governments the world over to act in alignment with the objectives of unelected pseudo-elites. It is the installation of a world where your right to live peacefully in a way of your choosing is no longer your choice to make. And they are being enabled by fiat.
The ideology is that what they believe trumps what you believe. What they want trumps what you want, and what happens is to be decided by them. It is the death of democracy.
We saw what happened in Canada earlier in the year when Trudeau’s dictatorship was challenged - he weaponised the financial system against Canadian citizens and created a blacklist of accounts and individuals to target.
Adopting bitcoin and building circular economies in our local communities is one of the ways we vote against this madness. To do nothing and continue to support fiat is to support the demise of the livelihoods of many farmers the world over and destroy the decentralized food network that has taken centuries to develop and has been absolutely pivotal to the flourishing of humans on earth up to this point.
Vote with your actions. No one is coming to save us.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Tesla announced yesterday they sold 75% of their bitcoin holdings to improve their cash position, while still holding 25% of the original position. However today’s letter is not about Tesla, and it’s not about Elon; It’s simply to highlight the use of such information by media and attention predators, who wish to tell vulnerable minds nursery rhymes like they’re still three years old to set the frame of their thinking.
The simple truth is that bitcoin is the first globally public money we’ve ever had. A money anyone can use and send to anyone and receive from anyone, from anywhere on the planet.. and potentially beyond. A boundless monetary substrate for humanity if you like.
The fact it continues to get mixed in with the broader “crypto“ or digital asset space continues to highlight most people simply aren’t getting it. Most still fail to see why it is so important, and the broader implications of a world with bitcoin in it, just as they did with the internet. Let me cast your mind back to the early nineties to remind you what that was like.. check the clip below for a walk down memory lane.
“What is internet?“. Think about just a few of the implications of the internet some twenty odd years after the above clip was recorded. It’s difficult to really grasp how different the world is today as a result. Video stores no longer exist, the mobile device (even calling it a phone barely seems appropriate given its capabilities) has replaced your alarm clock, your diary, your maps, your notebook, your music devices like CD players, your video and movie players, and as a result your TV, many around the world are no longer connected to legacy information channels like mainstream news (if you can even call it that) and others, it has replaced books, cameras and obviously it has replaced your landline phone. These are just a small handful of the things that have been distilled from many devices into one, and this is in a relatively short period of time. Imagine in 100 years - 5x more.
It has removed entire industries, and created many new ones. It has completely reshaped global society in a few short years, and that trend is unlikely to reverse. The genie is out of the bottle. And many of these changes aren’t even getting close to touching the real significance of what the birth of the internet changes and enables.
Without the internet Jullian Assange would never have been able to bring US war crimes in Iraq into the light, and that act, the murder of more than 12 innocent people, would have been able to go completely unnoticed, as no doubt many many atrocities have gone unnoticed prior. The internet changes absolutely everything.
To confuse bitcoin with some centralised crypto company is to confuse the internet with an AM/FM radio transmitter. The two are simply not comparable.
Below is a clip of former Jaw Boner extraordinaire Fed Chair Ben Bernanke from 2010 explaining to congress his expectations to reduce the fed balance sheet which he states would be back below a trillion dollars. Jan 21st 2010 the balance sheet was 2.25T. Did he really convince anyone they would more than halve it?
The current US Fed balance sheet is just shy of nine Trillion, with a T. Not only did it never go back down anywhere near levels prior to 2008, 14 years later it has increased by more than 9x.
Benanke’s comments sound familiar though, don’t they? Remember the clip of Christine Lagarde in May explaining how the ECB’s balance sheet will come down? Linked below if you missed it. It’s a doozy.
As Rudy Harvenstein beautifully points out, economics must be the only profession on earth where you can make predictions and be consistently wrong and still get promotions and be trusted, believed and even celebrated.
While this was true in a pre bitcoin world, it will not be true for much longer. Bitcoin as Luke Gromen describes it, is the last functioning smoke alarm and it has been sounding loudly for 13 years. Imagine ignoring a smoke alarm that’s sole purpose is to let you know the building you are in is on fire for thirteen years.
Well this is where we’re at. Elon buying or selling doesn’t matter. What the current thing is does not matter. It will only be used as a lever to influence you. If i were you, i’d be curious as to why that is. QE is never going to end. Just like Bernanke in 2010, and Lagarde in 2022, no matter what these people say, the balance sheets will continue to expand. This is the design of the system, and these people know it. A system that is completely out of control and acts against your best interests and those of your friends and families. A system that simply serves to keep you contained.
Bitcoin is not a get rich quick scheme, it’s a get free scheme, and like the internet, it is not going to go away. Quite the opposite. It is the signal amongst the noise and offers us an alternative to listening to the 3 amigos above. An alternative grounded in verifiable truth. The jawboners above will continue to jaw bone, while economies around the world continue to collapse as the the US based fiat ponzi does the same. The actions of these people have dramatic social implications and we’re seeing them all over the world. As central banks continue to expand their balance sheets, the wealth divide accelerates and social cohesion accelerates to the downside.
It’s never been more important to get educated and to be aware of what is happening. We are living within a pivotal moment in time. A historic pivot. The 4th turning. The great awakening. The end of the long term debt cycle. Whatever you want to call it. Like the seasons, we’re going into the depths of winter, and thanks to bitcoin we can be assured, that while it will still be cold, winter will not last forever. Spring will follow, and it will be glorious. Opt-out of a a system built upon lies and deception and opt-in to the the peaceful resistance that is bitcoin.
Hope you have a great day.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I’ve been meaning to chat about Fedimint for a while, and after receiving an email from Ego Death Capital this morning about their investment toward Fedimint it has prompted me to finally do so.
Why Fedimint?
Despite non-stop attempts by the bitcoin community to help educate the wider community on the importance of self custody - “Not Your Keys, Not Your Coins“ - the unfortunate reality is that a dominant percentage of users relinquish custody of their keys to 3rd party exchanges, and this weakens not only the security of the holdings of the individual but the entire network significantly.
The primary reasons for this are 1) People lack the technical competence to do so 2) Cost. Many around the world simply cannot afford the price of a hardware wallet and 3) Many people prefer to outsource trust as they do not trust themselves to take responsibility and secure their bitcoin.
This basically turns any exchange into a massive honey pot for government and nefarious actors wishing to control, surveil, restrict and censor the use of these bitcoin and could even lead to mass seizure of bitcoin, similar to what happened in 1933 with gold following executive order 6102. Fundamentally this dynamic removes the censorship nature intended, due to the outsourcing of trust to custody ones bitcoin keys.
What is Fedimint?
Fedimint, short for Federated Chaumian Mint, is a protocol that has the potential to profoundly improve bitcoin self-custody solutions and offers to potentially solve one of the most significant attack vectors facing bitcoin today - that being large percentages of bitcoin keys being custodied by centralised 3rd party exchanges.
Fedimint leverages two primary technologies being 1) Federations, or community shared wallets. This can be simply thought of as multi-signature wallets and 2) The use of Chaumian Mints. Attached is a great blog post explaining more around the use of federated mints including how and why they could improve scaling and privacy on bitcoin. Chaumian mints are explained in the post as follows:
“Chaumian mints, also known as Chaumian banks, or blind mints, offer a compelling solution to these problems, particularly when operation is federated. Chaumian mints, through the use of blind signatures, have extremely appealing privacy properties. The mint operators do not know the number of users, their identities, account balances, or transaction histories. Additionally, mint transactions are cheap and can be performed at unlimited scale.”
What Are The Primary Advantages?
Fedimint could offer a superior custody model while maintaining bitcoins core properties, and without sacrificing decentralization. The three primary benefits to leveraging this technology are:
A Superior Bitcoin Custody Solution. Better than trusting an unknown 3rd party like an exchange, and perhaps even better than individual self-custody due to the fail-safes it would provide, fedimint has the potential to be a superior way to self-custody bitcoin which would be widely available to all users.
Privacy. Fedimint can dramatically improve privacy on bitcoin as the use of federated chaumian mints makes it impossible for chain surveillance companies to tell the difference between a normal transaction and that of a federation. While they would be able to see the total balance, they cannot know who is sending or receiving what, and the balances of individual federation members is completely hidden.
Help more people take full ownership of their bitcoin, and enable them to leverage the core properties offered by the protocol, like censorship resistance, that are lost when trusting centralised 3rd party exchanged.
The forming of federations outsources the most technical parts of self-custody from the individual user who may not have the technical competence to do so, to trusted members of the federation. Thus making it far more possible than before for these users to custody their bitcoin keys.
Below is a timestamped link to Obi Nwosu’s presentation on Fedimint at Bitcoin 2022 Where he goes through the ins and outs of the protocol which i highly recommend watching to understand more.
In my opinion the improvement of privacy on bitcoin is the single most important advancement as fundamentally, everything else is downstream of privacy. The priority to ensure user privacy cannot be over-stated. The need for it to be standard procedure is critical. This requires an alternative to solve for the vast number of bitcoin users giving custody of their private keys to centralised 3rd party exchanges.
It must be simple for any user regardless of technical capability to utilise, and implemented in a way that makes it robust and common-place when interacting with the network and in my opinion, the promise of bitcoin full-filling the mission to separate money and state relies on such a solution. Hopefully Fedimint is that solution. Time will tell.
Just another example of why open networks win. Open Source Everything!
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Upon watching the original Matrix film from 1999 last night this quote from the end of the movie caught my attention.
"I know you're out there. I can feel you now. I know that you're afraid. You're afraid of us. You're afraid of change. I don't know the future. I didn't come here to tell you how this is going to end - I came here to tell you how it's going to begin.
I'm going to hang up this phone, and then i'm going to show these people what you don't want them to see. I'm going to show them a world; without you. A world without rules and controls, without borders or boundaries. A world; where anything is possible.
Where we go from there, is a choice i leave to you."
— Neo
It caught my attention for a number of reasons.
It’s as if it were written about bitcoin and bitcoiners. “I know you’re afraid. You’re afraid of us. You’re afraid of change“. This is reality for a significant number of humans, perhaps a majority, and this fear against both change and a cohort of individuals championing this change is leveraged. A classic example is in the ongoing attacks on Bitcoin Maximalism, by those trying to defend thieving scammers and who wish to profit from Ponzi schemes like Terra Luna at the expense of others. But this is where the battle is won and lost. It is a battle for hearts and minds. It is a battle of information. It is a meme war. Those that remain in closed states, who fear change and perhaps fear the brazen so-called “toxicity“ of bitcoiners, which is more often than not just raw honesty, often fail to recognise that one cohort of individuals intent is to deceive, distract and control, while the other (bitcoiners) is to free and empower you.
It highlights the ongoing nature of this fight and serves as a reminder that this wrestle for power is not a new one. However it is somewhat novel and more pronounced in the digital age, as we have lost many fundamental rights that were previously non-contentious. The privacy of the individual is at the heart of this, along with freedom of speech. Which is simply freedom of informational transmission. This is not fundamentally possible, however it is possible in a legal sense. It’s possible to create a legal framework opposing free speech if the minds of the many within a society become disturbed enough and distanced enough from the deep truths as to why this freedom of informational transmission is so critical.
It is a poignant reminder of how powerful the technology of bitcoin is, and how so many that have come before us have strived for such an innovation. And it has never been as important as it is now in the digital age. Rules without rulers. The borderless, censorship resistant transmission of information by anyone to anyone.
It is impossible to know how this ends, but how it begins is simple. By opting-in. Bitcoin has shown many that a world without rulers over the technology of money is possible. It has shown us a brand new kind of money, that is entirely novel to humans in the digital age. A money that is open, public and decentralized, instead of the closed, permissioned and centralized systems of fiat.
Hope this finds you well. Wishing you well as always.
Have a great week and i’ll chat to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The concept of a walled garden is not a new one. They have been around for hundreds, if not thousands of years. A precious garden enclosed by high walls serves many purposes, including providing protection from animal or human intruders and also acts to create microclimates, which allows for things to grow and flourish inside the walls, that may not otherwise be able to, due to the temperate climate.
It’s no secret that the concept of a walled garden is at the core of every major software companies strategy, and they are built around it to generate and sustain a network effect. Any Apple user knows first hand the way you get trapped within the ecosystem, because of both the way their products, like an iPhone and Macbook interact together, but also because of the friction that is introduced when using a non Apple product. This gives Apple incredible power as you see with the App Store, allowing them to control who can enter, and who cannot. It also creates the need for new apple specific products in order for you to maintain a consistent user interface, which is all part of the walled garden approach. The same is true for Google, Microsoft, Facebook and most others. Think about it. Many people use social media platforms like they are the internet. These platforms are masterful at keeping you inside of their gardens, and do everything they can to extend the amount of time you stay within their walls. If it were up to them, you would never leave.
Fundamentally they do this by designing incentives. Presumably they try to add value, by making their products as good as possible, so you simply want to use them over others. It would seem the case, they also allow a certain amount of friction to exist in other areas to detract you from exploring other options, and exiting their ecosystem. Apple software interfaces as I mentioned is one of the best examples of this, where many people fear having to ‘learn‘ how to navigate a different companies interface and migrating their images, contacts, messages etc. Thus, due to the incentives, they stay inside the walls. The reality is that as humans, we’re (in most cases) lazy animals, and a dominant majority of people will follow the path of least resistance. Thus we remain within their walls. And over time, the walls begin to look more like those of a cage than a garden.
In the same way that these software giants create walled gardens and work to keep us inside them, so to do governments and central banks with the creation of the political fiat monetary systems. Central banks issue money, and government insist this money be accepted. The fiat system is a classic example of a walled garden. Where the difference lies between software companies and governments/central banks, is that outside the walls of the fiat garden, are armed soldiers. Software giants while they do everything to incentivise you to stay inside, and prey on all your vulnerabilities to make it as unattractive to leave as possible. They cannot stop you, and if you exercise your agency, you can easily leave and never return.
Not so with the Fiat walled garden though. If you try to leave and venture off to explore outside the walls or even to explore a different walled garden, they want to know where you have been, the reasons for leaving, and every possible detail about your interactions while you were gone. To the fiat masters, it is their business. You are not simply free to explore.
The fiat standard is a walled garden, and unlike software companies it is one you are kept within by decree. Which is by force. Outside of this garden is the open, permissionless, abundant environment of bitcoin. The fiat masters are counting on the height of the walls, and men with guns on the other side being able to perturb you from scaling the walls, and exploring the vast abundant land outside of them. What they weren’t counting on however, was the invisible force of bitcoin being able to penetrate and then dissolve these walls, and flourish both inside the garden and outside of it. This invisible force is everywhere and it is nowhere, and it is the key to an abundant future. With bitcoin there are no walls. No borders. The very notion of a walled garden ceases to be possible. Or conversely, it is the ultimate garden with which no walls exist.
Wishing you all well.
Hope you have a great weekend. I’ll talk to you next week.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
This tweet from Arthur Hayes caught my attention this morning. It reads:
Arthur was one of the founders of Bitmex, and has worked in financial markets for a long time. He is extremely sharp, and the depth of his understanding of trading and markets is wild. His writings are one of the must-reads for me due to this depth of knowledge and experience, and communicates this in a straight-up and candid way, which i appreciate; and always makes for a great read!
His tweet is referencing an essay he wrote back in April titled “The Doom Loop“ and beautifully highlights the bind central banks are finding themselves in, particularly the European Central Bank. If you have not read it, i recommend setting aside the half an hour or so required to digest it, as it is eye opening to say the least. This section gives you a good preview of this predicament.
“Now the doom loop begins. Inflation prior to the Russian conflict was already running at 40-year highs across the EU member states. The ECB would love to raise rates and combat this inflation, but it is in a serious bind. If it raises rates and stops purchasing weak member state bonds, then Southern Europe will quickly go bankrupt. The PIGS’ (Portugal Italy Greece Spain) only option at that point would be to go off the Euro so that they can redenominate Euro debt into local currency debt, giving them financial flexibility. That would be the end of the Euro, and would cause massive banking issues for Northern European banks who lent to Southern European companies. The banks’ debt assets would get paid back in local currency, but they would then owe Euros to investors … bye bye, thanks for playing.
If the ECB continues to print money so that the EU survives, then citizens of Northern European countries, angered by rampant inflation, will elect populist demagogues who will blame their economic woes on the profligacy of their Southern neighbours, and will run on a EU-exit platform. It’s the foreigner’s fault! (Hmmm… sounds like a familiar play I read in 1939.)
The ECB is trapped, the EU is finished, and within the decade we will be trading Lira, Drachmas, and Deutschmarks once more. As the union disintegrates, money shall be printed in glorious quantities in a pantheon of different local currencies. Hyperinflation is not off the table. And again, as European savers smell what the rock is cookin’, they will flee into hard assets like gold and Bitcoin. The breakup of the EU = $1 million Bitcoin.
The EU doom loop is a certainty at this point. The degree to which Russian energy flow is curtailed determines the speed of collapse. If surplus countries decide that holding Euro debt assets is not safe, the pace of disintegration quickens even further.”
Oof. Powerful stuff.
The two charts below show USDEUR and EURUSD which is the same chart inverted. The chart/s show the USD looking insanely powerful vs the Euro, and subsequently the Euro looking insanely weak relative to the USD. The USD looks like it’s heading much higher, and the euro like it may be heading back down towards it’s ALL-TIME LOW.
Now, i’m always weary when anything seems certain or is said to be certain. It makes me very uncomfortable because I have very little confidence in our ability to accurately predict the future and process the infinite complexity that exists. The other thing is that traders and financial markets broadly play a lot of information games and are very much in on the meme war nature of our current world, so it’s always to be taken with caution in my opinion, as they may have financial interests motivating their behaviour and essentially be “talking their book“.
However, with that said, things look very very suboptimal for the EU (to say the very least) and I think it’s very likely Arthur is right, and the doom loop has infact begun. I definitely agree that “money shall be printed in glorious quantities in a pantheon of different local currencies”. The trend of USD strength and EUR weakness looks like it’s about to accelerate SIGNIFICANTLY. Whether this leads to the dissolving of the EU as we know it, i remain less certain, but i do think there is a high probability he is on the money.
Where my conviction is abundant is in bitcoin. And when i consider what Arthur lays out; that we could see the collapse of the European Union, and that countries like The PIGS as he references them (Portugal, Italy, Greece and Spain) would need to denominate their debt in their local shitcoin, it seems so obvious that these nations should be accumulating the most scarce monetary good EVER, and securing their balance sheets with bitcoin as a priority and one of national security.
No one said the path to hyperbitcoinization wasn’t likely to be messy. The best thing any nation can do if they have the slightest bit of sense, and desire for a positive outcome, is to stop trying to stop the freight train that is bitcoin and simply opt-in. It really is that simple.
Only time will tell how it all unfolds.. but if just one country wakes up and smells the bitcoin roses, and decides to stop playing a loosing game and elects to leverage the power of bitcoin, the game theory dynamic that would follow would be biblical.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
“Everytime we witness an act that we feel to be unjust and do not act we become a party to injustice. Those who are repeatedly passive in the face of injustice soon find their character corroded into servility.“
— Jullian Assange, Conspiracy as Governance, 2006
Good Morning Everyone,
A deep irony exists when we live In a world that has become so deeply polarised and politicised. So much so, an immutable, apolitical system of scarce information, of value, has been manifested into existence.
As a protocol bitcoin is absolutely apolitical. It is indifferent to any political beliefs or ideology. It is decisively neutral. Which is a stark contrast to most else in clown world. Bitcoin is neutral to race, religion, ethnicity, gender (trigger warning: of which there is only two 🤣), height, hair colour, skin color, eye color, body type, body shape, name, language, location, wealth or any other myriad identifying and distinguishing factors.
Bitcoin will process any transaction from any person and to any person, regardless of everything else except for 1) whether or not you adhere to the rules of the network 2) you pay the appropriate fees to process your transaction - which is essentially paying for the scarcity of the block space. Assuming those two items are met, your transaction will be processed.
Where the political paradox lies is in bitcoins very existence. The fact that it has come to be. That it even exists. Which implies that some cohort of individuals sought to create a technology with the very properties bitcoin has. While the protocol itself is apolitical, this act of creation, is a deeply political one.
When one see’s bitcoin for the first time it illuminates many things about our current system that where previously invisible. All of a sudden you can no longer see the world the same way. Prior to the inception of bitcoin, we had no superior system or point of comparison. Something that would highlight the characteristics by providing an alternative.
We now have something different to compare the current system to. It would seem to be the case, that the creation of bitcoin is the recognition that having a monetary system, a network of value, that is centralized, and enables the weaponization of this network by those with administrative privileges against those without (the users), is a deeply flawed and immoral one. A system of incentives that rewards people for playing political games, specifically those who get closer toward the center of this system by playing these games benefit disproportionately to those furthest away. The zero-sum nature of the design would seem another fundamental flaw in the code of the central banking system. But perhaps to those who designed the system, it is a feature? This dynamic of inequality only accelerates over time as those at the center of the system continue to increase the supply of units at the expense of a large swath of users on the network, and eventually to the demise of the network itself.
The very creation of this technology we call bitcoin is perhaps the most significant political act of all time. It is a technology that diametrically opposes the current system, and everything this current system stands for. The notion that someone should be able to get between two individual humans and their right to transact with one another, that any entity or group should have that power over another. Bitcoin rejects this. That you should be required to identify yourself in order to access the network of value transfer, and be subject to surveillance and a loss of privacy for that privilege. Bitcoin rejects this. That the imaginary borders formed by tribes of humans should have any impact over our ability to transact with one another. Bitcoin rejects this. One system asserts that these are not fundamental human rights that are implied as a result of being in a body; but bitcoin rejects this.
Bitcoin is a vote in opposition to the current system, and in many of the values this current system has attempted to install within the minds of the many. It is in its very essence, political.
The beauty of bitcoin is that it will never coerce you to use it, like the current system does. It will never impose its power upon you or any other, it will simply offer superior incentives, and no one can ever control the network whereby capturing this power. An immaculate system of incentive design, to allow the flow of pure informational clarity from any node in the network to any other, that is owned by no one. Where no hierarchical structure exists and no imbalance in the distribution of this information affords any node power over another as a result. Incredible.
It’s impossible not to be completely in awe of its existence, and to marvel at its very nature.
An apolitical monetary protocol for humanity birthed in a world so deeply entangled and confused by a captured system of political power, influence and violence. As Jullian Assange hinted at in the quote at the beginning, Once an injustice is bought to the fore of our attention, we are offered a choice: Will we be passive and become party to the injustice, and in the process find our character corroded into servility or will we opt-in to a superior system…
I know which one gets my vote.
Hope you all have a great week.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Imagine you’ve been living in a small dark room your entire life, and within this room it has been pitch black the whole time. You’ve been living in this room and all the while due to the nature of it, you’ve never seen a single thing. Almost as if there is no such thing as sight altogether, and the very concept of vision and your visual field where everything appears is a foreign and completely alien-like notion.
Then one day, you stumble across a switch on the wall that you have never felt before. You run your fingers across the plastic wall panel, and you feel the positioning of the switch in its place, and also that the switch has a range in which it feels like it can move, like something that can move between being active and inactive. On or off. You flick this switch to its opposing side, and all of a sudden the space in which you have spent your entire existence is instantly illuminated for the very first time. Almost like the feeling of waking up from a dream.
It now becomes apparent to you the very nature of your vision and your visual field. Colour and shadow rush in and it is made explicitly clear to you the depth and complexity that has always existed within this space, but has been in many ways hidden from you, until now.
This is very similar to the experience one often goes through when they discover bitcoin, and really grasp it for the first time. All of a sudden the nature of the world and our predicament is illuminated in a completely new way, and despite it being all around you from a point of your experience it is as if it has been hidden from you all along in plain sight.
Finding this light switch or an experience that facilitates something similar to this is not an easy one. We are often so deeply embedded within this space, or system, that we have become attached to it in a strange kind of way, and there is often a resistance or a lacking of openness that prevents us from seeing what is right in front of us, and all around us. This quote from Morpheus in the matrix very accurately describes the scenario i’m attempting to articulate:
“You have to understand, most of these people are not ready to be unplugged. And many of them are so inurred, so hopelessly dependent on the system, that they will fight to protect it“
This is one of the reasons that the Numba-Go-Up technology of bitcoin is so important. Many come for NgU and stay for Freedom Go Up, and at the end of the day, this is what it is all about. Atleast this is what it is about for me, and many others like me.
Years gone by prior to the internet, and everything the internet has enabled, we didn’t have to worry when we took a photo who’s servers it was stored on, because there were no servers. We didn’t have mobile phone devices capable of tracking our every move, and being able to observe or hear our most intimate conversations, let alone devices tracking our biometric data like heart rate, our sleep timing and cycles and other very specific bodily information. Life was obviously far simpler.
Since things have now changed we have lost a lot of the fundamental rights and privileges that were once basic and fundamental, and obviously this dynamic extends pervasively to money and thus our spending habits, movements and preferences as well as our social networks and community interactions.
As you can imagine, a tyrannical, authoritarian state actor loves these new capabilities. Like they’re some kind of super power. Very kid in a candy store-eque. And given our current societal construct is very much a hierarchical one enabled by central banks and political monies this poses extreme dangers to us all, as should be abundantly clear having lived through a pandemic of propaganda, lies and coercion for the past 2 years at the hand of these corrupt and destructive regimes.
So while the probability of the most verifiably scarce asset in history appreciating in value over time is very high in my opinion, as more people begin to find this light switch and illuminate the dark room of their lives, the reality is, that what bitcoin is offering us is so far beyond monetary gain, to even focus on this almost seems somewhat trivial.
Onward.
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The term cryptocurrency, or crypto for short, is one that in a perfect world would never have existed. Not because it lacks relevance to the cryptographic nature of bitcoin, but because it has been hijacked by a class of grifters who seek only to enrich themselves regardless of who has to lose to enable it. A class of people intent on playing short-term zero-sum games, instead of long-term positive-sum games.
Previous musings on the distinction between bitcoin and “crypto” can be found here.
Many people get triggered and often angry at quote-unquote “bitcoiners”, when this is pointed out. Typically these people are the “shitcoiners”, whether they realise this or not. I think very often not. It’s not that they are inherently evil, or have consciously nefarious intentions, it’s simply that they don’t know what they don’t know, and they, in most cases, lack the humility to enquire and deploy curiosity toward this.
Perhaps this is because they are puppets to sensations and patterns of energy inside them, things we call “feelings” and “emotions”, and the term shitcoiner triggers said patterns of energy and short-circuits their cognitive faculties. Perhaps it’s the fact they’re emotionally attached to whatever b**t story they have been told by these COMPANIES and their marketing teams and it threatens the beliefs they have been GIVEN and since adopted… about how they get their risk-free yield, or how their token is going to change the world.
I hold nothing against these people, only love, as I know first-hand bitcoin is not easy to see. In order to really uncover what it exposes requires a deep amount of work, a radical level of openness; and most are simply unwilling or unable to do this, or they just haven’t done it yet… and it can take time.
Forgive me father, for i have sinned. I have shitcoined, and realise the wrong doing of my ways, and I repent. Although it was a long time ago, i seek your forgiveness. I am a changed man, father. I now see that none of these companies are decentralized, rather decentralized in name only (DINO). They are simply manifestations of the same existing structures already existing in todays society, and enable the same level of corruption and single points of failure as all other centralized entities, and as a result are completely unsuitable as a form of money. I can see that without this decentralization none of the necessary properties can be assured, the very properties bitcoin makes possible, and without these and without millions of dollars spent toward marketing these scams and deceiving people into believing complete lies, they would never make it on their own merit. These companies are fragile like something built upon quicksand. They require rulers in order to exist. Bitcoin on the other hand is anti-fragile, and requires no rulers. Only rules. The innovation of bitcoin is so alien, that despite having existed for 13 years, most people still cannot see it. I now see how these shitcoins are an attack on this innovation, and are in opposition to the best interests of humanity moving forward. Please forgive me.
Over the last couple of months the truth continues to be exposed as one by one the crypto grifters begin to fail. It began with the implosion of Terra Luna, the so-called algo “stablecoin”, and continues to expose the true colours of many including Celsius, Block-Fi, 3 Arrows Capital and most recently some unknown-to-me lending platform called Voyager.
There was no shortage of “Toxic Bitoiners” who were willing to point out the truth about these companies, however unfortunately for many, greed is a powerful state of being, and as is often the case, pain is required to wake us up and calibrate us with reality.
The simple fact is that these companies people refer to as “crypto projects”, are infact centralized, unregulated and like it or not, illegal securities offerings. The sooner they are exposed as such the better for everyone. As such it was of no surprise to me when i saw an article this morning showing Solana are being accused of violating securities law.
It shouldn’t be news to anyone reading this that i’m in favour of free markets as opposed to central planning, but it seems obvious that with the current iteration of society and legal framework that exists, the appropriate thing to happen is for these scams to be treated accordingly. It definitely does raise an interesting philosophical point; should these scams and the soulless parasites that promote them to unsuspecting idiots (of which i have been) be able to continue their grift until enough people have lost money and realised they are infact scams, or not?
That is something i will have to think more deeply about, to form a thoughtful view. My initial sense is that if the markets were truly free, then these things would sort themselves out much faster as these people would be held accountable, instead of being able to weasel their way out, enabled by money and a flawed justice system.
Irrespective of this, despite being unfortunate and painful for many, i believe the exposing of these individuals, companies and projects and the subsequent cleansing of nefarious actors offering nonsensical things like yield - let alone RISK-FREE YIELD - is a good thing. It’s healthy. It’s good for bitcoin, and ultimately it’s good for humanity. While the fragile descend into the quicksand they were built upon, all roads continue to lead to bitcoin, and the “old and boring“ technology that is the most sophisticated monetary network in human history continues to produce blocks and facilitate transactions for anyone on the planet, without needing anything from anyone.
Onward.
Hope you have a great day. I’ll talk to you tomorrow.
P.S if anyone knows Saifedean, I applied for a research position with him, and would love if you could put in a good word 🧡
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The political climate is once again hitting a critical point in various regions of the world right now as the parasitic central planners assert their insane ideology on farmers in The Netherlands. An ideology that a small group of pseudo-elites can control every thing and every one. Completely disregarding the incomputable complexity that exists in the world. The dutch political class have taken center stage as they move to halve nitrogen output by 2030 in alignment with the World Economic Forums climate goals, as well as their Food Innovation Hub plans.
The Dutch plan led by Christianne van der Wal who is ironically a politician of the People’s Party For Freedom and Democracy, is to reduce nitrogen emissions by 50%, which by the way is one of, if not the most abundant chemical elements in our atmosphere. The plan which i’ve linked to above basically involves removing 30% of dutch farmers in an area based approach. This will directly target small scale farming operations, and lead to a further concentration of infrastructure and food production capability [read: Power].
As you’d expect the dutch farmers have rightly taken to the streets to express their distain for the plan of the minister for so-called “freedom” and “democracy” rising up in what is likely to be the largest ever protest in the country.
The Netherlands is the second largest agricultural producer on the planet, second only to the US. They are a massive contributor to global food production. Does this mean we need to starve a large portion of the population to deal with the climate hysteria? One can only wonder how long it takes for the dutch government to leverage the playbook of supreme leader Trudeau and enact economic war on the dutch citizens by freezing accounts and creating blacklists.
Make no mistake, this is not about the climate, it is about power and control. In this case, control of critical food production infrastructure.
The WEF plan to create food hubs and control the entire worlds food supply, if that is even possible. They are leveraging corrupt, for-sale political tyrants to remove your rights and enable the take over. This is not a “theory”, it’s direct from their website. The plan is to create 4 food hubs and It’s highly likely that the Netherlands is one as well as the US. This removal of smaller scale producers will enable the concentration of ownership and production into the hands of a few. It would also mean that if you wished to obtain that food, you would need to use their slave-coin to do so, and opt-in to their network. Classic fiat coercion.
This also explains why Bill Gates has been busy accumulating so much rural farmland in the US, having most recently been questioned by the North Dakota Attorney General what he intended to use the recent $13.5m purchase of land for. Gates now owns more than 240,000 acres of farmland in the US!
This is not about nitrogen or “the climate™️”. It’s not about abortion and it’s not about Ukraine. It is about control. Control over you and I. Control over what jobs are deemed necessary, what food is acceptable, who can produce it, what you can say and what you cannot say, and what monetary network you must use. Whether or not you can leave your home or remain in lockdown because you have not undergone fill-in-the-blank medical procedure.
You have the right to run a farm and produce food. You have the right to move freely, and transact with whoever you like. You have the right to leverage a monetary good that the government cannot take from you and extract the value of via inflation of the money supply and secure the future for your children rather than being trapped on some kind of hamster wheel that continually speeds up.
The notion that central planners can account for the myriad complexity that exists in the universe and solve every problem through top-down autocracy is absolutely insane. Free markets while not perfect, are without question the most superior mechanism humans have developed thus far to deal with this complexity, and the future ability for humans to flourish on the planet depends on us being free to operate as nodes within these markets.
It’s inspiring to see the dutch farmers rise up in opposition to this insanity, but is it enough? As we saw in Canada there is no length nefarious government actors will not go to in order to maintain power and discredit those who oppose their iron fist. Below you can see a video of dutch police removing farmers from their tractors and arresting them. Sounds familiar.. The Canadian truckers would be waking up in the night having flashbacks!
We must present a united opposition to this madness and rise above efforts to separate us and have us turn us on each other. While we are all unique we are far more similar than we are different.
The peaceful exit door of bitcoin remains open for anyone wishing to enter. It’s time to stop supporting these tyranny enabling political regimes and their political monopoly money and opt-in to the freedom network bitcoin provides.
We are going to win. We have to.
Hope everyone has a good day, and wishing everyone and especially those in the Netherlands strength and honour in this historic fight. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Jullian Assange is best known to most as the founder of Wikileaks - a not-for-profit publishing entity focussed toward releasing large datasets of censored or otherwise restricted official materials. He remains a political prisoner in the UK and has been used by governments, primarily the US government and all others who bend the knee to them, as an example to deter others from exposing the truth and who dare dissent about these corrupt unelected cartels.
He is also an OG cypherpunk, so it’s no surprise he was early to leverage the neutrality provided by the bitcoin network when governments pressured payment processors like Visa and Mastercard to censor any transactions to Wikileaks.
In 2006, the same year he founded Wikileaks, he wrote two papers titled “State and Terrorist Conspiracies” & “Conspiracy As Governance” which can be found on Nakamoto Institute dot org’s website. The intro to this paper reads as follows:
“To radically shift regime behavior we must think clearly and boldly for if we have learned anything, it is that regimes do not want to be changed. We must think beyond those who have gone before us, and discover technological changes that embolden us with ways to act in which our forebears could not.
Firstly we must understand what aspect of government or neocorporatist behavior we wish to change or remove. Secondly we must develop a way of thinking about this behavior that is strong enough [to] carry us through the mire of politically distorted language, and into a position of clarity. Finally must use these insights to inspire within us and others a course of ennobling, and effective action.“
It’s becoming increasingly clear to me as a matter of necessity, we must reject the framing by dishonest, incompetent or nefarious actors, be it government or any other entity, that are providing a misleading or blatantly false lens in which to view an issue. We must also provide an alternative frame for people to combat this, and one that is grounded in objective truth.
This tactic, often referred to as gaslighting, is designed to lead people to a specific desired conclusion or outcome, and is often used to short-circuit honest discourse and truth-seeking. The Covid hysteria is a prime example. Anyone that was wanting more information around vaccines, or that expressed any kind of curiosity, concern or hesitation was immediately vilified, demonised and banished from society as a heartless antivax lunatic with no concern for other members of their community. Obviously this is, and always was utter nonsense designed to politicise the issue, enable strong control measures to be enforced and distract people by placing a wedge in society and have everyone fight amongst themselves and become very anchored to perceiving the game board in a very specific way. Classic divide and conquer. An oldie but a goodie it seems. Plenty of lindy on that strategy.
tRusT tHe sCiEnCe™️
This kind of informational and psychological attack on us all is evil - and i mean that in the truest sense of the word. This is the meme-war. It is an attack on our friends and families, on our children and on their futures by a selfish and power hungry class of pseudo-elite sociopaths who seek to accumulate more and more political power, as is the incentive of a system of political money. If normies realised how they had been played they would be livid.
This manipulation and social engineering is enabled by the creating of a frame. A lens in which to perceive the current thing, and typically carves out clear paths for us to “choose” that are often, but not always diametrically opposed.
The ESG scenario is another prime example of this, but i won’t get stuck on that one right now. I want to focus on inflation.
We’ve been on quite the journey this past two years when it comes to the monetary system including monetary and fiscal policy. Given the US’s position as the world reserve currency most of what happens is downstream of the fed.
Lets recap the official narrative. “Deadly” covid pandemic hits, everyone must be locked in their homes and that means we need to increase the money supply drastically. In the US this was north of 40% in eighteen months. Meaning 40% of all US dollars in the circulating supply were created in the past 2 years. All other governments and central banks followed suit. Inflation came out of “nowhere” and apparently it was transitory. Nothing to worry about. Then it had peaked and they “had everything under control”; however it has continued to increase seeing 40 years highs month after month in the US (and most other nations).
The real version is that the financial system is in the process of falling apart. Whether they keep it limping along a while longer nobody really know, but the underlying fundamentals are cooked. Jerome and the gang had been trying to reduce their balance sheet between 2018 and -19 but things started to break, specifically the repo market, and they changed course very quickly.
If you zoom in around 2019 on the chart above which shows the US central bank balance sheet you can see that pre-covid they had already begun to reverse course and begin increasing their balance sheet once again beginning in September 2019. Covid or not they were going to print, but it gave them a beautiful nursery rhyme to lull people to sleep with while they did.
Now Fed Chair Jerome Powell has spilt the beans at the ECB forum and basically said they have no clue what they’re doing.
“One way to say it would be I think we now understand better how little we understand about inflation”
It’s impossible to know if he’s telling the truth at this point or just playing more political games - code for lying and actively deceiving the public - and it is merely a distraction to bother to find out. They have been so consistently wrong - they’re either 1) grossly incompetent or 2) they’re lying through their teeth. The fed employs around 400 PHDs. The probability that they are this wrong consistently is an extremely low one.
Regardless of the case, what should be abundantly clear is that these people have no place controlling the money of the world. The notion that a small number of people can just arbitrarily decide the fed funds rate, a number that effects every node in the fiat system and is derived from an incomputable level of complexity is absolutely absurd.
Money is a market good. What we have courtesy of central banks is a political system and one that enables control.
It is time to categorically reject the central planning class and adopt a superior monetary good of the market and for the market. One with a predictable issuance schedule that is known into infinity rather than one chosen by a few chimps sitting at a fancy table. These people have been leaches on society for long enough. If we are a free society then reject the frame that central banking is necessary and lets freely choose our monetary network that will support an abundant future for humanity.
It’s time to remove the muck in the middle between peers like banks, payment processors and corporations and reap the benefits of a peer to peer global monetary network that just does what it says on the tin, instead of wasting time trying to interpret the signals from these idiots.
Government and central banks only weapon in this fight is coercion. Over time the notion that a small group of liars ever had control over something as vital and influential as money will seem as primitive as traveling via horse and cart.
It’s time to reject the frame of these parasites and their network of surveillance and control and opt in to the freedom network of bitcoin.
Hope you all have a great start to your week. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Over the last few days I’ve been playing around with a podcasting 2.0 app called fountain. The app has a slick and familiar UI, and offers a custodial lightning wallet built into the app. While this is suboptimal ultimately, in order to onboard people initially and get people playing with the app it is likely the right move in the short term. For a fully noncustodial solution i recommend checking out BREEZ.
Having an alternative business model to that of the advertising model is essential to better align the incentives of content creators. When you consider that free-to-air legacy media is simply an advertising machine, it makes sense why the content becomes more and more sensational, as the more eye balls they have, the more ad revenue they accumulate. It’s not about truth. It’s about attention. The “news” is a shitcoin.
As i discussed previously when writing about podcasting 2.0:
“The primary difference here is that these centralized platforms are typically advertising machines; and advertising, if personalized, entails surveillance. The ability to pay for content you value, in a value-4-value model, via a censorship resistant protocol seems like an obvious way forward.”
While fountain itself is just a company building an app utilising lightning for payments and the existing RSS feeds for the content, the actual monetary medium of bitcoin most certainly is, and it’s integrated right into the app. Whats super cool about fountain, is that while they try to attract users to the app they are paying people to listen. So you literally earn sats to listen to something you would listen to anyway, and then get the chance to have a play with the app and stream some sats to people who’s content has provided you value. Win/win.
This is a phenomenal way to onboard users, and to get people playing with lighting and to begin to expose the power and capability lightning offers. I’ve been streaming sats all morning, and it’s a phenomenal way to connect with content creators you appreciate and build community.
Below are a few images of the app interface. You can find the audio from these letters in there by searching for bitcoin unlocked, and earn some sats for listening. I’ve also attached a referral link to sign up with. @andrewkeir-d79ab36451
It’s early days in respect to podcasting 2.0 but the ability of lightning to facilitate peer-to-peer transactions is incredibly powerful. It’s clear as day that the old model relying on advertising corrupts the incentives and ultimately leads to censorship and surveillance (just look at youtubes censorship), however it’s likely to take some time for people to get used to paying for content they value as opposed to it being subsidised by advertisers but in my opinion this is a powerful step in the right direction. I highly encourage you to download the app, subscribe to bitcoin unlocked, and have a play around with earning and streaming some sats to get a feel for the power the value4value model can unlock.
I hope you all have a great end to your week. I’ll talk to you on Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The US continues its decent into the depths of clown world™️, dragging most other developed nations with it. At a time when any sane human would think the rhetoric would have reached peak absurdity, things seemingly continue to become more insane.
Old mate sleepy Joe has been asking gas companies to reduce their prices as the pain from decades of irresponsible monetary policy and naive interventionism hits a critical point seeing record high fuel prices across the country leading to an increase in political pressure on the administration.
A week or so ago we saw this stunning clip from the energy secretary basically begging for more supply, while in the same sentence saying we’re committed to shutting down your industry over the next 5-10 years. You really could not make this up. Take a listen below.
This is the same energy secretary that basically made light of the situation a month earlier highlighting that if everyone just purchased new electric vehicles the rising prices wouldn’t be an issue.
It’s painfully obvious these people are completely incompetent and have absolutely no place having any control over, frankly anything really, and certainly not something as vital to sustaining life, as energy, The recent dialogue from the president directed at the oil and gas industry got the attention of Chevron CEO Mike Worth. He wrote an open letter addressed to Sleepy Joe highlighting the need to depoliticise the problem, and seek thoughtful discussion.
“As industry leaders, academic experts and numerous policy makers have pointed out, there are no easy fixes nor any short-term answers to the global supply and demand imbalances aggravated by Russia’s invasion of Ukraine. Addressing this situation requires thoughtful action and a willingness to work together, not political rhetoric.”
“Chevron and its 37,000 employees work every day to help provide the world with the energy it demands and to lift up the lives of billions of people who rely on these supplies. Notwithstanding these efforts, your Administration has largely sought to criticize, and at times vilify, our industry. These actions are not beneficial to meeting the challenges we face and are not what the American people deserve.”
In response to this catastrophe sleepy gnome has decided to reduce their tax on fuel for 90 days. Which is odd given that Obama called this out as being nothing more than a gimmick back in 2008.
While there is no question reducing the level of theft by government via taxation is a good thing in essence, responding to this issue by focussing on the demand is completely misguided and fails to meaningfully address the problem. The problem is not demand. The problem is supply as Dan Pickering aptly points out:
Reducing the level of tax on gas will increase demand, and an increase of demand without meeting that with a supply increase will equal - you guessed it - price increases. This action is purely a political stunt by an army of knuckle heads who are completely out of their depth.
To bring more supply online costs billions of dollars and takes years. No company will invest the resources needed when a government are directly and intentionally incentivising the opposite and essentially working as a competitor against them, while also being the referee.
The need to defund these idiots has never been more urgent, unless everyone is happy being cold and hungry. Transitioning away from broken political money and to a bitcoin standard has never been more mission critical. Vote with your time and energy. Bitcoin is that vote.
Hope you all have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
“Fiat money is a type of currency that is not backed by any commodity such as gold or silver, and typically declared by a decree from the government to be legal tender. Throughout history, fiat money was sometimes issued by local banks and other institutions. In modern times, fiat money is generally established by government regulation.”
- Wikipedia
The majority of people still do not understand why bitcoin is so important. Most people do not realise what is actually happening at the hand of central banks, and how fundamentally broken the monetary system really is. Most are unaware of how much power has been concentrated amongst a very tiny number of people, and at the expense of everyone else, as a result of the predatory fiat system.
Preston Pysh provided the best analogy i’ve heard to explain the nature of central banking in a conversation with Peter McCormack - which you can listen to here from the timestamped position. I highly recommend you take a listen. It’s explanations like these that should be explained to every child or teen.
He explains it through the lens of monopoly.
Imagine you have 2 monopoly game boards with 4 players at each and while one player is typically the banker, imagine there is a fifth person as the central bank adjusting the money supply as needed. So each time someone passes go and collects $200, the banker tops up the supply to maintain balance, as is the typical rules of the game.
In this scenario imagine that the players from either board can go and buy properties from the other board if they wish. So they could own the same property on each board if they wanted to.
Now imagine the following scenario where one of the central bankers whispers to the players on that board that instead of collecting $200 when they pass go, they will increase it say $700, and not to tell the players on the other board, thus increasing the money supply on that board significantly in comparison to the other.
Lets say that money supply increase is happening on board one. The players on board one begin to accumulate a lot more capital compared to those on board two. After a little while those from board one begin buying properties on board two. The players on board two begin to wonder what is going on. How is there so much currency flowing into our board from the players on board one? They begin to jerry that the players on board one must be cheating. This incentivises them to collude with their central bank as they realise it’s the only way they can compete. So the central banker on board two increases their amount to $1000 when they pass go.
Now imagine each board is a country. This very aptly frames where we’re at.
This is the dynamic we have with fiat money. This creates the situation where each central bank is essentially in a race against the others to increase the supply of their currency. It’s a race to debase. This is only possible in a fiat world, where there is nothing anchoring the supply to physical reality.
When you look at the insane balance sheet expansion of central banks, you can see this clearly playing out.
The following charts show the expansions of major central banks from 2003 to today. They’re displayed in their own respective currencies and then compared vs USD below.
US CENTRAL BANK BALANCE SHEET
$720B - $8.95T (8x increase)
EUROPEAN CENTRAL BANK BALANCE SHEET
$800B - $8.82T (9x increase)
CHINA CENTRAL BANK BALANCE SHEET
$5.16T - $38.55T (13x increase)
JAPAN CENTRAL BANK BALANCE SHEET
$1T - $5.62T. Peaked at $6.85T (5.5x increase)
COMBINED & ALL MEASURED IN USD
Fed: Blue / ECB: Yellow / BOJ: Orange / PBOC: Cyan
The last chart helps to provide a more apples to apples comparison by measuring the balance sheet expansions using USD and as you can see while in the short term most look to be attempting to normalise, the trend is very very clear.
This system is broken, and it is incentivising the parasitic class to do whatever it takes to maintain control, and to do so at the expense of the many.
Thankfully, bitcoin fixes this.
Reject the frame of central banks. The system does not exist to benefit you. Adopting a bitcoin standard is our way out of this mess, and while there will be volatility in the short term, in the long term bitcoin is the most sound and secure monetary network we’ve ever had.
Central banks have no chance competing against an open source, decentralized monetary network for the world. It’s just a matter of time.
Hope you all have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The macro environment has clearly changed over the last 8 months. We’re in the middle of a global energy crisis. The trend of globalisation appears to have come to an end, and de-globalisation looks to be underway. Inflation is at 40 year highs in the US, and there are many indicators suggesting things within the TradFi system are breaking. The fed is posturing like they are going to raise rates until they win the battle against inflation. The costs of living have skyrocketed and consumer confidence is at all-time lows. The bitcoin bears are celebrating the crashing of the price relative to melting US ice cubes, and everywhere you look the sentiment is bearish af.
Well, we had a good run. Bitcoin seemed like a good idea at the time. The possibility that we could have a global monetary substrate for humanity that is tethered to the fundamental fabric of life, being energy, that is completely free of human intervention, and entirely driven by market forces as opposed to the artificially engineered system we currently have; where the most important number which effects every economy in the world - the fed funds rate - is decided by 10 people alone in a room - has clearly proven to be inferior.
I guess it’s time to hang up the boots. Bitcoin is dead.
Excuse the sarcasm on this fine Monday morning, but the emotionality of markets makes me laugh harder than Ricky Gervais or Dave Chapelle. While no doubt everyone would prefer to see higher prices, obviously. The reality is, this is a marathon - not a sprint.
People looking at bitcoin as a risk-on tech stock or a get-rich-quick scheme will likely continue to be disappointed. Consider what bitcoin is actually solving for.. Anyone that thinks the separation of money from the state is going to happen overnight, clearly is not grasping the enormity of what is at stake here.
The truth of the matter is bitcoin is definitely being traded like a high-beta risk-on asset. Meaning, that it’s like a more the emotional little brother of the broader market. While in the short term this is certainly the case, over the long term it’s the best performing asset of the last decade and over the last two years has outperformed gold, the Nasdaq, and the S&P index by orders of magnitude.
Jan 2020 - today
Gold +24%
S&P +14%
NAS +31%
Oil +115%
Bitcoin +200%
The reality is, not only is bitcoin alive and well, bitcoin is operating exactly as designed, and that includes having no intervention from a single human to pull the strings - regardless of the situation. When you consider the chaos going on in the TradFi world with the ECB convening an emergency meeting with concerns around Italy, Japan struggling to maintain their peg, the fed in full on firefighting mode and layer on top of that the Terra blow up, which lead to the Celsuis blow up, which looks to have impacted major crypto lending platforms; the bitcoin network looks phenomenally orderly.
Given there is no buyer of last resort as there is in TradFi with the fed, this means the market is much more honest in it’s movements which also means volatile, but all things considered the fact it continues to just chug along highlights bitcoins stability in amongst a world of chaos.
This clip below from CNBC captures the state of play beautifully, and provides a glimpse of where we’re really at.
In talking about the price drop the interviewer comments:
“it’s still a lot though for something that we don’t really know what the heck it is”
To which Jim Cramer responds:
“Well it really isn’t anything”
I couldn’t agree more with Odell here. There is no clearer demonstration for how most in normie land are viewing the beast, that is bitcoin. Most are just puppets to the whims of the market. Price goes up, and bitcoin is going to change the world. Price goes down, and it’s a ponzi scam that’s going to zero.
Times like these demonstrate who as taken the time to do the work, and who has not. Who was simply part of the crowd following along with the hype of the market. Conviction is a bi-product of knowledge, and you have to have gone deep on bitcoin to have acquired this knowledge. Those that have done the work to understand bitcoin maintain a massive informational edge.
Many will buy the feds tough talk and think they are going to be able to continue to hike rates into a recession, however if you cast your mind back to the beginning of the pandemic when every TradFi economist and central banker said there would be no issue with inflation, and pretty much every bitcoiner called this out as absolute nonsense - who actually told the truth?
Bitcoin is the truth in a world of political noise, and for the bitcoiners who have taken the time to develop deep conviction, it’s in moments like these where their edge is most apparent.
Long live the king.
Hope you all have a great start to your week. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
While in the US the fed has hiked rates by a further 75bps, in Australia the beginning of the energy crisis seems to have begun with the government regulator suspending the energy market nationally. Channel 9, one of the major legacy propaganda outlets in Australia issued a warning urging NSW residents to reduce their electricity consumption immediately to avoid a blackout last night.
Only a few days prior this same regulator enforced pricing controls in the state of Queensland.
Wholesale prices in Queensland were controlled at $300 a megawatt-hour at 6.55pm after the cumulative total of seven days of prices topped the set limit of $1.3591 million, the Australian Energy Market Operator said.
The cap was only for the trading day initially, however was said to be extended if cumulative price threshold was exceeded.
This madness is as a direct result of central planning and classic naive interventionism. Pricing controls literally never work. Like clockwork as soon as governments introduce pricing controls, what follows shortly thereafter are shortages. Literally every time, without fail.
We are living the effects of this right now, and this energy crisis is not unique to Australia. Energy markets are global.
In a free and open market it’s not that we would never have problems, but the problems would get addressed and solved in a more robust way that would sustain more effectively over time. Because the problem presents an opportunity for someone able to solve it, and the incentive is not to create a bandaid solution, the incentive is to create long term solutions as it is necessary to solve long term to recoup the capital allocated to the problem in the first place.
Central planners are reactive to isolated events, and completely miss the interwoven complexity that exists. They are at the mercy of political opinion, and are incentivised to create short term solutions to diffuse any political opposition before people move on to the next current thing. This is what free markets do best, they solve this problem, and they do it at no cost to consumers unlike government bodies.
As we descend further into this mess, the need to remove money from the hands of central planners has never been more important. Bitcoin remains the most powerful solution to many of our current problems. Hopefully more and more people continue to understand why and how it does so, so we can course correct before we drive ourselves off a metaphorical cliff.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Feelings and emotions are fascinating phenomena, but how we interpret them is perhaps even more so. What is a feeling? Where do they come from? Where do you experience them from? Some would consider these extremely esoteric and “woo-woo” type enquiries but i would postulate that a focussed attention toward these appearances in consciousness are of critical importance in cultivating our ability to maintain a more sophisticated mode of operation as humans, and to prevent us from being puppets to these patterns of energy we call emotions.
I don’t wanna get too far out on the risk curve here, but I would postulate that fundamentally emotions are information and how we interpret this information is primarily based off of previous experience. Essentially comparative analysis in real time via the memory bank of your experience up until the present moment.
This is called unconscious pattern recognition, and it is a process our unconscious is constantly performing whether you are aware of it or not. It is this pattern recognition that will trigger an autonomous response to move your arm or your body if i threw a ball at your head (if in front of you or within your periphery) or if you are driving and have to quickly avoid something on the road. This system is always running.
So when we talk about confidence - what actually is it?
Britannica dictionary defines confidence as follows:
a feeling or belief that you can do something well or succeed at something.
a feeling or belief that someone or something is good or has the ability to succeed at something
the feeling of being certain that something will happen or that something is true
Typically humans do not like uncertainty. People often associate the feeling of uncertainty with bad, and certainty with good, although in many ways these perspectives are not truly representative of the reality outside of the individuals experience. Hence why nation states have been able to prey so effectively on large populations - they provide people with the illusion of certainty (safety and stability).
OK. That all sounds well and good, right? What does this have to do with bitcoin or financial markets?
Well we’re currently in the throws of extremely volatile market conditions. Even more broadly in respect to the various factions or tribes of humans on the planet. The geo-political landscape appears to be the most unstable it has been in decades, and many countries are experiencing significant levels of polarisation and division amongst local populations. Central banks are devaluing currencies at record rates. Energy markets are in disarray as a result of ESG zealots and downstream of that is food and agriculture. Which is fundamental to sustaining life and is having dramatic impacts on the costs of living all over the world.
All these things are having major impacts on how people are “feeling” about their current circumstance and the level of certainty, or uncertainty they have about the future (the unknown).
We currently are in the midst of a major breakdown in confidence.
Whatever this feeling is, and however reliable it is as as a source of information, there seems to be a record number of humans in developed countries experiencing it at present.
There are multiple data points showing confidence is near record lows.
-
Australian consumer confidence back to levels seen at the beginning of the pandemic, but otherwise not for 30 years.
-
Michigan consumer sentiment came out in the US and the last time it was this low, was 85 years ago.
-
The bank of Japan seem to have a major problem on their hands, with their currency peg looking on the verge of breaking, despite yield curve control policy which includes unlimited buying of government bonds at 0.25%. This means in an effort to maintain the peg they are devaluing their currency (read: siphoning the wealth of their population) at an incredible rate, with the Yen now reaching back to levels last seen in 2002.
-
According to Reuters there was a major protest in China over frozen bank funds totalling $178m. Apparently they cleared the protesters by authorities activating a code red on their health app, which forced them to disperse. Unbelievable
-
Despite all of this central banks continue to posture for further rate hikes, while most currencies are getting killed relative to the USD. Inversely the US Dollar looks like an absolute rocket ship which puts further pressure on the US and likely continues to fuel high inflation.
-
Not to mention the slew of crypto scams blowing up. Be it Luna/UST, Celsuis, 3 Arrows Capital sound like they may also be in trouble, binance halting bitcoin transactions and also Coinbase limiting transactions and operating in a generally suspect manner.
Buried deep amongst this crumbling of confidence is a somewhat comical irony. What does everyone think the money is backed by? That is, that the only thing backing the US dollar, and really any of these political shitcoins is an ephemeral sensation or pattern of energy inside of us, we call confidence, and a belief (or delusion) that my political paper will continue to be able to be exchanged for goods and services in the future.
As Paul Volcker explained in the documentary “In Money We Trust” when asked what backs the US dollar:
“What backs the dollar today is confidence that we will maintain reasonable stability in its purchasing power over a period of time. Nothing more than that. It's confidence in not just the Federal Reserve and government, in society; and we better maintain that confidence - A lot of things are going on that raise too many doubts.”
So while the US and political monies are backed by nothing more than an ephemeral internal experiential state, and becoming increasingly worthless, amongst all this chaos bitcoiners continue to stack sats. Are they just over confident? Perhaps. Obviously a strong bias exists whereby we believe bitcoin is the most superior monetary network and monetary good in human history, and that over time others will come to realise it too.
The difference is, it’s not based simply off a blind belief, or some unexplainable ephemeral pattern of energy occurring within consciousness - it is because bitcoin has a predetermined issuance schedule that is known into the future. It is because bitcoin is controlled by no single entity and requires no human intervention to continue to operate into the future. It is because it is backed by energy. By the fundamental laws of physics. These FACTS are what provide bitcoiners with confidence.
This confidence is because bitcoin doesn’t tell stories to us to try and provide us with certainty; bitcoin provides certainty because the rules are baked into the code and cannot change. They are set in digital stone. Protected by the scarcity of energy via proof-of-work.
There is no question there is a ton going on in financial land right now, and there is a ton going on more broadly. I have no answers for how any of this ends. What i do know however, is that the legacy system has uncertainty baked into it at the protocol layer - and humans tend not to like uncertainty.
As the financial infrastructure continues to be tested, bitcoin is a beacon of hope and can provide certainty like no other monetary network humans have ever known. It’s only when you measure it in melting political shitcoins that the water becomes muddied. Sats are the standard. When measured in sats, nothing has changed.
Continue to stay humble, and stack ‘em. The long term hodlers set the floor.
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I hope those in Australia enjoyed a long weekend despite some wild market price action and volatility. Another “crypto” scam called Celsius blew up in recent days limiting all trading, withdrawals and transactions.
Binance also had a 3h block on bitcoin withdrawals! Binance CEO CZ came out and responded with the following tweet:
I would be very wary if you use Binance’s shitcoin carousel. Bitcoin has been working flawlessly this entire time. It could be an internal issue at Binance, but it’s also very possible (even likely) that it was an attempt to limit a flight of capital during a period of major market volatility as a result of issuing too many IOUs and Binance operating fractional reserves. Very very shady!
In times like these, i keep things very simply. Is bitcoin still producing blocks? Yes. Am I able to send and receive as normal? Yes. Has anything with the underlying network changed? No. Bitcoin remains the most secure and resilient computing system, and continues to maintain a ledger of pristine informational clarity. As long as your are using the network as intended, your sats are safe. Keep it simple. Bitcoin only. Custody your keys. Stay safe out there team.
With that said, lets take a breath, center ourselves and discuss some more low time-preference happenings, mainly, how the internet is changing with the introduction of Web5.
Over the weekend Jack Dorsey’s TBD came out with a big announcement at the Consensus conference, announcing their intention to build out what they’ve called web5 - a decentralized web platform.
Jack said in a tweet:
TBD has added web5 alongside their already existing plan to build out a decentralized exchange - tbDEX. The decision to call the project web5 is genius in my opinion. My initial reaction was that it was a little cringey given what a scam so-called web3 is; but after giving it a little thought it occurred to me that as a meme it’s actually insanely powerful. Before i get into that, lets quickly cover off what the plan is for Web5.
First off they have outlined the primary issue being that of centralization. Specifically centralization over user identity and the individuals data.
The image above is taken from the outline TBD released as part of the announcement. You can view the full web5 outline here. It explains the problem as follows:
“In the current Web model, people are users who do not own their data or identity. They are given accounts by companies and their data is held captive in app silos. To create a new class of decentralized apps and protocols (eg: tbDEX) that put individuals at the center, we must empower them with self-owned identity and restore control over their data.”
The document goes onto explain:
“The Decentralized Web Platform (DWP) enables developers to write Decentralized Web Apps (DWAs) using Decentralized Identifiers (DIDs) and Decentralized Web Nodes (DWNs), returning ownership and control over identity and data to individuals <-- We are calling this Web5”
2 + 3 = 5.. and we all know the highest number wins, right. 🤣
The document goes into much more detail, and as always i encourage you to have a read for yourself. The meme in the final slide cuts to the chase.
Q: “We’re building an app platform?”
A: “Always have been"
An internet where everyone runs their own node, storing their own data and protecting their identity in a self sovereign way. A vision for the internet to fundamentally disrupt the current power structures, and reinstall the power of the individual. All built on top of the most secure, decentralized computing network on the planet - and one that no single entity owns or controls: Bitcoin.
As for the decision to call it web5 - I think it’s honestly a stroke of absolute genius, and an absolutely classic troll on all the web3 shitcoin scams. My initial reaction was that it was a little cringey and perhaps even giving legitimacy to the whole “web3” nonsense. After giving it a little more thought, the genius of it became more apparent.
It can act as a mechanism to release the grip of the web3 meme, and offer an opportunity to refocus the attention of many that have been overcome by greed and short term gains. This is extremely positive. The web3 scam has hurt many more people than it will ever help. Web3 doesn’t even really exist. It’s nothing more than a clever marketing meme someone came up with to entice people into VC funded, centralized scam tokens, run by centralized teams in centralized companies, with centralized points of failure who tell any number of stories to the contrary.
So the use of web5 really is the ultimate troll on that entire cohort of grifters. But that’s not even the most important part. As a result of the web3 meme confusing so many people, many discounted bitcoin and failed to do the work to actually understand it. It created a sense of bitcoin being “old” technology that doesn’t compare to that of the new shiny web3 apps.
The real genius of web5, is that it can provide a new opportunity to reintroduce people to bitcoin. To regain and refocus their attention on the signal instead of the noise. To go a little deeper in gasping the core properties of bitcoin that make it so special and unique and to actually dig into the truth instead of simply believing the stories that are designed to separate them from their money, as opposed to the mission of bitcoin which is to separate money from the state. Powerful.
While markets experience chaos, bitcoin is predictably facilitating transactions. It is the point of stability in an unstable world. Over time, it will seem obvious.
Hope you all have a great start to your week. I’ll talk everyone tomorrow.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
It’s incredible to see how the tables have turned in relation to the clown-world narrative about inflation. A couple of short years ago i recall Jerome Powell come out saying we need to generate higher than normal inflation. That they planned to generate significantly above the 2% norm, and would let it run hot for longer than normal. A string of articles followed making this point, and the incredible claim that persistent low inflation was the real danger.
Fast forward to the present, and add in a 40%+ expansion of the monetary supply we see official inflation numbers in the US have been in the high single digits. No one actually buys the cooked up official numbers however, as they have continued to move the goal posts in what they include in their calculations. Even the New York post has caught on - publishing an article a couple of days ago discussing the changes to how inflation is calculated. This topic has been completely taboo for years, but it’s now becoming understood by the mainstream.
Former RBA big swinger, Ian Macfarlane has now come out of the inflation closet and said that inflation is unlikely to get back to the long-standing target of 2-3% in Australia or the US, and is likely to be much higher.
“I find it hard to think that it will just come back to 2 per cent. I think there’s enough scarcity out there, particularly with such a tight labour market both in the US and here, and with the feeding through of all the supply shocks... I think 3-4-5 per cent is more likely. It could go up to 7 or 8 per cent,”
The latest clown world numbers in Australia were 5.1% with the US hitting 8.3%. I’ve included a list of inflation data shared by Charlie Bilello below that shows the current state of play in many major nations. More than half of these are above 6%. Countries like the UK, Spain and the Netherlands are between 8 and 10% and 6 countries well into double digits. Remember, these are official numbers, the reality is much much worse.
Something that is completely missed when discussing inflation, is the fact that inflation never reverses - It compounds. At a 5% rate of inflation your money loses over 40% of its value in 10 years. It is essentially outlawing the ability for people to save. It’s an unofficial ban on saving. With the unit of account eroding at 40% every 10 years the level of misinformation in our monetary system becomes extreme. It increases our time preference and we will continue to devalue the future at an ever increasing rate.
This is a recipe for disaster, and it’s why we bitcoin. If you’re still storing your wealth in political shitcoins, it may be time to reconsider.. If you leverage bitcoin as a savings device, you get the opposite effect. Everything is going down in price over time. Everything is getting cheaper vs sats. Or said differently, any [fill in the blank] political money is buying less and less sats.
3 years ago you could buy 13,000 sats per USD. 2yrs ago just over 10,000 and currently around 3,300.
The simple truth here is that the system of money has no place being controlled by any single entity. It’s simply too powerful. As Spiderman’s uncle said “with great power comes great responsibility” and as the separation of the monetary system from the state continues, it requires you to take back your power. As you can see from the above, the sooner you do so, the better.
Hope you all have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The technology we call money is fundamentally a system of information. It is a ledger, that assigns who has what. Bitcoin does not send “money” from one side of the planet to another to enable the transfer of value - it is simply updating information. Modifying numbers between one pigeon hole and another on an open, public, immutable ledger. It does so in a way that ensures no errors can exist in this system of information. A system of pure signal - completely free of noise. A system of pristine informational clarity; of truth. Some would say, the ultimate record of truth.
When we compare this to that of the fiat monetary system, considering it as a system of information, the transformational nature of bitcoin becomes more pronounced. The fiat system is almost by definition the opposite. Where bitcoin is a system of truth - fiat is a system of lies. A system of noise. The poor informational quality is baked into the fiat system at the protocol layer as a result of a small number of humans having admin privileges over the network, and being able to inflate the supply with no limit, at the expense of every other node.
This inflation of the supply at the hands of a few fundamentally and irreparably corrupts the information in the system. It makes it very difficult to verify the truth, and increases the friction between nodes as they try to interact via the network. The societal impacts of this are all around us right now. No one knows the true price of anything, with risk tolerance being completely perveted across all asset classes [insert ape/rock jpeg]. Due to the design of the system allowing for admins, and the ability of those admins to elect future admins, the system mutates into more of a political system and less of a reliable monetary one. This has never been more obvious than it is today.
A year ago Janet Yellen and the rest of the mob lied to the public labelling inflation as transitory after they’d increased the monetary supply by 40%. Last week she said she may have been wrong about inflation.
Now in the face of a major energy crisis she has become an expert on energy markets, and said when testifying before the Senate Finance Committee yesterday that “the critical thing is we become more dependent on the wind and the sun”.
These people and the system they represent are morally and ethically bankrupt. The US is the largest oil producer on the planet and has every capability to solve the energy crisis if they wanted to. It is entirely self inflicted as a result of incompetent policies and naive interventionism. They are a corrupted file system trying to execute a corrupted program called fiat. Ultimately however, they are just operating in alignment with the incentives of a broken system.
Prior to bitcoin we had little option than to rely on closed, private systems, and had to trust the entities that control these systems to operate in good faith. To trust the validity of the information. Thanks to Satoshi, we no longer need to rely on faith - now anyone on the planet has the power to verify the rules of the network, and can verify the information for themselves; and for the information to be clean and pure. Fiat has created monetary misinformation that is deranging our societies and short circuiting our nature to self organise. Bitcoin is the anti virus software that will remove the corrupted information and reinstall the truth.
Don’t get lost amongst the fiat noise. Bitcoin is the signal.
Hope you all have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The lightning network continues to experience incredible growth. In my opinion most people are completely unaware of the significance of what is happening on top of bitcoin on the second layer. At the protocol layer transaction volume and speed is limited by block space (the number of transactions that can fit in a block), and the speed at which blocks are mined, and thus transactions added to the blockchain - which is on average every 10minutes.
The lightning network is how bitcoin scales. It enables near free and instant transactions. It enables anyone on the planet to send a bearer asset with absolute finality to anyone else, anywhere in the world and with the security of bitcoin. Transactions at the speed of light. Peer to peer, that do not rely on any single entity in the middle to process your transaction, or that can censor your transaction.
If you compare this to the legacy banking and financial system, this is such an incredible phase shift, few seem to be grasping the enormity of it. Lightning essentially brings bitcoin to life as a medium-of-exchange, full-filling one of the three primary properties of a monetary good.
With lightning you can now stream value peer-to-peer in the same way you can send other forms of information like messages, audio or video over the internet - and most importantly it requires no assistance from a single other entity. 24/7x365. Doesn’t matter if it’s a weekend. Doesn’t matter if it’s a public holiday. Doesn’t matter about your geographical location, your race, your political beliefs, whether you can provide 100 points of ID. None of that matters. A fully open and public payment rail for humanity.
Given how little attention lightning is getting, it’s incredible to see the growth of the network. Below are a few charts that illustrate this growth including Network capacity, the number of active nodes, the number of lightning channels as well as the mean or average channel size.
Every metric is moving strongly up and to the right, demonstrating that the fundamentals of the network are stronger than ever, despite bitcoins short term price-action volatility.
NETORK CAPACITY
The current network capacity continues to create all-time highs - currently reaching 3970.7 bitcoin total. This is up from approximately 1200 a year ago - a 330% increase in capacity in 12 months!
NUMBER OF LN NODES
The number of nodes in January 2020 was hovering just below 5000. At the time bitcoin price was around $8000USD. In March ‘22 it peaked just above 20,000. That’s a 4x increase in that time. In the last year the number has approximately doubled. This is consistent with overall node growth since 2018.
NUMBER OF CHANNELS
The number of channels open at the beginning of 2020 was 31,000. This number is now around 85,000. In 2021 this number grew at 238% and is currently just shy of it’s highs having peaked at 86,000 - and now around 84k.
AVERAGE CHANNEL SIZE
The average channel size is currently creating all-time highs. Which stands to reason that this would need to increase to facilitate the same amount of value transfer capability while we’re still utilising the USD as a unit of account. On a bitcoin standard however, this would be less important, and if anything would very likely be the opposite. As the price of bitcoin has dropped, the channel size in sats needs to increase otherwise the overall capacity of the network would drop from a dollar value perspective. A year ago the average channel size was 0.0284 (2.8m sats). The current average is 0.0467 or 4.7m sats - a trailing 12 month increase of 167%
When you ignore the noise and look at the actual fundamentals of lightning - the growth is simply incredible. Even more so when you use the network - it’s truly an incredible experience that continues to get better and better from a UI and UX perspective. Near free and instant settlement of a bearer asset with cash finality that requires no intermediary, and is available to anyone, anywhere.
The future of money is being built out right in front of us. Closed, centralized legacy networks simply have no chance against the open, global monetary standard that is bitcoin and the lightning network.
Hope you all have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
It feels like the US Political apparatus could be about to go full-blown hysteric-mode toward bitcoin mining, in the face of the energy crisis which for the most part is self-inflicted. In an effort to save face in the minds of those still trapped in normie land, i get the sense they are seeking to provide a political sacrifice to the gods, and bitcoin is on their radar.
The state of New York has passed a bill to ban bitcoin mining, specifically proof-of-work mining. The bill had been in the throws of the political process over a year ago, and initially failed to pass the state assembly last year; however following continued attempts the bill has now passed, and following being signed into law by the governor will see New York, follow China’s lead and become the first US state to ban bitcoin mining.
The purpose of the bill is as follows:
“Establishes a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.”
Whether these actions are genuinely in good faith and with good intentions, and aim to have a positive and meaningful impact on limiting any negative effect on the so-called “climate” boogeyman, or not, is unclear to me at this point, however i’m leaning to it being very unlikely by default based on the historical track record of politicians and central planning generally. What is clear is that regardless of their intentions, the actions taken are phenomenally idiotic, but also deeply concerning; for a host of reasons.
“Miners” are just specialised computers, basically guessing numbers at random. This law is attempting to dictate what you can use a computer for, and is specifically targeting the banning of guessing random numbers.
Anyone running a mining rig, whether it be at home or a larger scale commercial operation is simply running a computer, or a data center, no different to that of Amazon or Microsoft, and are paying for their electricity the same as everyone else. Are we really going to discriminate what an individual or business can use their electricity for? Will the state of New York implement a ban on AWS servers? The hypocrisy is incredible.
Proof-of-work mining is one of the core innovations that underpins bitcoin, and that enables for the first time EVER the property of digital scarcity. Up until bitcoin, everything in the digital realm has by definition been able to be copied in an unlimited way. Until now. Banning one of the most profound innovations of our time seems like a strange action to take, however it is somewhat typical of humans to resist out of fear of the unknown, when they encounter something new.
The reality is, that this is impossible to police, and enforce. It seems much more likely this is political virtue signalling more than anything.
This action incentivises large scale operations to simply move, and move their business revenue along with it to a jurisdiction that respects property rights. This directly harms the state far more than it helps as it removes jobs from the state, as well as revenue. It also likely deters any future operations from being established in the state. Given what a growing industry this is, this seems obviously counter productive.
There is a fundamental malware that exists in respect to this entire energy scam that bitcoin mining is contributing to carbon emissions. Bitcoin mining is simply utilising electricity that is being produced with or without bitcoin mining existing.
Bitcoin mining’s global energy usage is a rounding error. Not literally, but technically; as Lyn Alden explained:
“Bitcoin’s energy usage is a rounding error as far as global energy usage is concerned. And I mean that literally; when scientists estimate that the world uses a certain amount of energy in a given year, they can easily be off by a couple percentage points in either direction, let alone a couple tenths of a percent. Bitcoin is estimated to use less than one tenth of one percent.”
If the climate hysterics are genuinely wanting to solve something they perceive as a problem, it seems fairly obvious this will not do it. Going after something that is a rounding error is going to have no meaningful impact on their announced goal. This point alone strongly brings into question the motive and validity of the states actions toward bitcoin mining.
Just over a year ago China banned bitcoin mining. At the time China accounted for the lions share of the hash rate, with approximately 65% within its borders. Following the ban, the hashrate saw a major crash from 177 Eh/s down to 89 Eh/s. However it has since recovered to significantly higher all-time highs exceeding 220 Eh/s at it’s peak. What is also of note is that while following the initial ban, the hash rate appeared to move from China, a significant share has since returned or simply been switched back on, now accounting for 21% of global hashrate despite whatever action the CCP took.
Most attacks that we have seen toward PoW mining, come interwoven with the line comparing bitcoins evil form of mining versus Ethereum’s righteous version call Proof-of-stake - which it doesn’t even use yet, and at present is simply a theoretical proposal. I even remember seeing an incredible piece of propaganda from the World Economic Forum, showing PoS as a nice “normal” human figure, and the PoW mining character as a criminal. I’ll find it and attach below incase you haven’t seen. It’s important to realise the extent of this attack, as i believe acts like these are designed predominantly to influence you to believe certain ideas, as opposed to actually fixing any real world problems.
As we’ve discussed multiple times, PoS is fiat, and it’s also important to remember Ethereum still does not even run on PoS - it’s a promise that has been incoming for a number of years and we’re yet to even see it in effect. PoS may use less energy, but that is because it is not solving the problem proof-of-work solves. The reason Proof-of-work is so essential, is that it is what anchors the digital system to that of the physical world. It does this by using energy. It is fundamental to the enabling of digital scarcity, because while governments may think they can solve their problems by simply printing more money - you cannot print more energy. Nor can you print more bitcoin.
While it’s a bad precedent for New York to be setting, and there is no doubt a risk of this malware spreading to other states, as we have seen from the China “ban” - bitcoin is an extremely resilient system. It will be interesting to see how the landscape continues to evolve in the US. My guess is that market forces bitcoin creates will win, and that any short term intervention will prove to be just that - short term.
If you live near New York, get your ASICs plugged in and resist the madness.
We are going to win.
Wishing you all well. Have a great start to your week. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Jurrien Timmer is the Director of Global Macro at Fidelity, which is one of the largest Asset Managers on the planet with an estimated $4.5T assets under management (AUM). He shared a fascinating thread this morning where he revisits the supply/demand dynamics of bitcoin, following the deviation of bitcoins price from Plan B’s stock-to-flow model; and compares network growth to that of mobile phones as well as the internet as a useful analog to help model the exponential growth of the bitcoin network.
We previously discussed the growth of bitcoin compared with that of the internet, and believe it’s a valuable analog, but the comparison of mobile devices is a good one I had not looked at previously. The thread begins as follows:
The chart shows the stock-to-flow in yellow, mobile phone S-curve model developed by Timmer in blue, the internet adoption S-curve in grey as well as bitcoins price in black. Visually it appears that the price is tracking more in line with that of the internet and mobile phones than the stock-to-flow model. Timmer explained:
Given bitcoins issuance schedule is fixed, and known into the future you would think there is little to model on that side but Jurrien makes an interesting point on the potential diminishing returns as a result of the reduced (deflationary) issuance over time.
He compares a modified S2F model, a multi-variate modified supply model which tracks more tightly with that of mobile phones and finds when comparing it in hindsight that it tracks more accurately on the whole than the original S2F.
Something he notes with both that of mobile phones and the internet is that the growth slows over time, and becomes asymptotic, meaning it begins to hit its limit. With the mobile phone analog it tracks tightly with his modified S2F for the next 10 years before really starting to flatten out. The internet curve began flattening out much more already. Jurrien explains as follows:
At the end of the day models are not comparable to reality. A model is by definition a simplification. It’s one of the ways we humans try to understand the complex world. It is impossible to model the complexity of reality which is important to realise when working with models. They can be a guide at best. At worst they’re like having Stevie Wonder as your guide.
Is bitcoin’s adoption mature? In my opinion, far from it. Most people that own bitcoin still do not even realise what it is, and the implications of it existing in the world. It’s impossible to truly know what a global sound monetary standard can do for humanity in entirety over time. The gravity of this innovation is way beyond what most people are appreciating i believe.
I don’t know which one we have here, whether we have a guide that knows where they’re going or if we’re walking blind but no doubt some fascinating data to look through regardless. It’s particularly interesting to me looking at the adoption curves of various innovations like cars, TVs, radio’s and even VCRs. The thing is to acquire all of those you need money. I believe what we’re looking at will far eclipse all those things combined, and the true power of this technology is not something that can be captured in a model.
Alex Gladstein has highlighted that something in the vicinity of 40% of the worlds population lives under authoritarian rule. This technology has the potential to upend this by enabling people with a monetary standard that can not be inflated away, can not be seized and can not be censored. What happens when the global human society is enabled in a way that has never been possible? I can’t say for sure, but i’m willing to bet it will enable a renaissance on a scale that will eclipse anything that has come before it - and i’m here for it.
Hope you all have a great weekend. I’ll talk to everyone Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The act of intentionally persuading people, or influencing them has long been something i’ve been somewhat allergic to. It’s always felt somewhat disingenuous to me and i’ve opted to take a more neutral approach. One where I’m less inclined to convince others or feel compelled to change their mind on a given topic, while being willing to provide the information that has led me to arrive at a certain position if asked.
In thinking more deeply about the current situation we are facing, and how catastrophic the current actions being taken are i’m becoming more open to the idea that there may be a different lens to view persuasion from, and that it may actually be a very necessary strategy, given the fact we currently seem somewhat intent in running ourselves off a metaphorical cliff; where famine is likely to be re-normalised for many if we do not course correct. (No doubt being banished from society throughout the covid hysteria by a tyrannical government and supported by a society of cowards has had an impact as well)
This is another one of the ways were I haven’t changed bitcoin, but bitcoin is changing me. It’s become increasingly apparent that there is a war of ideas underway, and the vast majority of those in normie-land are getting led to slaughter. Even worse than this, what appears to be a large swath of the ignorant sleep walkers are cheering for it.
Fiat money has enabled the concentration of power amongst a small group of pseudo-elites. It has enabled and incentivised endless wars, and the exploitation of less sophisticated cultures around the world. This small group of pseudo-elites have an outsized level of influence on media, industry and government. Those that benefit from this dynamic naturally oppose anything that could destabilise their bounty of power, so naturally they oppose bitcoin - An alien technology that they cannot control, and that will not conform to their ideologies and beliefs. The harnessing of denser and denser energy sources, specifically hydrocarbons, has led to what is widely regarded as the most prosperous society to ever exist in history. It has been said many times, there has simply never been a better time to be alive. This is due to the ingenuity of humans and it should be celebrated - not condemned.
This very small group of ‘haves’ have hijacked the narrative and many unsuspecting minds along with it, and are actively trying to convince everyone that animals (meat) are destroying the earth’s atmosphere, boiling the oceans and are bad. The very thing that has enabled us to flourish is evil, and we need to transition to a far less dense and intermittent energy source in solar and wind, which has lead us to a major energy crisis.
The energy debate is a complex and nuanced one, and one that i cannot put to bed in a paragraph or two but in it’s simplest form, in order to be able to transition away from hydrocarbons (which is a truly insane idea) it would require us to be able to create everything from the alternative. Everything. The fact of the matter is that this is simply not possible at present, and seems unlikely to be in any near future.
Solar and wind specifically require the power that hydrocarbons afford to create the panels and turbines they require to access this energy in the first place, and the power those alternatives generate is insufficient to perform this. So until that were to change, any notion we should remove hydrocarbons is truly the most absurd malware that only someone that has done zero research into and posses an impressive general lack of critical thinking capability could possibly believe. Ie the normie. For which urban dictionary provides a fairly accurate description.
Normie
“A person gravitating to social standards, accepted practices, and fads of their own time & geographic grouping without broader cultural perspectives from which they draw.
Normies possess a lack of interest in ideas not easily accessible or being outside of their/society's current range of acceptance. A straight. A follower.
Most normies adopt a "popularity is the only measure of good or bad" mindset at an early age.
Normies typically have a sense of cultural superiority over "counter culture" movements & foreign cultures. They will often try to discredit out cultures or choices falling outside of their majority think claiming those of other dispositions are mentally ill or out of touch with reality.”
So what does this have to do with persuasion? In short, it is abundantly clear that the small group of haves, like those at the World Economic Forum appreciate the importance of persuasion and are actively persuading those in normie-land to career themselves off a cliff by de-industrialising and starving themselves of the necessary materials needed to flourish. This obviously includes us adopting some glorious web3-like CBDC slave coin that would render us hungry and malnourished, compliant serfs with the autonomy of a 16th century peasant.
Thankfully bitcoin fixes this. But i do believe it needs our help. While bitcoin will continue to produce block after block regardless, and will wait for as long as needed for us to shake our current psychosis and embrace it’s magic alien-like powers. To do so sooner, would be far better, and we do this, in part, through persuasion. We do it through education. We do it through building. We do it through communicating and providing clarifying information to counter that of the clown world; and we do it by meeting the normies where they are and helping guide them to water.
As Marty Bent said in one of his recent newsletters:
“Getting quality, digestible information about how bitcoin works and why it is important is the most high leverage thing bitcoiners can do to help spur more adoption.”
More adoption of this alien technology is ultimately how we disable the lunatics that wish to continue to accumulate power at our expense into infinity, and it is how we will achieve energy abundance.
In my opinion, there is not a single thing on earth that can be done that is more meaningful to support the continued development of society and to enables humans to flourish long into the future, and be equipped to combat our future challenges that lie ahead.
I hope you all have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The base layer of everything is energy. The universe and its contents are all made from energy. You are energy. Everything you acquire is energy, and made from energy. We consume it, and we generate it. Currently within clown world there is a malware installed which seems to imply using energy is bad, and we should try and use less of it. The counter to this would be that the effective harnessing of denser and denser energy sources (hydrocarbons) is what has enabled us to innovate to our current point, and it is unlikely that we will advance and survive over time by using less of it. We would certainly get pretty cold in the process if we try.
I’m of the opinion energy use is good; and that bitcoins energy use is good. I’m pro human. Furthermore, i look forward to seeing bitcoin use more energy over time, not less.
A primary driver to enable this energy use is going to be the merging of the energy sector with bitcoin mining. Bitcoin mining is the ultimate load balancing tool. It can be turned on and off in an instant. Due to the genius of proof-of-work, the work being done when mining, or hashing, is completely random. Meaning each hash is independent of the next - there is no progress. Due to this under-appreciated thing of beauty it means there is nothing lost by switching off from a progress point of view. You can simply restart and continue hashing again at random.
Bitcoin mining can also capture stranded energy like nothing else, and convert the energy from local megawatts to global megawatts - accessible from anywhere. Not necessarily just anywhere on earth either! It also requires very little infrastructure to do so. Obviously it doesn’t transform the energy literally - it uses it - and then by using it, and mining - you mine some percentage of bitcoin. The beauty of bitcoin is that it can be directly monetised, and a growing liquid market exists for it. This fact enables that which was previously uneconomical - thus not possible - and not only makes it possible, but directly incentives people to go and do it. This is an insanely big deal.
The reason the load balancing is so important, is for energy companies to be incentivised to generate power, say electricity, they need demand. If the demand is too high, prices go up, and they need to either reduce load or bring on ancillary power supply (backup), otherwise they will not meet the demand and people will experience blackouts. If demand is too low, and there is no one wanting to purchase it, then they are just wasting the resources to have generated it, and are at a deficit for doing so.
This incentivises them to reduce supply, but then if demand increases a new problem emerges. You can imagine what a balancing act this would be.
Bitcoin mining is the ultimate buyer of electricity in this scenario, and that can turn off in peaks or other scenarios as required. There is a previously unforeseen level of flexibility available. Because of this, i believe that energy markets all over the world will look to integrate bitcoin mining into their operations. How this all plays out is anyones guess. But I believe this leads to the eventual merging of energy markets and bitcoin mining. The incentives for this to happen are clear.
What is so incredible about this is the fact that for us to live, and for us to thrive, we must consume energy. It is fundamental.
Bitcoin is incentivising humans, broadly speaking, to harness more energy and to source it more efficiently, and to use it (bitcoin) to support this endeavour; and by doing so creating a positive flywheel-like effect, a feedback loop, where it also incentivises us to adopt and support and strengthen the bitcoin network at the same time. Incentivising, and enabling, the use of the most sophisticated monetary network in human history, and for the network to become increasingly secure, and for energy to become increasingly abundant.
OMFG.
The rabbit hole just went a layer deeper!
Some humans may not be ready for this, but this is the most incredible innovation of our time; and over time, this is going to enable the most sophisticated version of human society yet. If those humans want to complain about it, at least they’ll be able to do so from a warm and comfortable environment :P
Hope you all have a great day. I’ll speak to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The history of money is a deep and fascinating rabbit hole. In order to understand the primary dimension of bitcoin, this knowledge is fundamental and helps to provide much insight as to why many of us believe bitcoin is the most pristine iteration of money ever invented and why, when referring to money, bitcoin truly “fixes this”,
This morning I stumbled upon an incredible resource (shout out to Marty Bent!) that has been created by a guy named Matthew Mežinskis at Porkopolis.io which tracks the global monetary base. To quote from his website:
“The Monetary Base is a Basic money, High-powered money, Outside money, and Reserve money, among other names. The Monetary Base is the ultimate asset of settlement, the most irreducible form of ‘Money’ in the financial system.”
Matthew’s research is incredible. It compares the global base money on a quarterly basis which includes the top 50 fiat currencies (sourced directly from their central banks) as well as looking at historical money stocks like gold and silver. He also includes bitcoin in his analysis given it’s potential of being future base money and frames their intention as follows:
I highly recommend you take a look for yourself in detail at the thread, i’ve linked it below.
Here are some of the major takeaways from the data:
The USD, Yen, Euro and Yuan are the four dominant currencies.
Gold no longer acts as base money, with central bank holdings on the whole being reduced dramatically since the early 1980’s.
Central Bank gold reserves-to-issued base money today is less than 7%.
Bitcoin is ranked #7 for Global Base money. Ahead of the Hong Kong, Canada, Australia, India, and trailing Switzerland, UK, China, Japan, US and The Eurozone nations. (see chart below)
Inferred bitcoin prices needed to rival the dominant base monies is shown on the chart above, and is compelling! At just over $70k bitcoin would exceed the UK. At just over $360k it would exceed them all.
Bitcoin’s issuance currently comparable to that of gold. Following 2024 halving this will obviously be much lower.
Graph below shows current value of all basic monies. The block on the right includes gold, silver and bitcoin with the fiats. Bitcoin is in Orange @ $0.6T
Bitcoin’s predictable programatic issuance is unlike any base money in history. Of all the base monies it is the only one that is known into the future and can be counted on at a protocol level. (Yes, we know!)
The graph below also shows 80% of fiat currencies have been printed since 2008 !! That is a stunning number.
The inflation data included is absolutely fascinating and shows that basically all fiat currencies are growing at atleast 1% per month or MORE. They are very clear to distinguish inflation as inflation of money supply - not pricing inflation which follows the inflation of money supply. Given the growth rates of most fiat monies and given they are on average doubling at a rate of every 6 years - which is a mindblowing statistic - and considering bitcoin will continue to become more scarce, the current trend feels more like a steam-train and one that is highly unlikely to stop.
As i said the analysis is incredible. The fact that it is shared completely free and open sourced on twitter is incredible. There is so much data in there, i highly recommend you take a look for yourself.
While it’s still early days for bitcoin, to see that it has already surpassed the Aussie Dollar shitcoin as well as that of Canada, Hong Kong and India as a base money is pretty incredible, with the rest of the dominos in clear sight. It will be really interesting to continue to track this data over time, and see how things evolve.
No one can predict the future. But bitcoins issuance is the only base money we can know - no need for predictions. This lays the foundation for the most transformational base money and monetary substrate that will enable human flourishing into the future.
I’m here for this.
Hope you all have a great day. I’ll talk to everyone tomorrow.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Earlier this month saw a major milestone moment occur in the small country of El Salvador. According to a tweet from President Bukele:
The countries represented were all developing nations. I won’t read through the list, but you can take a look below.
While we do not know the specifics of their discussions or any outcomes from the meeting, it’s an incredible thing to witness as 44 nations are on the brink of unlocking financial sovereignty, perhaps the first time.
Some people will rush to point out that China aren’ there. Russia aren’t there. That is true. No doubt these are all less well-known and are less developed countries. But to think like this would be to miss the point. These countries currently have little power or influence in the world. However the potential that exists for this to change by plugging in to a decentralized, global sound monetary standard would be the most powerful aligning force imaginable, and while individually they may be less significant - make no mistake, collectively they are anything but.
I did some rough math to establish the total number of humans represented by these countries, and the number flawed me.
These countries represent in the ball park of 1.2 billion people! That’s 15% of the entire worlds population. Incredible.
It’s been said for along time that the people that need bitcoin the most will understand it the fastest. Those in the affluent developed nations are more likely to struggle to see the value as their systems appear to work reasonably well (at least on face value and if you are completely asleep at the wheel).
This is playing out in front of our eyes in real time. Major countries have no incentive to adopt bitcoin if they think short term - and they do. The game theoretic element to this is that those who adopt the technology earliest, benefit disproportionately compared to those who wait, and comparatively as a result, the wealth gap between the two shrinks. Meaning the poorer countries are likely to be enriched by their early adoption relative to the larger more powerful countries, that do not want to release their grip on control of the money.
While the normies are numbing their minds with whatever mind sludge they’re fed and and focussing on the current thing, El Salvador is presenting bitcoin to the world. And the world is paying attention.
Onward.
Hope you all have a great day. I’ll talk to everyone tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Back in 2019 there was a leadership change within the European Central Bank. The leadership role transitioned from Mario Draghi to Christine Lagarde. Wikipedia describes Mario Draghi as:
“an Italian economist, banker, academic and civil servant who has been Prime Minister of Italy since 13 February 2021. He previously served as President of the European Central Bank (ECB) from 2011 until 2019. Draghi was also Chair of the Financial Stability Board from 2009 to 2011 and Governor of the Bank of Italy from 2006 to 2011”
Before she assumed the big swingers position at the pointy end of the ECB pyramid scheme Lagarde acted primarily as a politician. Wikipedia describes her story as follows:
“a French politician, economist and lawyer who has been President of the European Central Bank (ECB) since 1 November 2019. She previously served as Chair and Managing Director of the International Monetary Fund (IMF) from 2011 until 2019. Lagarde also held various senior ministerial posts in the Government of France, most prominent as Minister of the Economy, Finance and Industry from 2007 to 2011.”
I remember the time of Lagarde’s appointment well, as it was a curious choice for the ECB to make; to go from having a seasoned banker in the top spot to a politician/lawyer - but it was a decision that was made with clear intention. It was clear in 2019 that the economic machine was, for use of a better word, in a bad spot, (read: in deep s**t). The ECB needed someone that is good at talking, persuading and essentially lying to the public and convincing them that “everything is fine”. Basically just treating the peasants like mushrooms.
Fast forward 3 short years, and you would probably agree they made a gReAt hiring decision, as they have needed to influence and persuade A LOT! Mario Draghi did not raise rates once in his entire tenure which lasted 8 years, with rates hitting 0% for the first time in 2016. They remain at zero.
The other thing i want to highlight before moving on is where Mario Draghi went after finishing his role at the ECB..? He became the prime minister of Italy. It’s important to highlight this to demonstrate the intertwined and incestuous nature of banking and government. The two go very much hand in hand. Because this system you think of as a monetary system is not only a pure monetary system. It is a political system. Fiat money is political money, or political energy, if you like. All these sharks swim in the same circles be it the IMF, the World Bank, some branch of Government or even the supreme leader of a country. It wouldn’t be a shock to see Lagarde become the French PM once she is done pretending at the ECB.
Building on this short, incomplete and likely somewhat flawed history lesson, take a listen to the following clip of big swinger Lagarde as she is asked about the state of the ECB balance sheet. I don’t want to ruin it for you; but suffice to say - you cannot make this s**t up.
She is asked about the ECB’s balance sheet and whether or not the ECB have a gigantic bubble being inflated in their balance sheet. First off she feels the need to clarify there are no crypto assets in their balance sheet - which is ironic because if they had bought bitcoin with their monopoly money, they would be profoundly better off. She then explains that you have to think in counter-factuals to understand it. Ie: something that is impossible to verify. Perfect.
She is basically saying, imagine if we didn’t do this, image what would have, or could have happened. OK. Let’s say you’re buying that one. The next part will squeeze some jam into your donut. She’s then asked how the balance sheet will be reduced. How it will come back down. I give her response a 10.
“It will come. It will come. In due course, yeah.
In due course, it will come.”
As she grin-f***s the interviewer indicating her desire to move on from this question which she doesn’t want to answer honestly, for whatever reason.
The truth is, that it will not come down. Not over time. Infact, it will continue to expand and we will continue to debase and devalue the currency, stripping wealth from anyone that saves in our political shitcoin, and continue to inflame the wealth inequality across the region in alignment with the need to expand our balance sheet further into infinity.
This is how the story goes with fiat currencies. The supply must expand forever, Laura.
The impact this is having on markets all over the world is so catastrophic as the unit of account is corrupted at the protocol layer. This is corrupting and distorting the insanely complex mechanism of price, across all assets. Which is distorting society more broadly.
It’s a sad and to be perfectly honest, pretty pathetic society when the so called “leaders” cannot operate in an open and honest way instead opting to lie directly to the face of the youth and the next generation of potential leaders and powerful individuals. Even some people that may look up to these mutants and actually believe their fairytales.
These are not the values that a powerful, virtuous and prosperous society are built on, and in my opinion, the sooner these sovereign debt defaults happen, the better.
Pre the internet it was easy to get away with the lies. There were less than a handful of broadcasting channels, and if you controlled them, you controlled the narrative. Anyone that opposed the narrative was refused entry and had no voice at scale. The internet is exposing these frauds for what they are, and while they continue to deploy the same strategy and lie, the channels of informational transmission are much too fast for this strategy to be sustained for long without the use of force. Violence will be the tool they lean on to maintain control, as the system continues to fall apart and their influence and control with it.
Opting out with bitcoin truly is the best way to cast your vote for the future. Do you want a future where we continue to operate in this disingenuous manner, this constant pretending, as if it’s some kind of social game of theatre. Where lying and dishonesty is our default mode of operation, or do you value truth and honesty; and trust that we, as a global human community, are strong enough to handle it.
Bitcoin provides no guarantees. The transition into the unknown may seem scary and uncertain, but I believe the certainty the fiat system provides is far scarier.
The choice is yours. At least it is for now…
Hope you have a great day. I’ll talk to you all tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Stories of good and evil have been told all throughout time by humans. This dichotomy is baked in deeply to us all and thus is reflected in most religions and cultures throughout history. From psychology to the arts - the story of diametrically opposed forces continues to be reverberate through time, evident by the endless list of books and movies based around it; be it The Lion King with Scar and Simba, Gladiator with Maximus and Commodus, Superman with Clark Kent and Lex Luther or StarWars with the force and the darkside.
This archetype of two directly opposing forces is deep within us all individually, and thus in our societies.
It’s difficult to imagine a more poignant manifestation of this deep and complex dimension of the human condition than what is currently taking place in Oslo, Norway and in Davos, Switzerland.
The gathering of the worlds pseudo-elite is currently underway in Davos, as the World Economic Forum convenes. While at the very same time in Norway, The Human Rights Foundation (HRF) hosts the Oslo Freedom Forum.
The fact these two events are running alongside one another in time is somewhat fitting, and it offers us a clear picture of just how opposing the values, intentions and ideals of the two are.
One seems desperate to control, and the other seems committed to empowering.
One has the humility to acknowledge we can not control everyone and everything, and the other acts as if it is almost a god given right.
At the WEF it’s all about web3, crypto and blockchain, while in Oslo at the Freedom Forum it’s all about bitcoin.
One is championing closed, centralized and permissioned networks that can be controlled by a few, and where you need approval to join; the other favours open, decentralized networks that no one can control, and that anyone can join.
If you want to see just how clearly these two forces oppose one another, take a look at this clip of Julie Inman Grant who works for the Australian government as Australia's eSafety Commissioner. Prior to this role she had worked in the tech industry at Twitter and Microsoft.
She says:
“We are finding ourselves in a place where we have increasing polarization and everything feels binary when it doesn't need to be. So i think we're going to have to think about a recalibration of a whole range of human rights that are playing out online, from freedom of speech to the freedom to be free from online violence or the right of data protection to the right to child dignity.”
One entity is literally called the Freedom Forum and is organised by the Human Rights Foundation, the other full of sociopathic pseudo-elites at the World Economic Forum are talking about “recalibrating” human rights. Wow.
The WEF’s influence over the the world cannot be over stated. It is impossible to ignore given what we now know, and especially what has transpired off the back of the COVID hysteria - perhaps best highlighted by the insanely creepy parroting of the “build back better” slogan by so-called leaders the world over, and the clear alignment in decision making by leaders who have attended the WEF’s global future leaders program - Most notably the sociopathic leaders of Canada, France and NZ.
Old mate Klaus’ performance at Harvard University gloating about how they penetrate the cabinets of governments also should not go unnoticed.
The reality is that the freedom to transact is a human right. We do not need some organisation of people to give us that right. It is by design as a human. The fiat monetary system has been designed in such a way that enables the weaponization of the technology of money, essentially modifying it from being an effective monetary system to a system of control and one that enables tyranny. The moment the system is used for anything other than the neutral facilitation of transactions, is the moment the system begins its decline toward being obsolete. This decline is well underway, and the WEF puppets know it.
It needs to be said that if these pseudo-elites actually solved problems, i’m sure their would be far less skepticism and more support for their initiatives. But when you look at what they do, as opposed to listen to what they say, it seems somewhat naive to ignore the glaringly obvious truth. There is either somewhat of a controlled demolition of the US based monetary system underway, and subsequently an attack on the family nucleus and the resources needed for humans to survive and thrive in order to maintain control, or there is a level of incompetence that exceeds most peoples wildest imaginations.
Joe Rogan framed it up perfectly:
If the fact that the US president being focussed on flying in baby formula using C-17s doesn’t give you a bit of an idea where things are at, I’ve got bad news for you. Years gone by the US and other nations would fly in aid to other countries in support, now we see them having to fly in support to their own people! (and boasts about it on twitter!!)
The fight between good and evil is the most pronounced right now than at any point in my life. We are clearly at a point of major transition. On one side you have a powerful elite desperate to control everyone and everything in pursuit of never ending profit via a hierarchical system that gives them overarching control.
The other system is inanimate, and rather than operating on the whims of humans is governed by the laws of physics and mathematics. It simply processes transactions and broadcasts block after block regardless of what anyone thinks. Complete neutrality. In my opinion it is the most important innovation of our life times, and perhaps in the history of human civilization.
Bitcoin is an insanely powerful force for good in the world, and there are many people around the world who’s lives depend on the availability of such a technology right now. When you consider that it employs no people, and has no marketing department or communications team, it’s hard not to be in awe of the calibre of humans it attracts, and that will speak on behalf of what this technology offers us as a species and who work tirelessly in support of the rights many of us don’t even realise are being taken away.
Reject the dark-side. Be a force for good. Join the peaceful resistance.
I hope you have a great day. I’ll talk to everyone tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Toward the end of my letter on Friday I touched on a point that I believe is extremely important to bring to the surface, and largely goes un-noticed by most at present.
That in order to survive in the world you must choose a monetary network.
Let me quickly recap for anyone that missed it:
“For centuries fiat currencies have been created and destroyed, and many lives along with them. Never in our civilizations history was there a viable alternative that would sustain through time. Until now.
No one is going to force you to adopt bitcoin. Thats the beauty of it. It’s a peaceful resistance, and you can choose to opt-in to the network - or not; and when you consider the fact that in life, you have to be a node in a monetary network of some kind in order to be able to survive, and your choice is between one where admins have special privileges compared with you - like in fiat, or you can choose a neutral network of only users - no admins. Where no user in the network has any power over another, with a cryptographically fixed supply that can not be changed. Compared with a system where some admin who lies to the population like it’s a sport, can just arbitrarily create more at the flick of a switch, stripping value from you and your family at will.
Once you frame it up, It becomes increasingly bizarre to consider that many people are actively choosing the fiat network as their preferred monetary network at present.”
When you realise this it changes everything.
Whether you actively choose or not, you are going to be a node in a monetary network. So it would seem somewhat obvious that it is absolutely within your interest to choose; and to choose wisely. If you appreciate the significance the technology of money has on your life, the gravity of this decision can not be over-stated.
Think about it. You likely interact with money everyday. Directly and indirectly. If you are turning on lights or running an appliance - energy is needed, which you will need to pay for. Money determines where you can afford to live, and of equal importance - where you can’t. It effects where you can go to school. These factors effect which other people you are likely to interact with. So there is a direct impact and relationship between money and the people you associate with and very likely your closest relationships are impacted by the technology of money. It effects the clothes you can buy. It determines whether or not you can travel beyond your local municipality. It impacts what food you can eat. Which is how many nutrients you can consume, and the quality of said nutrients. This impacts your state of being in a very direct way. The list goes on and on, but what becomes apparent, is that if you think of society as a technology stack, then money is the base layer of society, above the hardware layer of our bodies and the environment. ie Meatspace.
So if our monetary network impacts our lives so significantly - and it does - it stands to mind, that making a choice between which network we wish to be a node within is an extremely important one and certainly one we should make with a clear intention, and with our eyes open as to the implications of our decision. In many respects it could be the most critical decision you make in your life and many other occurrences will be down stream of this choice.
So how do we choose? What properties do we value? What makes one system preferable over another?
I shared the below table in an earlier article. It outlines the key properties needed to perform the role of a monetary good, and helps to clarify how gold, fiat and bitcoin compare.
This chart is looking at the fundamental properties of what makes a good money. Clearly given the fact that we’re on a fiat standard at present, what makes a good money doesn’t necessarily determine which money will be adopted over a short period of time, If it did we would never be on a fiat standard. So there is a layer of complexity beyond the monetary properties alone and the length of time we consider.
Something that this chart doesn’t capture is transferability and the level of acceptance of a monetary good. This property, which could loosely be represented by the number of users of the network, has a significant effect on the ease to which someone can exchange a monetary good, for a good or service. The smaller the network, the less people that are likely to accept the monetary good. The larger the network the more people that will accept it. If the network is growing, this creates a network effect. Meaning as more users join the network, the value of the network increases, attracting more users, and creating somewhat of a flywheel effect.
At present given how young the bitcoin network is, its definitely early days as a medium-of-exchange. There is little doubt in my mind however that over time as the network effect continues to compound and the number of users grow, that this will change. The lightning network is the mechanism that enables bitcoin as a medium of exchange in the 21st century.
The other factor that stands out in my mind, is force. The fiat network accumulates users by force. The word fiat literally means “by decree”. Which means, by force. It is a system you have not been able to opt-out of, and in fairness we haven’t really had a better system to opt-out too, prior to bitcoin.
While nation states, and the powerful among us are going to attempt to keep everyone trapped within the fiat system, i believe the human community can subvert that by having a clear recognition that we have a choice to make. That we get to decide which monetary system best serves us. That we get to decide how we store and save our wealth across time, and this is beyond the scope of any framework of governance. If the market adopts a superior monetary network, the others will simply fade into the background. Whether or not they continue to operate is less important compared with whether or not the network can continue to attract and grow users.
Realising we are a node in a network. That we have a choice as to which network we operate as a node within, is step one. Step two is choosing wisely.
I do not believe, if armed with all the information and the facts about these systems, and a clear understanding of what the different properties enable and incentivise, that anyone would knowingly choose the fiat network.
One system enslaves you. The other empowers you.
Hope you all have a great day. I’ll talk to you tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Yesterday May 22nd, was bitcoin pizza day. The story goes that on this day 12 years ago a person by the name of Laszlo Hanyecz made it known on an internet forum called bitcointalk.org, that he was willing to purchase 2 large pizzas for 10,000 bitcoin.
At the time the value of the bitcoin was $41.
Four days later, the transaction took place. Jeremy, another user on the forum took Laszlo up on his offer, and had two large pizzas delivered to him in Florida in exchange for the bitcoin. This day has since been known as bitcoin pizza day, as it signifies the first documented purchase using bitcoin.
It’s obviously pretty wild to think about in hindsight, and given what is now known.
Someone has created a cool little site called bitcoinpizzaindex.net to track the current market value of 10,000 bitcoins, and serves to highlight the deflationary properties of the issuance schedule and the impact this has on the value of bitcoin over time.
The current market price for Laszlo’s 2 large pizzas is $295,160,257
Almost $300 million for 2 large pizzas. Insane.
If you think bitcoin is dead at $30,000 - good luck to you. Treat yourself to a pizza and ask yourself what another 12 years will do to the value of bitcoin..
For those of you that think the trend is likely to continue, bitcoin pizza day may offer a useful perspective of how things can change over time. Obviously no one can predict the future. I like to keep things simple, and believe that an object in motion tends to stay in motion.
I believe the exponential rise of bitcoin is just getting started.
Hope you all have a great week. I’ll talk to you tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
We’ve descended so deep into clown world at this point, that it almost feels as if no one with any kind of influence or power is either paying attention or has any idea what they’re doing.
We’ve witnessed Lebanon’s central bank blow up, as their currency essentially hyper inflated into oblivion leaving many broke, homeless and hungry.
We’ve more recently seen the central bank of Sri Lanka default on their obligations. Yep. They’re broke as well. This has led to major societal unrest in the country as they’re experiencing an energy and food crisis as well as a result.
Lets not forget Turkey. As discussed back at the very beginning of the year - Turkey have been experiencing extreme levels of inflation leading to the implementation of pricing controls and capital controls. Naturally we sore capital rush to gold and bitcoin amongst others, as the countries local currency became increasing worthless internationally with inflation printing almost 70% last month. Wild!
Next up on the clown world winners list is New Zealand. New Zealand’s government have been amongst the most insane during the COVID hysteria, perhaps only outdone by Canada and the crack-pot drama teacher, and it doesn’t look like sanity is going to be reinstalled in NZ any time soon.
Apparently the New Zealand government have decided to combat their inflation issues and rising costs by inflating the money supply and handing out some fiat currency to bribe their population and keep them compliant and submissive.
According to this article from the abc, the payments are aimed to support families as the inflation crisis peaks.
“New Zealand’s government said Thursday it will hand out an extra few hundred dollars to more than 2 million lower-income adults to help them navigate what it describes as “the peak of the global inflation storm.”
It’s difficult to believe this is even real, given how incredibly absurd it is. But i guess the clown world is only going to get more clowny.
I’m genuinely starting to be open to the possibility that this is actually a coordinated and controlled demolition of the financial system to make way for a new and improved iteration via CBDCs where a whole new level of control can be exerted upon populations, as the measures taken are just too outrageous. It’s nearly impossible to believe that the people implementing these measures do not understand the ramifications of the actions they’re taking.
Or perhaps it’s just a natural course of action as a result of the varying incentives that exist.
The NZ Dollar is currently down just shy of 30% from its highs in 2014 and while that’s a period of 8 years and there has been some ebb and flow, the chart is not looking good. Infact it looks a lot like the chart of a shitcoin as the rolling hills of distribution are starting to look well established and its in an 8 year downtrend on the monthly. Brutal.
The simple reality is that inflation, and specifically the ability to inflate the money supply is at the root of our problem. It is not the solution. Trying to fix this s**t show by printing more money, is akin to being completely broke and thinking you can solve your problems by getting a new credit card. The fact that we are being blatantly lied to about this should scare you.
‘The inflation will save the day’ propaganda is only going to continue to ramp up, meanwhile country after country continues to tell a different story as the dominos fall one by one.
This tweet from Saifedean is on point:
For centuries fiat currencies have been created and destroyed, and many lives along with them. Never in our civilizations history was there a viable alternative that would sustain through time. Until now.
No one is going to force you to adopt bitcoin. Thats the beauty of it. It’s a peaceful resistance, and you can choose to opt-in to the network - or not; and when you consider the fact that in life, you have to be a node in a monetary network of some kind in order to be able to survive, and your choice is between one where admins have special privileges compared with you - like in fiat, or you can choose a neutral network of only users - no admins. Where no user in the network has any power over another, with a cryptographically fixed supply that can not be changed. Compared with a system where some admin who lies to the population like it’s a sport, can just arbitrarily create more at the flick of a switch, stripping value from you and your family at will.
Once you frame it up, It becomes increasingly bizarre to consider that many people are actively choosing the fiat network as their preferred monetary network at present.
But over time, I believe this will change. It’s just a sign of how early we still are.
The world has never had an immutable network with the properties of bitcoin. In years to come, we won’t be able to imagine a world without it.
Hope you all have a great weekend. I’ll talk to you next week.
AK
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
“Don't Listen To What They Say; Look At What They Do”
I first heard this heuristic from Nassim Taleb and it refers to the fact that words are cheap. There is far more signal in peoples actions than in their words. Simply put people can say whatever they like. And they do. People talk all kinds of bs with little concern for accountability. Especially with the pace of informational transmission with the internet and social media, the news cycle is so fast these days, that the attention of most people is in an absolute tsunami of content and most things are forgotten as quickly as they came.
Markets topped back in November 2021 as the Federal Reserve narrative pivoted and began to posture that they would cease increasing the money supply - something they like to refer to as “easing” - to fight inflation - the exact inflation that they caused as a result of increasing the money supply and not letting people leave their homes to go to work. Funny that. Who could have possibly guessed that such insane measures would trigger an economic disaster?!
This coincided with markets adopting a risk-off posture. While selling in the short term was clearly the move, I want to postulate why i think listening to what the fed says is far less valuable compared with paying attention to what they’re actually doing.
It’s important first off to understand the feds fundamental position. They have something in the vicinity of $9T in assets, and now in excess of $30T in debt. So they have a debt to asset ratio of around 70%. In other words for every 1 unit of assets, they have 3 units of debt.
They’re deep in the red obviously. But in the fiat system this is the case for most users that are considered “rich”. They’re up to their eyeballs in debt. The difference for the fed compared with the average user in the fiat network, is that the fed can just arbitrarily increase the money supply, and essentially print away their debt, or at least the value of the currency and thus enable to them to pay for their debt with newly printed US shitcoins.
Since the 2008 financial crisis, it has been pretty clear that this is what they’re going to do. The chart below shows M1 which consists of currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions (amongst other things). The chart speaks for itself.
So while the fed are saying they’re going to tighten and increase rates, and markets have reacted accordingly by selling aggressively since November, they have actually only increased rates so far by 25 basis points (0.25%), and 50 basis points (0.50%).
Most of what the fed does is political theatre. They’re in between a rock and a hard place, whereby they have so much debt, that they cannot increase rates in a significant and sustained way over time, as they have too much debt to service. But they have to pretend that they care about inflation, as it starts to hit families and enters the overton window within the media and the political landscape. But the reality is they want inflation. Infact they need it. The only way they’re ever going to service their debt is through currency debasement. Just like the UK did before them with the british pound, and the dutch did with the guilder before the brits.
This story has been told before throughout history. Even back to the roman empire it is clear that the wheels fell off once they began to devalue to denarius.
So in the short term they can raise rates a little and pretend like they care about inflation. But i believe the fed is extremely limited as to the extent to which these actions can be sustained. Especially when you consider the level of household debt, and the fact that the vast majority of people have little to no savings. There will likely be some "extraordinary” catalyst that will be blamed as to why we must get back to printing and increasing the money supply. Maybe it’ll be Putin, maybe another pandemic. Who knows.
But they have talked the talk. Now we will have to wait to see the extent to which they can actually act, and walk the walk.
Meanwhile… 1 bitcoin = 1 bitcoin.
If your unit of account is sats. You’re sitting pretty in the most powerful and pristine monetary good to ever exist. Don’t get tricked into worrying about the fluctuations relative to melting usd ice cubes. It’s simply an opportunity to accumulate. One currency is going to be printed into oblivion, despite what they might say, and the other can never be changed.
Hope you have a great day. I’ll talk to you all tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The concept of saving is likely something few people give much thought to. It’s somewhat intuitive. If we eat all the food in the fridge and have no money saved, then we cannot buy anymore food until we get more money, and if we get hungry in the interim this poses an issue and will likely cause us some discomfort. Suboptimal. So we have to either save some food or save some money to maintain some level of certainty about the future in this very small example.
The concept of saving is predominantly linked to our time preference, which is our ability, and the extent to which we prioritise delaying gratification. That is the extent to which we prioritise the future over the present or vice versa.
Saifedean talks extensively about time preference in his book the fiat standard, and identifies it as the primary negative externality of being on a fiat standard as opposed to a hard money standard. That as a society we have less certainty over the future and our time preference increases, whereby we begin to discount the importance of the future and shift out preference to prioritise the present.
This is the fiat disease. A modification of our time preference from a low time preference or a low sensitivity to time (ie: prioritising the future), to a high sensitivity or high time preference whereby we prioritise the present.
As a result of inflation via a corrupted and flawed monetary system our ability to save value across time diminishes. This leads to a number of undesirable higher order effects, but one of the primary symptoms of the fiat disease is that it perverts our risk tolerance and pushes people further out on the risk spectrum in an attempt to preserve wealth.
“This has manifested to produce what many of us would refer to as clown world. Where lying is the norm and deception has become a core business tenant.”
It used to be that if you gave a bank $100 of your money to store, that they would then be able to leverage that capital and earn a yield. For this opportunity they would pass on a small amount of this yield and you would earn $5 on your $100.
Nowadays if you place $100 in a bank in many parts of the world where negative interest rates have become the norm, not only are you getting killed by crippling high inflation, but the bank does not only operate in opposition to your best interest invading your privacy, your rights and facilitates a full scale surveillance racket which targets you and every person or entity you interact with in a population and around the world, the bank will also charge you $5 of your $100 for the privilege of using their service and storing your money within their predatory establishment.
Insane right?
Only in a clown world could something so clearly absurd and absolutely mental be normalised and accepted. Where a large swath of the population have been fed so much fiat information (read: lies) that they have lost the ability to disseminate the truth from the fiat noise, and infact many of which actively defend the nonsensical mind sludge.
Thankfully, Bitcoin fixes this.
Jack Mallers gets it right in this little rant. I’ve included a clip below.
“The federal reserve has perverted risk tolerance across all assets; and here’s what i mean by that. No one knows the price of anything any more. No one even knows the true rate of inflation right now, and no one can now save in dollars - whether you know that; or whether you’re on Tiktok and you’re seeing the guy with the nice car as the one that bought AMC at the right time.
It is implied through human behaviour, through societal behaviour and just through mathematics that you have to hold other assets if you want to preserve and retain wealth.”
The fiat system is going to continue to try and deceive you into remaining a slave to their centralized and predatory surveilance system which masquerades as a monetary system - and they will apply force to do so.
If you are ok with this, it’s probably wise you unsubscribe from this letter as it’s almost guaranteed that the content here within will trigger you and you’ll blame me for hurting your feelings and dissolving your delusional sense of certainty provided to you by this system of slavery.
On the other hand, if the fact that your sovereignty as a human being born into a human body is being violated, and attempts are being made to further enslave you and to trap you within a predatory system does not sit well with you, and you generally oppose the clown world, then you would welcome the fact that a mechanism, a technology, a tool now exists whereby you can peacefully opt-out of the madness and cast your vote as a human being on the planet of earth that you believe in-order for humanity to survive and thrive across time, and the fundamental behaviour that has led us to the present moment right now is our ability to maintain a low time preference and prioritise the future over the present.
On one hand you have closed, centralized hierarchical network that preys on the many to benefit the few. That opposes neutrality as a core value. That enables censorship and refutes your right to privacy.
On the other you have the most pristine iteration of money to ever exist. That is open, public, available to anyone, is censorship resistant and perhaps most critically that is completely neutral, flat and that no one owns or controls.
It’s literally a decision between slavery and freedom, and it’s my belief that with enough information to counter the fiat-information the decision becomes very easy.
Clown world is no match for an open, decentralized network that no one owns or controls and that anyone can peacefully join.
Join the peaceful resistance.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Understanding financial markets whether it be from an investing or trading perspective is not easy. There is myriad complexity despite what you may hear or some people may have you believe. The mechanics of how the system actually works are opaque at best and the incentives that exist as a result of how the system operates given the complexity of incentives at play, and also the positions of different entities or nodes within the network, differ significantly and alter the end result.
This is one of the points where the bitcoin network and fiat network differ most significantly. Obviously the bitcoin network has incentives for miners, and those incentives differ from that of a user, and these incentives are likely to evolve and mutate over time given that we’re still operating in a kind of limbo in between two competing systems.
One system that has been well established and installed within the operating system of society for over 100 years - fiat; and the other only a short 13 years in comparison - Bitcoin.
Our external systems have advanced significantly. There is absolutely no doubt that the level to which the bitcoin network is superior to that of the old legacy fiat installation of money is not even a question at this point (for anyone that understands it). One thing however that has not undergone the same level of technological advancement is the human hardware. Meatspace. Us.
We have figured out how we can outsource some of our processing and cognition via computers, like our memory via storage devices that can store infinite calendar entries, notes, photos and videos of past experiences - our actual brains though and more specifically our emotional responses to extreme events at scale appear to have remained fairly consistent over time.
The two main malwares that effect our cognitive operating systems are those of fear and greed. This quote from Warren Buffet is well known, and while he is a massive cantillionaire and has been a huge beneficiary of the fiat system, I’m of the belief he still did a lot of work to understand himself and his own mind which is what gave him his primary edge. The realisation of the two primary psychological diseases of fear and greed. His primary skill was to develop simple heuristics (alongside partner and fellow rat poison believer Charlie Munger) that enabled them to make decisions when facing uncertainty. An absolutely key competency when it comes to trading and investing, and also perhaps most significantly, in life.
The quote is from 1986 and reads as follows:
"[O]ccasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree.
Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
This likely sounds simple and intuitive to many when you read it now, but thats the thing with brilliance. It appears simple. I can assure you to execute this “simple” strategy when operating under the complexity of experience, it becomes obvious pretty quickly that its anything but.
Right now within markets, fear is at extremes.
There is a crypto fear and greed index that has been operating since 2018. As this index accumulates more and more data the efficacy of it will become more or less apparent. A couple of days ago it showed a 10 read and today is at 8, which is one of the most extreme fear reads since the index was created.
If you go back and reference this chart alongside price action it makes a fairly interesting case. I’m not going to do this now, but if you’re curious it’s worth a look (below).
My interpretation of the chart is that if this is a macro bottom, which will only be confirmed in hindsight, it’s likely to take its time and more than anything is likely to trade sideways and lull people to sleep.
Most people are not traders. And most assets are not verifiably scarce.
In my opinion (and this is by no means financial advice) the best thing we can all do is just accumulate and hold bitcoin, and times like this while fear is at extremes, are a phenomenal time to do so. Especially if you think old mate Warren has any clue at all.
It’s obviously not guaranteed to go lower in the short term, but in my opinion its very likely to go higher in the long term as more people begin to actually understand the technology, join the dots and start stacking sats.
To some they still think of it as “crypto”. Good luck to those people. For the initiated, it is the most advanced version of money ever invented.
If you believe this as i do, then it’s a game of accumulating as much as you can while we try to help wake up as many normies as possible to the impending collapse of the fiat ponzi.
Like I said, this is certainly not financial advice, but it seems obvious to me that the disease of fear is in high supply right now.
Act accordingly.
Hope you have a great day. I’ll speak with you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Afternoon Everyone,
I’ve spent the day on the road driving from Melbourne to Moruya for skydiving event i’m coaching at this weekend. It’s about a 9 hour drive. I was pleasantly surprised when i loaded up youtube to find a new discussion with Dr Saifedean Ammous and Lex Friedman on Lex’s podcast.
Here is a link to the podcast. I cannot recommend this enough. It’s is easily the best pod i’ve listened to this year. One of the best I’ve ever listened to, and without question my new go-to to orange pill anyone new to bitcoin.
This podcast was the perfect companion for a long drive as it was over 4hours long and went deep into economics and specifically differentiating between the fraudulent Keynsian version as well as the perspective of the Austrian school of economics.
Obviously bitcoin was at the heart of the discussion, and both Saifedean’s books were discussed and unpacked as well as some phenomenal explanations and clarifications on why shitcoins are shitcoins, why proof-of-work is so profound and why proof-of-stake systems are essentially a scam.
One snippet from the conversation that i wanted to zoom in on was Saifedean’s clarification on why bitcoin is the superior monetary good humans have ever invented.
It can be summed up in simple terms as the title suggests:
“Harder than gold and faster than fiat”.
Saifedean delivers perhaps the best explanation I’ve heard of bitcoin when asked to explain what bitcoin is. Here is how he responds. Also as i’m on the road there is no audio from me today, so I’ve included audio from the conversation as quoted below.
“Bitcoin is a software and it's a distributed software to operate the peer-to-peer network between members who are all equal on the network - they're all peers - and what this software does is that it allows you to operate a payment network between those peers and that payment network has its own currency and that seems like just a simple software game, but the reason this is such a big deal, is i believe bitcoin is the most advanced form of money ever invented and the reason for that comes from two properties that this network has.
The first one is that the currency is the hardest money ever invented. It's the money whose supply is the most resistant to inflation. it's the first monetary asset that we've ever invented that is guaranteed to be fixed in its supply that cannot be increased beyond a certain number. So there's only ever going to be 21 million bitcoins and that's a qualitative leap forward in our technologies of money.
All of our monies leak essentially because people can always make more and more and more of them. The best money is the one that leaks the least which is gold because it only leaks one and a half percent. In other words your share of the gold stock is diluted by one and a half percent every year. Ideally you'd like it to be zero.
Bitcoin is currently at around one point eight percent headed towards zero, so it's the first money that we've ever had that goes to zero in terms of terminal supply. So there'll never be more than 21 million bitcoin.
I think that's a huge deal because as i said earlier money is always whatever is the hardest to make and now bitcoin is the hardest thing to make, and then the second property which is extremely important as well is the fact that it operates without the need to trust in anybody.
It doesn't have a party that is in charge of it. It doesn't have a central authority. As i said it's peer-to-peer so it only has users - it doesn't have any admins. There's no authority in charge of bitcoin that can take your bitcoin; that can stop you from using bitcoin; that can change the rules of bitcoin.
They can't make more of it so it's fixed; it's available for anybody in the world. It's the hardest money ever invented and I think it is absolutely an enormously enormously significant invention; because if you read the fiat standard and the bitcoin standard as well, you'll see my perspective for why i think a very large number of problems in the world are caused by easy money; are caused by inflation. Are caused by government having access to essentially an infinite recourse to people's wealth.
I think bitcoin fixes this because it allows us to have money that has the saleability of gold across time meaning it holds its value across time. Like gold, but much better than gold; but also it is similar to fiat in that fiat can travel quickly - but bitcoin can travel even faster than fiat.
So it combines gold's saleability across time with fiat’s saleability across space in one immutable package that nobody can change and nobody can control.”
If that is not the most powerful explanation of what bitcoin is, then i do not know what is.
This absolutely blew me away and i’m sure i’ll continue to simmer on it for the next few days. I urge you to listen to the podcast in full when you can allocate a full 4hrs to immerse yourself in the learning. So unbelievably powerful to consider the content is freely available too!
Hope you have a great day. I’ll talk to you tomorrow.
AK
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Good Morning Everyone,
The hopes and dreams of many shitcoiners were shattered yesterday as Terra - the so called algorithmic stablecoin - lost its peg and went into freefall. It went as low as 0.61c and has since “recovered” slightly and is hovering around 0.70c at the time of writing.
It’s a rare day that I would waste a seconds energy on a shitcoin, but this scenario is simply too comical not to discuss, and while it sucks that many people likely will have lost a ton of money gambling on this rubbish, it should serve as a valuable opportunity for those of you that have broken free of the fiat mind disease and see these scams for what they are.
For those that have never heard of Terra let me give a tiny bit of background. I first heard about it a couple of months ago, and the only reason i likely did is because it was using bitcoin to collateralise it and back its peg. It was created by a South Korean named Do Kwon. Do Kwon did the rounds making a ton of noise and creating hype to launch it, and presumably to attract capital - touting it will usher in a “new monetary era”.
According to their website the protocol is explained as follows:
The protocol consists of two main tokens, Terra and Luna.
Terra: Stablecoins that track the price of fiat currencies. Users mint new Terra by burning Luna. Stablecoins are named for their fiat counterparts. For example, the base Terra stablecoin tracks the price of the IMF’s SDR, named TerraSDR, or SDT. Other stablecoin denominations include TerraUSD or UST, and TerraKRW or KRT. All Terra denominations exist in the same pool.
Luna: The Terra protocol’s native staking token that absorbs the price volatility of Terra. Luna is used for governance and in mining. Users stake Luna to validators who record and verify transactions on the blockchain in exchange for rewards from transaction fees. The more Terra is used, the more Luna is worth.
Do Kwon had made a statement back in March that he wanted to be the largest BTC holder aside from Satoshi, which triggered my scammy spidey senses at the time. Do yourself a favour and click play on this video.
I didn’t pay any attention beyond this until now, as it seemed kind of self explanatory that it was just another scam leveraging bitcoin to try and promote their racket.
But the speed at which this thing went from:
“We will be the largest BTC holder in the world” to “UST stablecoin peg breaking”
and
Is just too classic.
This clip of Raoul Pal as he is informed of the peg breaking captures the moment perfectly. Wait for it.
Jokes aside for a second, there are a couple of genuinely interesting points to note out of this s**t show. The first is that bitcoin is a transparent public ledger, and the fact that UST was backed by bitcoin means that we can see the bitcoin being sold to try and prop up the peg. I’ve included a couple of tweets below that include the addresses if you want to take a look in a bitcoin block explorer.
You also have to marvel at the beauty of a decentralized army that collates and researches in real time and shares information via social media in these instances. The capability of a decentralized community to monitor and track a scenario is really an incredible thing to witness and stands out to me as being a major positive force to have come out of the advent of the internet and social media more generally.
There is a more technical side to how this stable coin lost its stability, and it’s articulated well in this tweet below for anyone interested in understanding in a little more detail.
From my perspective the specifics are less interesting as this is simply another centralized shitcoin pretending to be something the world needs, and a predictable basket of greedy humans that fall for it and are left holding the bags.
The sad reality is that this really was so tediously predictable as Nic Carter says:
Anyway, enough timewasting talking about this scam for today.
I’ll leave you with this beauty from Mike Novogratz.
You really cannot make this stuff up.
In the words of Matt Odell, stay humble and stack sats.
Hope you have a great day. I’ll chat to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As most of you know i tend not to talk too much about bitcoin price action in these letters, as i view the price relative to USD shitcoins as more of a distraction than anything else, as the true unit of account in my opinion is bitcoin or sats. Measuring this truly inelastic asset against something that has and will continue to be created into infinity makes little sense in my mind, and it’s not until you replace your UOA for sats that the true state of play begins to become clear. However I realise the USD price can be a vacuum for the attention of many, and particularly those early on their journey down the bitcoin rabbit hole so i wanted to make a couple of comments as the price breaks down below $31,000USD.
The first thing I wanted to note is that for the class of 2021 that purchased in or around the 60k level, being at a 50% drawdown can be psychologically challenging. There is no way to make this process easier, and infact, there is much to learn about ourselves in these moments if we are willing to pay attention. One thing that must be said however, is that the situation can definitely be made worse by capitulating and selling your bitcoin due to the perceived psychological discomfort you may experience as a result of price fluctuations.
It’s important to recognise the mind game of markets. The market as you perceive it, measured by prices on a screen, is designed to trigger you psychologically to press a buy or sell button. But the market cannot touch you, or move you arms or legs, or physically force you to do so. It does so by triggering you emotionally. Which is to say you do it to yourself.
However if you train your attention, you can choose to channel your focus elsewhere and become agnostic to the whims of the market. This ability is a super power, and a necessary one to be successful over time.
This quote from Charlie Munger hits the nail on the head:
“If you’re going to be in this game for the long pull, which is the way to do it, you better be able to handle a 50% decline without fussing too much about it.”
My advice for anyone in this phase is the following:
Zoom out. Get clarity on your thesis, and write it down on paper.
If you are worried it’s often because you’re suffering from the fiat disease of a high time preference. Zooming out and gaining clarity over your thoughts and expectations will help you in deploying patience. Your inability to do this also offers a hint for what you need to do next. It highlights your lack of conviction;
Build Conviction by learning.
If you are worried, you lack conviction. This typically indicates you only really entered at the prospect of price increasing and being able to sell to someone else at higher prices. Pure speculation in other words. This is not on it’s own a bad thing, it’s only an issue if you are suffering from a level of self deception and don’t realise it. If price is all you are thinking about, you do not yet understand what bitcoin is. Focus on learning. Stop looking at price and do the work. Read the books instead of fixating on price. Conviction = a low time preference.
Focus On The Lows, Not the Highs.
This flipping of perspective can be a powerful reframe to help you have a more realistic and productive frame of reference over the variability of price, and to provide a vantage point that is more conservative and less euphoric.
Perspective Is Everything
This tweet perfectly articulates the typical failures of the human mind in truly grasping time and the changes that occur over it. In 6 short years, as the next halvings are in 2024 and 2028, the block subsidy or issuance of bitcoin will be reduced to 1.56 bitcoin. Meaning the reward that miners earn for securing the network in 2028 could be purchased today for $53,000.
Zooming right out and looking at how the deflationary model of bitcoins issuance changes over time, is a powerful tool to visually capture the alien concept of true digital scarcity.
Get Your Bitcoin Off Exchange & Custody Your Keys
This one is pretty self explanatory, but it’s of the upmost importance. It’s extremely likely that there are many more IOUs that exist for bitcoin, than actual bitcoin. If you hold your bitcoin on an exchange all you own is an IOU. In the event that everyone wants to redeem their IOU at the same time, ie a run on the bank or exchange, anyone that has given the privilege of custody of their keys to said exchange is exposed to counter-party risk, and risks loosing their bitcoin in the event the exchange fails under this stress test. It is only those that custody their own keys who are truly immune.
Personally, I choose to view this phase of the market cycle as necessary, healthy and unavoidable. When we have capital being allocated to jpegs of rocks and apes, and the average “investor” thinks shitcoins are anything other than a scam, these phases of the market in my opinion are the naturally occurring mechanism to help educate us and expose our delusions and recalibrate the market - us - on what is likely to be true.
Often this comes with some pain, but this is part of the game. This pain is an important and necessary process, and for those that are paying attention you soon learn - that you either win or you learn. If the market provides you with some tuition, which is typically expensive, you best listen and pay attention. Otherwise the market has a funny way of running the same clinics for you, until you do.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Back at it after a short break. I was away travelling for a couple of weeks skydiving in outback Queensland, and then managed to get myself the flu (yes covid), so I’ve been resting up for a week while my energy levels normalise. Pleased to be back to 100% now, so lets waste no more time.
A lot has happened over the last 2-3 weeks. Risk markets have continued their risk-off posture and asset prices have acted accordingly with powerful moves to the downside being sustained. Unfortunately bitcoin price is not immune to this market dynamic with price looking weak - currently trading at $34,200USD. However for anyone that understands the nature of this truly inelastic asset and the fact that it is literally the most pristine monetary good to have ever existed, these times should serve as an opportunity to accumulate and stack more sats.
Back in March i highlighted the situation in Argentina, whereby the IMF offered another predatory loan to the country with a number of conditions including a clause to crack down on “cryptocurrencies”.
The French African colonial bank is next to get in line, sending a letter to Central African Republics President after introducing a bill to make bitcoin legal tender in the nation. The letter warns adopting bitcoin as legal tender will have “significant negative impact” on the colonial franc system.
I wasn’t aware of how deeply imbedded the French were in Africa and actually how much they have preyed on many of the small nations until I listened to this discussion from the bitcoin conference with Alex Gladstein & Farida Nabourema (timestamp 15min) where Farida does an incredible job of articulating the lay of the land historically. I highly recommended you give it a listen in order to gain some proper perspective on the situation.
The short version is that these countries are not in control of their money, and are essentially operating as part of a non-neutral network and one that enables censorship. They are less powerful nodes in the monetary network enabling actors with more power (the french) to devalue the money and strip value from the less powerful nodes in the network - the people.
So it should come as absolutely no surprise that now with the advent of bitcoin, countries like the CAR wish to adopt a neutral monetary protocol. A protocol that does not give any node in the network power over another.
Just like the IMF in Argentina, the French African Colonial Bank should be expected to continue to take action to deter the use of bitcoin as it threatens their business model, which is predicated on their ability to prey on every node that connects to the network.
Given how poor the nation is, it looks like more of a trojan horse than anything to me and one that likely spurs others in the region to challenge the status quo.
It’s hard to believe sometimes that we live in a world where entities exist that want to oppose your right to choose your money. That is for the free market of free humans to decide. Sadly they do exist.
Thankfully, we have bitcoin, and bitcoin most certainly fixes this.
Have a great start to your week everyone. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Markets are a funny thing. They’re insanely complex in many respects, and they can also be boiled down to a pretty simple truth about someone having something to sell and a separate person looking to purchase that something. Perhaps one of the most fascinating things about “a market” is that they emerge more or less spontaneously. They can emerge for myriad reasons but they only really survive through time if there is ongoing supply met with ongoing demand.
What I find really interesting to think about is the phenomenal level of hubris of the human mind, to think that we can control something that emerges spontaneously out of infinite complexity that we can only begin to understand in hindsight. This desire runs so deep within our species, and no matter how many times we try and fail, typically via our compulsive naive intervensionism, create extremely undesirable unintended consequences which damages and impedes a market over time, we seem to be struggling to get the message.
The number of examples of this are endless. Something as simple as serving drinks requires some kind of a license, or to be able to serve them beyond a certain time requires a license. This kind of thing is just beyond absurd in my opinion.
If person A wishes to run a business selling drinks at 5am, and person b wishes to purchase drinks from person a at 5am - who is anyone to tell them otherwise?
If there is no market for it, person A will simply shut up shop having received clear feedback from their so-called market. It requires no intervention. Unfortunately however, this neurotic and obsessiveness to over control has been well and truly normalised within our current iteration of society and this parasitic malware is likely to attempt to spread to, and attempt to infect the bitcoin ecosystem, as it has most other areas of our society.
There was an interesting conversation from the bitcoin conference about mining that included some discussion about regulation. Marty Bent hit the nail on the head in my opinion where he said something to the effect of:
Bitcoin and bitcoin mining has been running flawlessly without regulation for 13 years, and implying that if it has been running without the need for intervention to date, what would give anyone the impression it requires government intervention now.
It’s not obvious to me when it became anyone else’s business to dictate to another person what they could use their purchased electricity for. But it does appear that when it comes to bitcoin, people of this pathological belief exist.
This rule from Jordan Petersons book ‘12 Rules For Life’, comes to mind when i think about this insatiable desire to unrelentingly & naively attempt to control everything and anything. Of course with the exception of our selves.
“Set Your House in Perfect Order Before You Criticize the World”
Bitcoin and the industry it has spawned around mining is an unbelievable and in many ways inconceivably huge net positive for the world - if we just let it be. The notion that we would even contemplate telling a business what they can and cannot use their electricity for is beyond insane and there should be absolutely zero acceptance of such a ridiculous utterance.
If person A is creating value as determined by person b, and person b is willing to purchase said item from person A at X-price there should be no need for any further conversation. If someone thinks there is a better way to provide this service that is more in line with their values, this is an opportunity, and they should create the offering and be rewarded by the market for their efforts, if correct, rather than complaining and trying to over-control others.
The time for this kind of primitive human behaviour needs to be left in the past. We need to move to a more sophisticated mode of operation where we can deploy a level of humility. Where we are open to the possibility we may not be capable of fully understanding and perceiving the complexity. That if something can emerge entirely on it’s own and in a spontaneous fashion, perhaps it does not require our intervention and the best way to allow this to be solved is within the dynamic of a free and open market.
I believe that bitcoin is in the process of reintroducing what a free market is to those that have been living within a corrupted and distorted society for too long. This changing in perspective cannot happen soon enough.
The following sums up my thoughts.
“You don’t change bitcoin. Bitcoin changes you.”
With that said, below are a few content suggestions for the easter weekend. I hope you all have a great easter and share it with special people and family.
Wishing you all well, and i will talk to you next week.
AK
Article: True Names Not Required - Der Gigi
This article blew my mind. I recommend exploring Gigi’s site and reading through pretty much everything he has written as it’s filled with genius and mind expanding clarity.
Pod: Cult Of Central Banks - Ricardo B. Salinas
This man gets it. This is a must listen.
Book: 21 Lessons - What I've Learned From Falling Down The Bitcoin Rabbit Hole
Gigi’s first book. Life changing text.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Inflation in the US has been at 40 year highs for the last number of months and the most recent ‘official’ numbers came out this morning with the trend continuing -printing 8.5% month-over-month inflation. Of course the propagandists would have you believe that this is not from increasing the money supply or disrupting supply chains and commerce globally in response to the flu - it’s all Putins fault of course. “The Putin Price Hike” is the official inflation slogan coming out of clown world to deflect any kind of accountability from the lunatics at the levers of power.
The political class are waving the peak fiat flag as they blatantly lie and gaslight a population. This kind of propaganda is so decoupled from reality it really is beyond belief and demonstrates the extent to which our current system is broken - if these people are considered ‘leaders’ or ‘elites’.
6 months ago it was transitory. Then it was the fault of greedy corporations. Then supply-chain bottlenecks. Now everything is just Putins fault.
The thing with these inflation numbers is that they’re a simplification of an incomputable complex world (at-least for the time being). The fed has a formula in which they measure CPI (consumer price index), which identifies a basket of selected items and tracks the changes between these items over time. As we know though, the formula has changed, so the historical data and any subsequent comparisons of changes over time become distorted. If they were still tracking the same basket of goods, and utilising the same formulas these numbers would be MUCH higher!
Shadowstats.com is the best known site to show what the true numbers are using the unchanged model, and is run by John Williams. If you want to dive a little deeper to better understand how and why these changes have been made he explains it here in a pod from last year. The true numbers would be well into the double digits! (site currently down so unable to get exact figures)
The other part about inflation is that our preferences are not all the same, and thus we do not all purchase the same baskets of goods. So there is a technical argument to be made that we are all exposed to different levels of price inflation which is certainly true, but there are some broad typical commonalities where we tend to generalise.
For this primary reason, i find CPI as being less informative and prefer to focus on one specific kind of inflation which i think drives all others. That is inflation of the money supply.
Simply put, if we increase the money supply by 40% then we should expect somewhere around a 40% increase in prices, as the value of the money is essentially reduced by the same number. This rings true for real estate, meat and food broadly, oil and many essential commodities and other items.
It’s wild to reflect on how truly deranged and distorted our society is becoming under the clown-world dynamics. Propaganda has been fully normalised. Lying and gaslighting citizens is standard procedure; meanwhile truly critical priorities that we should be fully aligned on and actioning with the greatest of openness, honesty and intention barely seem to make the cut.
The average family right now is struggling to afford to fill their fuel tanks and nourish their children with nutrient dense food, while the political class continue to lie, distort and distract and play absurd and dangerous games. It really is as if reality has been forked and we’re running two different implementations of the ‘reality software’.
The sooner we can remove these dangerous and divisive lunatics from positions of authority and power, the sooner we can let the beauty of human intelligence and ingenuity rise up, and charge toward a better future. The importance of fixing the money has never been on greater display than it is right now - meanwhile the most sophisticated monetary network is waiting idly in the background and slowly being adopted one person at a time.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I’ve had the phrase “you catch more bees with honey” floating around in my mind for a couple of weeks after listening to a pod with Robert Breedlove on What bitcoin did. As a kid growing up my mum used to say this to me from time to time. It’s a common turn of phrase and is essentially referring to incentives, and the fact that it’s most effective to focus on properly motivating humans toward the ideal outcome as opposed to always reaching for the stick.
As humans operating in hierarchical structures we typically default to the carrot and the stick design framework when trying to guide and incentivise decision making and human behaviour. Something to deter you from doing the wrong thing and motivate you toward the preferred option. The thing with this is it’s extremely simplistic, and the implementation often tends to leave a lot to be desired.
It’s typical that whoever is higher in the hierarchy tends to operate on more of a “do as i say, not as i do” type model. The fiat model. Because of their position in the hierarchy they have an increased level of influence over the protocol. This is true in shitcoins like ethereum, and it’s true in fiat. Meaning that the quality of the incentive structures are null and void because we will see the people above us operating in opposition to these desired behaviours. This corrupts the system as it’s obvious that the system is essentially disingenuous and trust ceases to exist. It also creates different unintended incentives and thus myriad potential unexpected and unwanted higher order effects as a result of this broken incentive structure.
It also on some level tends to corrupt us psychologically in respect to meaning. Specifically how meaningful the work is to us. When we see the system is essentially built on lies, and cease to trust it, the entire business and intention is also corrupted and we struggle to find meaning in the work and performance suffers as you would expect.
I feel like this is the state of play for 80-90% of businesses these days. The most basic of tasks can be profoundly important for a community, a country or the world more broadly, and it’s easy to forget the pivotal nature of a given task, job or business when the incentives are broken and we’re distorting reality within markets (which are really just human societies).
This in my opinion is really what bitcoin, and moving to a bitcoin standard promises to fundamentally change and hopefully improve dramatically. That’s not to say everything would be perfect on a bitcoin standard, but it seems obvious at this point, that the central banking and fiat standards corrupt our minds and thus human society on the deepest of levels.
It’s really a fundamental output of a monetary system - To incentivise and optimise our allocation of finite resources (energy) that supports and facilitates humans to innovate and flourish.
We’re never going to optimise for this when our core governance structures around the world (central governments) are predicated on lying and deceiving the public (nodes in the network) given they only need to the slightest margin of a majority to push things in a specific direction. Which is essentially a 51% attack on the network.
We can do better. We must do better. The separation of money and state and the adoption of a truly decentralized monetary protocol for the world is a major tool to help us better organise the incentives of our complex modern society and move in a better direction for our kids, and for the future of humanity.
Fix the money, fix the world.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
With the bitcoin conference currently underway in Miami there has been a ton of announcements and hype around the orange coin and as you would expect a lot of people fixated primarily on price as a result. I feel while number go up, is highly probable over time (as close to certain, without being certain), to focus on the very narrow detail of price truly is to miss the forrest from the trees. What bitcoin is enabling is so much bigger than simply capital appreciation or some kind of an investment.
I realise that I could hype-up number go up tech, and it would probably be far more enticing to the average sapien running the now obsolete fiat OS, but that would be completely disingenuous of me, in opposition to my values, and frankly i have no interest in appealing the crowd that support “the current thing”. There are a plethora of hustlers out there that will happily be a vacuum for your attention if all you want is to be told bitcoin is going to one hundred million bazillion.
I’m here for the peaceful revolution. I’m here for the installation and major upgrade of a new kind of psychological software - a software package that we call money. A new operating system for us to run on our somewhat primitive hardware. The kind that will completely remove the parasitic and short-circuiting fiat malware from our minds, and install a new kind of system that is and will continue to liberate and empower humans everywhere.
With that said, here are a few suggestions from the conference which best capture the potential of such an installation.
Hope you all have a phenomenal weekend. I’ll chat to you next week.
AK
1 Bitcoin is Freedom: Panel with Alex Gladstein, Yeonmi Park, Farida Nabourema, Fadi Elsalameen
Probably the best panel I’ve seen on why bitcoin is so important.
2 Peter Thiel - Bitcoin Keynote
I think he gets a couple things wrong here, specifically when comparing bitcoin and ethereum on the axioms of value and velocity. I would make the case that he’s trying to propagate a narrative around this and it’s simply false. The lightning network and the development that is coming as a result of taproot highlights this very quickly as nonsense. However the part of this that i believe is extremely important is his honesty and clarity around ESG, and it is critically important as many people begin to see this evil trojan horse for what it is.
3 Jack Mallers - The Kings Gambit
Jack is unlocking bitcoin as a medium of exchange using the lighting network and in partnership with Shopify, Blackhawk & NCR enabling someone to pay direct from their bitcoin node over TOR and across almost any major outlet in the US.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Taro which stands for Taproot Asset Representation Overlay is a brand new bitcoin improvement proposal, or BIP. It is a protocol designed to enable low-fee multi-asset transfers via the bitcoin and lightning network.
Lightning Labs have developed this new protocol and have raised $70m in order to help bring Taro to life.
I realise most of you are non-technical, so i’ll spare you the complex details. If you want to get a more detailed understanding, i’d direct you to this post from @roasbeef - the developer of the protocol.
What i think is most critical to understand here is:
1)This new capability is enabled by the Taproot upgrade. This upgrade only happened in November of last year (14/11/21). Only some four months later we have a major BIP proposal. It’s insane how quickly taproot has been utilised to build on top of bitcoin and this is unlikely to be the last!
2) As a result this has the potential to completely change the game bringing non-custodial assets to bitcoin, while maintaining the inherent security, decentralization and other fundamental properties of the network. This is absolutely massive. The current system does not allow you take custody of almost anything. If you want to hold stocks, bonds etc they need to be held with regulated 3rd parties. Taro has the potential to completely change this model.
3) This is completely open-source. Made in the open and for anyone to view, verify or modify to build on top of. I think the wave of open-source development that is being ushered in as a result of bitcoin generally is way under-appreciated.
4) Most people still have no idea about lightning, let alone taproot or Taro.
5) This should help offer some perspective as to how insanely early we still are in the life of this thing as demonstrated by this post from Allen Farrington yesterday from the bitcoin conference which is going on right now in Miami.
It’s important to note that this Taro protocol has not been implemented yet. It will undergo somewhat of a peer review process by core devs and as with everything in bitcoin this process will take some time to ensure t’s are crossed and i’s are dotted.
We have witnessed the birth of open-source money, a brand new kind of truly neutral money for the world, and now we’re seeing it grow up in real time. It’s impossible to know how things will evolve from here, but you have to just take a moment to sit back and marvel at the significance of what is actually taking place.
How often does a new money come into existence? It is truly incredible to be alive to witness this, and even more so when you consider how few people really grasp the significance of it.
The asymmetry that exists in respect to bitcoin has simply never been greater in my opinion.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
This morning the Lebanese Government has announced the state and the central bank are officially bankrupt. This announcement comes on the anniversary of the US government confiscating gold from their citizens 89 years ago.
The Lebanese deputy prime minister had this to say:
“The losses will be distributed to the state, the Banque du Liban, banks and depositors, and there is no specific percentage. Unfortunately, the state is bankrupt, as is the Bank of Lebanon, and we want to come out with a result, and the loss occurred due to policies for decades, and if we did nothing, the loss would be much greater.”
What an absolutely stunning statement to read.
Only a few months ago I’d discussed the hyperinflation within the country and the breakdown within food and energy markets. Now the truth finally comes out. They’re broke.
This is a microcosm of the broader world on a fiat standard.
If citizens of Lebanon listened to these lunatics and trusted their government, and they continued to hold their money with a bank, it would now be clear that they were lied to and they’re now broke. If they used bitcoin to store their wealth, they will have successfully insulated themselves from some of the madness and at least have some options moving forward.
A separate but relevant video has been circulating which includes Stephen Poloz, Former Governor of the Canadian Central Bank being asked about “opting-out” of inflation using bitcoin. The video is extremely enlightening and worth a listen. It’s attached below.
He was asked:
“Central banks are a key feature of Pierre Pollievre’s campaign and he had a big rally - 1000 people in Ottawa recently - and he said Canada should become the crypto capital of the world because Canadians need to be in charge of their own money supply and he used the phrase ‘through bitcoin you can opt-out of inflation’. How do you interpret what he means by opt-out of inflation by using bitcoin and controlling our own money. What’s your response to that?”
The former Governor of the central bank responded as follows:
“Well firstly i think Canadians do control their own money through their own central bank in a very transparent process by which it’s administered. But setting that aside, being on a bitcoin standard would be very similar to being on a gold standard except more volatile. A gold standard does limit inflation, so if the price of oil doubled or something like that all the other prices in the economy would need to go down in order to off-set it. That’s the sort of deflation you get during a depression. It’s why we had the big depressions, [and] were during the gold standards years. The Victorian depression and the depression during the 1930’s. Those would not have happened if we’d had a more conscious monetary policy and expanded the money supply to meet the increased supply that came from the industrial revolutions. So i think there is a way around all this which is to say we have an inflation control agreement - That’s how Canadians control their money supply.”
He was then asked:
“So for the people fascinated with Bitcoin - Can you through anything “opt-out” of inflation?” and responded as follows:
“Well, no. Because bitcoin is not a legitimate transactor vehicle. It’s highly variable. So the price of things you would buy would be varying all the time. Digital currencies in a broader concept they’re definitely coming but they’ll probably be official ones, you know the same kind of money we use every day thats in our pocket. But opting out of inflation I just don’t understand that concept. Like when the price of oil doubles, how do you opt out of that?”
There is so much to unpack from this short clip, it’s scary. The fact that he thinks sound money is the reason for depressions is completely insane. I do think they are speaking in respect to one kind of inflation, which is price inflation and not in respect to inflation of the money supply. This is muddying the conversation.
What seems abundantly clear is that it is the belief of this former central banker, than sound money is bad, and having an elastic monetary system where they can more “consciously” massage the supply of monetary units, and thus confiscating value from you, is good. Not to mention the ability to be able to simply exclude you from the system as we saw with the freezing of citizens bank accounts with the Canadian truckers.
These people are not going to save us. Ask anyone in Lebanon now how much they trust the word of the government or central bank, and i’m sure it is decisively less than 12 months ago.
They have no interest in learning about or understanding bitcoin, but will force you to adopt their “official” version, that enables all kinds of parasitic capabilities over your money and spending, and essentially gives them an on/off switch whereby they can exclude anyone from the system with the press of a button.
These over controlling central planners have not learnt anything from the last 50 years and seem insistent on keeping the charade going. I don’t think they honestly believe they can control everything, but rather than can trick enough people into believing whatever they tell them.
I believe that they’re underestimating the mind virus of bitcoin and are in for a surprise. History will be written by the victors, and i’m betting on the smartest minds on the planet and the simple fact that open networks win.
It’s unimaginable to me that anyone would choose to continue to trust these people after what we have seen. Maybe i’ve been living in my own echo chamber for too long? Possible. But a world dictated by a closed, censorable and permissioned monetary network like what central banks want, is a world I want no part of.
The future of money already exists. It’s free to join, and anyone is welcome.
Wishing you all well. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The sanctioning of Russian central bank reserves by the G7 marked the end of the Bretton Woods II monetary system (1971-26/2/2022). As a result, the world is going to continue to transition away from the petrodollar and the US T-bill standard and toward a new monetary order as yet unknown.
What this new monetary order will be, nobody knows for sure. We can only speculate for now. Something that just struck me when thinking about this transition is that a major symptom of this change, will be for the mainstream crowd to go down the rabbit hole on money.
The average person is still unquestioning about the nature of money. Be it the paper, or plastic in Australia’s case, that you can hold it in your hand, or the one’s and zero’s that appear on the screen of your online banking app. Most just unequivocally and unflinchingly utilise the technology like it’s almost invisible and never stop to question it. Which is fine when it works i suppose. Arguably that’s the ideal outcome. That the system is so seamless and so effective, that we need not waste a moments thought on it. Just as the oxygen we breath is invisible and the body autonomously breaths in and out without any need for conscious intervention on our behalf.
This would be great. But this is not where we’re at.
It seems highly probable that in the short term countries will continue to trust each other less. Much less. Each individually wants to use their own fiat currency more. We have already seen Russia move to selling gas for Rubles, and having already sealed a 30 year deal with China for Gas in euros.
The problem with using commodities as money, is that commodities have a very critical utility to humans. Commodities like oil, gas, and coal are the primary hydrocarbons that power grids around the world, and that enable many to heat their homes, run their cars, and cook their food. The use of such items as money will lead to much higher prices, and major shortages. We’re already seeing significant market shocks in energy and food markets. This will be a painful education process for many as to why these items are terrible “money”, but the education process will none the less happen.
This breakdown in global trust and cooperation, while being painful and devastating for many, has the very real potential to be a catalyst for a seminal shift in mainstream understanding of money and may infact propel the mainstream down the rabbit hole many of us have been thrust into thanks to bitcoin.
Assuming the level of internet censorship does not significantly worsen, which is a big if at this point, there will be no shortage of educational material to help people come to a more informed understanding of the technology we call money. While central banks and governments are likely to continue to try and maintain power as a result of their political currencies, there is no doubt in my mind that as the mainstream descend into the rabbit hole of money, they will inevitably arrive at bitcoin.
No one said the road to a neutral monetary protocol would be an easy one, infact, it is likely to get much worse before it gets better unfortunately; but there is no question that it’s made less bad once you understand and embrace what Satoshi gifted the world with.
Bitcoin is the mission.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The concept of a truly inelastic and verifiably scarce digital asset is something that i believe remains alien to most humans on the planet at present, despite having existed for some thirteen years already and being completely in the open. It’s a concept that on first glance sounds fairly simple and straight forward, but it’s such a conflicting notion compared with the world of money printing and pricing signal-distortion in which we have become accustomed, leading most to remain ignorant to the gravity of such a characteristic and failing to grasp the profound nature of this innovation we call bitcoin.
We are products of a system that is predicated on the basis of infinite growth expectations, despite the obvious reality of living on a planet of finite (albeit it adequately sufficient) resources. This system has distorted our perception of value altogether. We have become deeply confused about what is truly important and fundamental to sustain life, and have strayed along way off the path as a result of a monetary system that gears our time preference, thus our behaviour, to being increasingly short term oriented.
I believe our time preference is predominantly to blame for the lack of understanding and appreciation for the characteristic of digital scarcity. And our time preference is a symptom of a broken monetary system. The average person remains fixated on what the latest shitcoin is, or what meme stock is going to make them rich tomorrow (high time preference) - as a result of being increasingly time-poor we are incentivised to seek shorter and shorter term gains - rather than having any interest in deploying any serious cognitive resources toward making sense of the ramifications for this novel innovation. Perhaps it just seems to intangible to zoom so far out for most people? Maybe it is just not practical, and is subconsciously perceived to be unlikely to provide any kind of chemical reward compared with the surge of dopamine attained when their favourite “crypto” surges in price?
The fact of the matter is that digital scarcity does now exist. For the very first time in human history we have a verifiably scarce asset. Not only does it exist, the majority of the supply has already been issued. Which in itself is a crazy thing to realise. Bitcoin has only been running for 13 years, and already over 90% of total supply has been issued. I saw this image the other day (thanks to @bitcoinfool) and it beautifully captured the profundity of the this alien concept. Given that we’re so visually dominant, i figured it may hit home with people a little more that the pure numbers.
The image shows a circular pie chart split into 21 segments. 19/21 are filled with orange representing the already issued supply. Two segments remain black representing the remaining supply to be issued over the next one hundred and twenty odd years. When you see it like this, the visual representation of bitcoins scarcity leaps right off the page.
In thirteen short years 19m bitcoin have been mined. Over the next 120 years the remaining 2m will be issued, at which point the only way to acquire bitcoin will be to incentivise someone to sell you theirs, or by selling goods and/or services for bitcoin.
However as previously discussed in the below letter, the reality of bitcoins issuance and the nature of a truly inelastic and verifiably scarce asset is far more confronting. While the issuance continues for the next 120 years, 99% of total supply will have been issued by 2035 with the remaining 1% issued over the following 100 years.
We have already entered a new global monetary regime following the end of Bretton Woods II - What Zoltan Pozsar is calling Bretton Woods III - and it is to be a return to scarce resources being at the core of what determines value, this is a return to re-prioritising scarcity as the fundamental property which underpins money within our complex human civilization. If this is the case, it’s going to be wild to see how the world grapples with the fact that the only verifiably scarce digital asset on the planet has almost been entirely issued. Perhaps it is in this moment that the gravity of true verifiable digital scarcity truly hits home?
Time will tell.
The race is on to accumulate as much as possible of the remaining 9% of bitcoin supply in the next 13 years. No doubt by this time the nature of money will have changed forever and the realities of true scarcity likely begin to sink in.
Grateful as ever to be alive to witness history in the making.
Wishing you all well. Hope you have a great start to your week. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
⚡️ Bitcoin For The Weekend ⚡️
Article: The Blocksize War Review - Nic Carter
Pod: What Bitcoin Did w/ CK
Book: The Bullish Case For Bitcoin - Vijay Boyapati
Good Morning Everyone,
It feels like there is a ton going on in the background right now, whether it be the outright attack on bitcoin via a bogus climate change narrative or the EU parliaments incoming crack down on “unhosted” wallets, which is essentially an attack on an individuals property rights - which is absolutely wild when you think about it - many factions of human society continue to attempt to exercise control over the bitcoin network.
Despite all of this my conviction on bitcoin has never been greater and seems to just be deepening with every passing day. The desperate need for the fundamental recalibration of human society which i believe this technology is and will continue to facilitate is on full display.
I’ve also come to realise that while it is somewhat counter-intuitive; we actually want these attacks against bitcoin. Which is basically an attack on a set of ideas and principles, or values. It is essential to stress test the network. If bitcoin is going to serve as the primary layer of value settlement for humanity, then it will need to be subjected to every such attack. While it’s critical that the community continues to expose false narratives and vigilantly bring the truth in to the light, these attacks are somewhat of a necessary evil, and each such attack that bitcoin survives will only serve to further highlight the incredible properties of the worlds most sophisticated monetary network and educate greater and greater numbers of human society on these properties and make it increasingly clear how and why the properties that underpin the network are so important.
In some respects each attack really serves as a free marketing campaign and as a mechanism that further drives the network effects and user adoption. Which really supports the concept of anti-fragility as the network not only survives any such attack, but actually benefits from the disorder and volatility.
This perspective would not be possible for anyone thinking short term. It is only possible when you really lower your time preference and zoom right out. It requires us to think differently, and bitcoin as a tool or technology enables us do to this.
Bitcoin really is the antidote. The antivirus software for human society to run, that will cleanse our operating system of the malware that has been installed that is short-circuiting our ability to self-organise in a more constructive and harmonious way.
So bring it on. I am choosing to embrace all the attacks, the lies, and the nefarious actors that wish to prevent the unleashing of human potential that this network will usher in because i believe that they are engaged in an unwinable war against truth, and are in opposition to the fundamental laws of nature which will prove to be futile given the fullness of time. The network was designed with these nefarious actors in mind. It was built for the adversarial environment in which it finds itself. It was literally made for this. Block after block will continue to be filled with transactions and blocks mined, while humans struggle to come to terms with the inevitable reality that they cannot control everything and this network will not succumb to their rigid and pathological expectations and world views.
Optimism and gratitude really are an unfair advantage in this clown world, and I’m abundant in both.
Hope you all have a beautiful weekend. I look forward to speaking to you next week.
AK
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Jack Mallers reminded me of the inspiring Apple marketing campaign from back in the 90’s when he recently shared the ad designed around the slogan “Think Different”.
There is also a link here which is actually narrated by Steve Jobs.
I wanted to actually read through the text for you, as it resonated with me on a deep level. It is as if it were written about bitcoin, about Satoshi, and every bitcoiner out there that see’s clearly why this mission is as important as we believe it is - and it is as evergreen today as it will be in 100 years from now.
Here’s the text from the ad:
“Here's to the crazy ones.
The misfits.
The rebels.
The troublemakers.
The round pegs in the square holes.
The ones who see things differently.
They're not fond of rules.
And they have no respect for the status quo.
You can quote them, disagree with them,
glorify or vilify them.
About the only thing you can't do is ignore them.
Because they change things.
They push the human race forward.
While some may see them as the crazy ones,
we see genius.
Because the people who are crazy enough to think
they can change the world, are the ones who do.”
So powerful.
Bitcoin is pushing the world forward and challenging the status quo in a way that is so major, many who cling to certainty may find the change too challenging to bear. The default reaction of these people is to cling to the very system that preys upon them. A system designed to benefit the few at the expense of the many. Bitcoin fundamentally changes this dynamic and redistributes power from the center and back to the edges. From the few, back to the many.
These words and the actions of so many within the bitcoin community remind me to remain crazy and be content with my tribe of misfits, rebels and trouble makers.
Whether it be Jack Mallers and what he is doing at Strike or Jack Dorsey at Block. The number of rebels who see clearly why the world needs the round peg that is bitcoin, continues to grow. The age of predatory central banking and the nation state’s monopoly on the technology of money is coming to an end. This is the future i’m here for, and i’m inspired to be on this journey with you all.
I appreciate you all.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
A slew of energy FUD hit the internet this morning courtesy of a greenpeace US twitter account claiming that Bitcoin specifically is driving climate devastation and includes a hashtag “change the code” linked to a marketing campaign advocating bitcoin to adopt a less energy intensive consensus mechanism.
They have created a website at the domain cleanupbitcoin.com. The first line of text on the main-page reads “you’ve heard bitcoin fuels the climate crisis” which is so predatory as it is intentionally preying on previously held biases of those that may actually take it seriously, and confirm their previously held concern or bias. They are preying on what is known as confirmation bias.
The site highlights four "““facts””” about bitcoin:
“Recent estimates show Bitcoin uses more electricity than all of Sweden.”
“Bitcoin alone could help warm the planet more than 2 degrees.”
“Bitcoin is resurrecting fossil fuels.”
“A software code change could reduce Bitcoin’s energy use by 99.9%.”
The marketing campaign, which is exactly that, is funded by Ripple co-founder Chris Larsen who said he provided $5m to fund “the endeavour” and is still being investigated by the SEC in relation to the sale of unregistered securities relating to ripple and XRP.
For anyone that is new here i would refer you to the following articles to get you up to speed incase any of the above “facts” have you concerned about whether bitcoin is going to melt the planet.
» Bitcoin Needs To Use More Energy
» Proof-of-Work Is Not Just Useful - It's Essential
» Is Bitcoin Worth The Energy 1/2 & Is Bitcoin Worth The Energy 2/2
What i find far more interesting is the incredible individuals within the bitcoin community that are so quick to correct nonsensical and disingenuous claims, and provide verifiable data to the contrary to help level the playing field within the marketplace of information and ideas.
For most people that have no understanding of bitcoin, and lack the time, intention or curiosity to investigate further they are psychologically vulnerable to these kinds of marketing campaigns so the critical role the community plays cannot be over-stated and the change in dynamic compared with that of legacy media is also a significant contributing factor.
Looking at the comments from Greenpeace’s tweet is a thing of glory. I won’t read through them individually but i will include a few below so you can see for yourself.
The thing to remember here, is that bitcoin is not a company with a CEO at the top of a traditional hierarchical power structure. No single entity can actually just decide to change the code, as this marketing scam infers is possible. This only adds to the comedy of it. It could be a precursor however to more combative government measures and to attack the identity, for use of a better word, of bitcoin within the town square of ideas to enable such attacks - and with how easily most people have demonstrated their ability to parrot information mindlessly these days that the news told them is true, it is not difficult to see this happening. In my estimation this is the most likely intent for this campaign, but i can only speculate.
The beautiful thing about bitcoin, is that if Chris Larsen and his band of hysterics truly believe their own propaganda, they are more than welcome to fork the bitcoin codebase, and run their own network. Anyone that believes in this vision is welcome to abandon bitcoin and join their new PoS network. This story has already been told in the blocksize wars, but if some exec wants to try again I invite them to try. It would only serve as another powerful demonstration of the beauty of bitcoin and further strengthen the worlds most sophisticated monetary network.
My node however will be doing no such thing, and I wish anyone dumb enough to waste $5m on this endeavour all the best for the future.
Pomp nailed it with this tweet.
Absolutely hilarious!
Proof-of-work is one of the core fundamental innovations in bitcoin, and critical in enabling digital scarcity. Without it bitcoin does not exist.As long as people still fail to understand this, it offers an insane edge to the rest of us that do.
What a time to be alive.
My bitcoin can remain in cold storage longer than Chris Larsen’s marketing scam can remain relevant.
Wishing you all well. Hope you have a great day, and i will talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
We’re at a fascinating point in human development (or regression depending on how you think about it) where the oozing of hubris is at all time highs and the absurd belief that we can control everything has gone mainstream. We can’t even control ourselves, let alone anything else. We (on a collective societal level) completely discount the incomprehensible complexity of a world we exist as only a small part of and have become numb to our naive interventionism as so many seem to be willing to ignore the destruction caused by this unconscious and pathological behaviour.
According to wikipedia a free market is as follows:
“In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities.”
We are the market. You and me.
This is not to say that everything would immediately become some kind of utopia if we were permitted to operate within a purely free-market dynamic. This notion is fantasy. Humans will inevitably be human and we are deeply flawed animals. We are so deeply flawed most of us deceive ourselves from even acknowledging this simple truth.
A free market would consist of good actors and bad actors. But this is the case within a regulated market dynamic as well. The difference is that regulation provides a safe haven for bad actors to “game the system” where as a free market would give rise to more competition and presumably weed out these bad actors over time, or at the very least provide the market participants with superior offerings and the ability to choose. Modern day fiat banking is easily one of the best examples of what happens when we try to “fix” things.
The issue with us trying to control everything and prevent bad actors is that we naively underestimate complexity and fail to acknowledge the impact of higher order effects. We perceive reality within a very narrow scope of time and a very specific set of circumstances, and often fail to observe higher order effects that take time to manifest and may not manifest in a way that directly effects us making it more likely to not be acknowledged or even noticed.
We are psychologically and culturally overly skewed toward hubris and simplistic binary thinking and severely lacking in humility, and a willingness to be open to complexity and the possibility we may be wrong.
Regulated markets enable and encourage 1) monopolies and monopolistic dynamics 2) distortion of pricing leading to; 3) lower quality goods & services 4) create unnecessary friction which; 5) excludes certain participants and 6) further amplifies all prior negative externalities
KYC (Know Your Customer) & AML (Anti Money Laundering) regulations are prime examples of iatrogenics - which means to help but instead cause harm. This is a classic output of a market that is not allowed to operate freely, and of course the road to crony-capitalism is paved with g00d intentions.
Bitcoin fixes this.
While a free market is imperfect by nature (as is nature if you are looking at short time horizons) - what it does is fundamentally align incentives. It will not censor anyone per se, but it will disincentivise bad behaviour and incentivise market participants to create or supply the best quality goods and services as the market will naturally be inclined to consume these - rewarding the behaviour/output. Thus indirectly communicating in support of the offering. It allows the complex mechanism of price to be unencumbered which leads to better quality and overall lower prices for consumers. It enables new entrants to more easily enter a market where they perceive an opportunity to create a superior offering as there is less barrier to entry and encourages those already within the market to “sharpen their pencil” as it were. All of this is good for consumers on the buy side of the trade.
Ironically, this is a simplistic view, as my daily letter is not a sufficient vehicle to go into a deep thesis, but hopefully you can get a feel for it.
The thing that i don’t think most realise, is that we can have this dynamic right now thanks to bitcoin. Bitcoin is a tool to enable freedom. As more and more people accept bitcoin, circular economies will develop, people will naturally begin to denominate in btc as opposed to political monies, and sats will become the standard unit of account.
Many people mistake the current environment for capitalism. This is not capitalism. Not even close. Bitcoin is in the process of reintroducing free market dynamics to the world, and the result is going to be glorious.
Optimism and gratitude are an unfair advantage in a world of fiat-quality attention and bitcoiners are abundant in both.
Free the market. Free the world.
Wishing you all well. I’ll talk to everyone tomorrow.
AK
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Good Morning Everyone,
Back at it after a week of paragliding! Lets get straight into it.
As bitcoin heads toward $47,000 (relative to melting USD shitcoins) i found this video of Russian supreme leader Vladimir Putin of particular interest. The video shows Putin calling a spade a spade, and rightly calling out the end of the USD as a first class reserve asset following the sanctions by the G7 seizing Russian central bank reserves.
If you have been paying attention and following along - this is not news to you - but the significance of a pivotal world leader and one of the major energy producing nations calling it out certainly is. The US and others are hiding behind propaganda and Russian smear campaigns to distract the populous from this reality and the potential implications of this. Like him or loath him - What supreme leader Putin is saying here hits straight in the middle of the bullseye.
He says (which is subtitled):
“Let me reiterate, the whole global economy and trade have suffered a major blow, as did the trust in the US dollar as the main reserve currency. The Illegitimate freezing of some of the currency reserves of the Bank of Russia marks the end of so-called first-class assets. In fact, the US and the EU have defaulted on their obligations to Russia. Now everybody knows that financial reserves can simply be stolen and many countries in the immediate future may begin - I am sure this is what will happen - to convert their paper and digital assets into real reserves of raw materials, land, food, gold and other real assets.”
As i said, if you have been following along none of this is news and has been discussed and explored multiple times including here in a previous article titled - “A Clinic On Counter-Party Risk Ensues”
What is significant, is confirmation from Putin that he/Russia has received the US memo about counter-party risk, albeit a little late, but will now acknowledge reality and accept that we are entering a new monetary paradigm in which the US dollars reserve status doesn’t count for anything and is not worth the paper it is printed on.
I do agree in the short term that it is likely to see most nations pivot to protecting their wealth in quote-un-quote “real assets” as he mentions, however as i discussed last week, this is historically a suboptimal strategy. Hoarding of perishables like raw materials and foodstuff and monetising of suboptimal monetary goods is a knee-jerk reaction to a much more systemic problem. But it is a problem which now has a solution thanks to bitcoin. It is certainly the case that the monetisation process of bitcoin requires more time to deepen liquidity to be able to truly serve as the global monetary reserve asset. In the short term these “real assets” will likely be increasingly used, but over time this will also act as an educational tool for the wider populous what an unsatisfactory monetary good these items actually are.
As i said last week:
“The problem with this is the same as why it’s problematic to have monetised real estate. By monetising real estate as a store of value, it pushes prices up. This directly and negatively impacts local people because obviously people need somewhere to live. The only reason we have monetised real estate, and may be moving toward a world of commodity backed money, is because we had not previously discovered or invented a superior system. A pristine monetary good. We need a neutral money for the world, that does not need us to trust each other in order to trust the money, or the monetary protocol. With such a monetary good, this ensures we’re not incentivzed to hoard other things people may need, like commodities, in order to store and protect value. We do not want to adopt a money with utility. Quite the opposite. The most superior form of monetary good, is something that purely full-fills the purpose of an optimum money and absolutely nothing else.”
Short term it seems likely that naive interventionists will monetize so-called real assets at the expense of many humans on the planet being able to nourish themselves. Long term, the transition to the most pristine monetary good in human history has never been more obvious, and it is this transition that will usher in a new paradigm of energy abundance.
Hope you all have a great start to your week. I’ll chat to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Hope you have all had a great week. Before i get into a few content suggestions for the weekend, i couldn’t leave you for the week without briefly discussing a recent development between the IMF and the Argentinian Government.
The short version is that Argentina are in debt to the IMF, and have had a long and contentious relationship since joining in 1956. In this time Argentina have sought and agreed to 21 emergency financial-support programs, most of them lasting fewer than 24 months.
The perspective from inside the country vs outside is very different as Arturo C. Porzecanski explained in a noteworthy article regarding the relationship between the two back in late 2021:
“Outside Argentina, that record is evidence of the country’s frequent economic mismanagement. Inside Argentina, it is the rescue programs, rather than the fiscal, monetary and political causes of the country’s financial emergencies, that have come under most criticism, roundly disparaged as ill-conceived, excessively harsh and overall disappointing.”
Back in 2018 Argentina borrowed more than $40b from the IMF. These funds were due to be paid back, however Argentina is seeking an extension.
In a statement on the IMF website, they outline the agreement to extend repayments:
“IMF staff and the Argentine authorities have reached a staff-level agreement on the economic and financial policies to be supported by a 30-month Extended Fund Facility (EFF) Arrangement. The EFF, with requested access of SDR 31.914 billion (equivalent to US$ 45 billion or 1000 percent of quota), aims to provide Argentina with balance of payments and budget support to address the country’s most pressing economic challenges and to enhance the prospects of all Argentines by implementing measures designed to promote growth and protect essential social programs.”
As part of the extension included in the letter of intent was a clause to “discourage” the use of crypto-currencies. The exact language was under the heading “strengthening financial resilience” and reads:
“While commercial banks remain liquid and well-capitalized, strong bank oversight will continue, especially following the unwinding of pandemic-related regulatory forbearance. To further safeguard financial stability, we are taking important steps to (i) discourage the use of crypto-currencies with a view to preventing money laundering, informality and disintermediation; (ii) further support the current process of digitization of payments to improve the efficiency and costs of payments systems and cash management; and (iii) safeguard financial consumer protection.”
Basically in order for the IMF to agree to extending repayment of the loan they have slid in the need for Argentina to “discourage” the use of bitcoin and cryptocurrencies. The IMF are making a strong anti-competitive play here. They are making a play to limit the proliferation of bitcoin, while they attempt to support the proliferation of CBDCs (Read: Centrally-Binding Digital Chains). Bitcoin and crypto adoption is massive in Argentina - according to chainalysis the country is top10 for global adoption. Is it any wonder with 50+% inflation absolutely decimating the people of the country?!
The IMF do not want the free market to have any say on money. But this is how money works. They are wanting to prevent the proliferation of a decentralized and open-source alternative to their centralized slave coin. They do not want countries like Argentina to be able to get out from under their heel. They want them to be debt slaves forever.
While there is no doubt they can make things more difficult for the people of the country, trying to stop an open permissionless protocol like bitcoin, is no different to trying to ban free speech or ban certain numbers. The notion of it is simply preposterous. But this clearly will not stop them.
Thankfully, while there is no doubt they are clearly trying - ultimately they will fail. It seems obvious that they are attempting to prevent another country following El Salvador’s lead and creating a snowball effect within South America which at this point seems inevitable. Once other countries see the profound changes within El Salvador others will rush to implement a similar playbook.
Imagine trying to prevent the proliferation of the internet? Well, certain entities and governments tried, in many ways they are still trying to limit its power. But in the exact same way as they failed with the internet, they will fail with bitcoin. I’d anticipate that any action against the citizens ability to interact with this new technology will only act as a further marketing campaign as to why we need bitcoin and will trigger a huge demand for the asset.
We may have to demote Justin Trudeau from the role of CMO (Chief Marketing Officer) and appoint the IMF if they keep this up.
With all that said, lets get into a few powerful options for the weekend to expand your mind and deepen your knowledge.
Hope you have a great weekend. I’m doing a paragliding course all next week, so I will speak to you the following Monday.
AK
⚡️ Bitcoin For The Weekend ⚡️
Article: What Is Money - Lyn Alden
Pod: What Bitcoin Did w/ Nic Carter
Book: Bitcoin Is Venice: Essays On The Past & Future Of Capitalism - Allen Farrington & Sacha Meyers
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
In listening to an absolutely fascinating conversation between Peter McCorrmack and Nic Carter, Nic explains something that absolutely blew me away in how he thinks about commodity prices and the true connection of these costs to the humans in the world.
He explains:
“Commodity price charts; they’re not just numbers on a screen. They’re a measure of human flourishing basically. So if a price of a commodity gets cheaper, humans are flourishing more, and if it gets higher humans are in misery basically. So it’s an inverse flourishing index. So as metals and oil and gas get more expensive, life gets worse for human beings on planet earth. And the fact that commodities are in this enormous, monstrous rally no matter where you look, whether it’s food, commodities or metals or energy - that’s a bad sign for humanity.”
This is a really interesting way to think about it, and it’s most certainly true. You only have to think as far as food to very quickly realise how significant and far reaching the increased cost of basics like wheat are on individuals, families and society more broadly.
When you look at the charts of most commodities this is a pretty deeply concerning dynamic with respect to the “human flourishing index” and it suggests we are likely heading in a direction that leads to extreme pain.
The other thing the ‘inverse human flourishing index’ demonstrates is stability (or lack there of) within the world order specific to trust and cooperation and with respect to global trade. In many ways, given the amount of technological innovation over the past 100 years you would expect our ability to source different resources and utilise these resources would have become increasingly efficient and thus drive down costs. And perhaps it has, but the fundamental break down in trust we’re seeing in the world and the way that is disrupting supply flows of specific resources appears to be over-riding any potential benefit that may have existed.
It certainly is an absolutely wild time that we find ourselves living through. Perhaps in some respects we need to be more restrained in our consumption of resources - there is certainly an argument to be made for this. However i think the true root cause of this dislocation is a fundamental breakdown of the worlds monetary order. As this system is failing, and instruments and vehicles that were previously considered “safe” storage mechanisms for value no longer appear so. This is leading to a flight to “real assets” such as commodities and others.
The problem with this is the same as why it’s problematic to have monetised real estate. By monetising real estate as a store of value, it pushes prices up. This directly and negatively impacts local people because obviously people need somewhere to live. The only reason we have monetised real estate, and may be moving toward a world of commodity backed money, is because we had not previously discovered or invented a superior system. A pristine monetary good. We need a neutral money for the world, that does not need us to trust each other in order to trust the money, or the monetary protocol. With such a monetary good, this ensures we’re not incentivzed to hoard other things people may need, like commodities, in order to store and protect value. We do not want to adopt a money with utility. Quite the opposite. The most superior form of monetary good, is something that purely fullfills the purpose of an optimum money and absolutely nothing else. Those three primary properties are SOV, MOE, UOA. Store of value, Medium of exchange and Unit of account.
Either way it seems clear at this point in time, that without global cooperation and us having an ability to maintain constructive and productive relationships where we align on values, we’re heading toward some severe and sustained dislocations that will have major impacts, particularly hurting developing nations the hardest.
Hopefully we can course correct, and realise we’re all on team human and work toward getting this index trending back in favour of humans flourishing. I don’t think bitcoin alone fixes this obviously, but there is no question in my mind that the world moving to a neutral monetary protocol is one of the steps we need to take to reinstall this trust, and enable us to align team human toward win/win objectives and ensure that the human flourishing index can begin to trend again in the right direction.
Hope this finds you well. I will talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
One of the most fundamental dynamics that has underpin the dominance of the US dollar since defaulting (again) in 1971 and the subsequent removal of the peg to gold, that is the removal of any tether to the physical world, is the creation of the PetroDollar system.
Alex Gladstein explains this system and the historical account of its formation in his article - The Hidden Costs Of The Petrodollar.
As he explains in the article:
“In 1974, they sent new Treasury Secretary William Simon to Saudi Arabia “to find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth.” Simply put, a petrodollar is a U.S. dollar paid to a petroleum exporter in exchange for oil. As a Bloomberg report says, the basic framework was “strikingly simple.” The U.S. would “buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.” This was the moment that the U.S. dollar was officially married to oil.”
Now following the changing global dynamic, we may be seeing the birth of a new petro-backed monetary chess piece - that of the Chinese Yuan. There was a fascinating article in the Wall Street Journal that i’ve linked below covering this possibility.
There are many elements to this I find interesting, but to me the most significant of those is the fact that metcalfes law, ie network effects, goes both ways. The move to trade oil with China in Yuan is potentially the initial etchings of the end of the petrodollars dominance.
I don’t think we’re going to see some monumental rise by China tomorrow as a result of this however. Most likely China are just responding to the obvious realisations that they are vulnerable from an energy perspective. But there is certainly the possibility that they wish to attack the US dollar and its stranglehold on them and the global economy by attacking what underpins its dominance. It is also understandable that the Saudi’s will be planning for the potential that the US aims to become more energy independent and reduce their demand for oil.
Simon Rabinovitch who writes for The Economist, put together an awesome thread covering some of the complexities. What he is specifically looking at in this thread is not the strategic potentials of this move, but rather “how much Yuan can it absorb and put to work”.
He begins to review import/exports and considering the levels to which the Yuan accumulated as a result of such a move could be recycled.
The point he arrived at was that while the Saudi’s have some runway to accept Yuan and can expand their FX reserves up to a point, they are ultimately constrained by the fact that China’s markets are still considered too narrow and volatile, and that if they were to increase it further it would risk the original petrodollar arrangement.
He gives the example of Russia’s reserves just prior to invading Ukraine.
The fundamental issue i see within all of this is the fact that these currencies and the regimes that back them lack neutrality. If the Saudi’s wanted to increase their Yuan FX reserves they are fundamentally constrained because they would be tied to the whims of another global power. This may upset relations with a seperate global power and add further complexity to geo-political relationships. It also means the value of these reserves is tied to this power, their monetary policies and their actions in the world.
It would make so much more sense if they were to hold reserves in bitcoin. A completely neutral and censorship resistant bearer instrument which they can custody themselves digitally, and that can be transferred at the speed of light completely agnostic to borders. If this were the case, they would not be constrained by any of these issues and there would be no limit to their trade partnership. This would be a far superior mechanism in my opinion, and would alleviate much of the friction and risks that exist using the Yuan, dollar or any other unbacked piece of paper.
It seems clear to me that while this transition may be unlikely to happen immediately, that at some point in time, nation states will wake up to the fact that having a significant portion of the wealth anchored to that of a rival power is suboptimal, and the utilisation of a truly neutral digitally scarce asset is an obvious and far superior choice.
In the short term liquidity and the depth of the market is no doubt still a limiting factor, but over the next decade or two I believe this will change and what may seem unlikely now, will then seem obvious.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The EU parliament voted yesterday on a bill titled “Cryptocurrencies in the EU: new rules to boost benefits and curb threats”.
Included in this bill was a a rule relating to Proof-Of-Work mining which reads:
“ 1. Crypto-assets shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union.
Crypto-assets that are issued, offered or admitted to trading in the Union before [please insert the date of entry into force of this regulation] shall set up and maintain a phased rollout plan to ensure compliance with such requirements, in accordance with the conditions and criteria referred to in paragraph 3.”
Essentially this was a direct attack on PoW mining as an acceptable method of achieving consensus.
The notion that a regulatory body can ban PoW is frankly laughable, and demonstrates how far behind these people are, and how deeply they have descended into some kind of clown-world psychosis.
The process that we call Proof-of-Work is simply the process of a computer guessing random numbers. That is literally it. So the EU were proposing they could potentially outlaw the use of a computer to guess random numbers? If you’re not familiar with PoW, how it works and why it’s essential - I wrote about it previously here.
What is obvious at this point is that the EU can not really ban PoW or force bitcoin to change its consensus mechanism - remember, bitcoin is an inanimate object - rather all they can really do is ban themselves from the bitcoin network.
We really are at peak stupidity (in terms of governance) when we have people that have no technical capabilities voting on something, that they 1) clearly do not understand and 2) is as fundamentally absurd as banning guessing numbers.
If you want to read more on some of the specifics there is a great thread from Patrick Hansen that covered the situation in some detail.
In what is essentially inconsequential for bitcoin, the proposal was voted 30-23 against. Keeping the provision out of a draft of the proposed Markets in Crypto Assets (MiCA) framework.
Interestingly, this kind of a proposal if accepted could hurt something like Ethereum which still runs using PoW (despite planning for years to transition to a PoS model) as they have a centralized body of humans (the Ethereum foundation) where regulators could attempt to impose such a change. Bitcoin on the other hand being truly decentralized, does not. Thus any such attempt is futile.
The larger theme that stands out to me is that of energy usage. It seems obvious at this point that some nation states are at war with bitcoin, and the energy usage is the battle ground and current attack vector of choice.
This is of no major surprise given that bitcoin empowers the individual and disincentives the political rent seeking that many of the pseudo-elites in power have become accustomed to.
Ultimately the choice each nation-state will need to make is not whether or not they approve of the consensus mechanism or any other protocol level development, but whether or not they want to ban their citizens from plugging into the most powerful monetary network in human history and disproportionately harm their society as a result. If they were to ban it, not only would they harm their society in the short term, it would most likely be the catalyst for significantly higher prices in whatever local shitcoin currency as a result which would only amplify the problem, as we saw in the US when they banned gold in the 30’s.
Ultimately, scarcity drives value and eventually everyone will capitulate. The EU could never really ban PoW mining and infact situations like these just further highlight how far in front bitcoin really is.
Open networks win.
Hope you have a great start to your week. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I thought i’d keep this theme going on a Friday, and offer a few content suggestions that may be unknown to you and potentially valuable as we go into the weekend or to cue into you playlists for the next week.
Instead of recommending three books, articles and pods like i did last week, which seems unlikely you’re going to be able to get through all that, I thought i’d narrow it down a little, and point to one of each which is hopefully a little more digestible - please let me know via the like/comment section if you find this valuable or not.
The piece of the week for me, is from Nic Carter titled “America’s Quiet Default”.
As the title suggests, it gets into much of what I’ve been discussing and thinking about this week, which is the end of the US Dollar as the global reserve currency. Phenomenal article and i recommend you give it a read.
With all that said,
Hope you have a great weekend. I’ll talk to on Monday.
AK
Article: Nic Carter - "America's Quiet Default"
Pod: JP Sears & Robert Breedlove - What Is Money Show
Book: The Fiat Standard - Saifidean Ammous
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Good Morning Everyone,
Yesterday I wrote about the thesis from Credit Suisse’s Zoltan Pozsar, who is one of the most listened to and respected macro voices around. His thesis is too complex to rehash in detail again here but essentially he postulated that we could be on the cusp of a transition back to a commodity-backed monetary system essentially backstopped by China. This would be the transition of the world order away from a US dominant - US Dollar backed system - and toward a system where the PBoC become the new cantillionaire [Someone close to the ‘money printer’ that benefits from the Cantillon Effect] on the block.
His thesis is essential reading and while i’m open to the possibility of it playing out, I wanted to offer a little more nuance as to my thinking and why i believe the likelihood of us going back in time and adopting a metal based or broader commodity based monetary system is 1) Unlikely 2) would be sub-optimal and would fundamentally be a huge step backwards and ultimately fail; 3) Would mean a reversal in the trend away from the digitisation and adoption of technology that we have been on since the inception of the semi-conductor. Totally possible, but i would avoid temptation to fade this trend, until clear trend reversal were confirmed.
It is critical to first differentiate that there are conflicting wants and needs in respect to this. There are the wants and needs of you and I and the “middle class”, and there are the wants and needs of the political pseudo-elites and Geo-Powers. These wants and needs are, in many ways, in opposition to one another and fundamentally out of alignment at present.
The conflict here is that one class of people are forced to create value, and the other class of people benefit by confiscating that value (rent-seeking), which disincentivizes the value creation in the first place. As a matter of priority this fundamental lack of alignment should be addressed if we have any hope of course correcting and setting sail in a more mutually beneficial win/win direction.
The critical factors driving my view against the idea of a commodity-backed money are 1) trust is required but never possible 2) Supply not verifiably finite + scarcity drives value (ie: we don’t know what the supply cap is) 3) encourages centralization and has already been proven to fail (incentivising cantillion effect) 4) Elasticity - Increased price brings on more supply. This essentially means that supply increases indefinitely. Something with a perceivably infinite increasing supply is a poor monetary good (ex: Fiat).
It really is in many ways fundamentally a conversation about monetary properties and the hardness of money. We have seen gold fail as a money through time, be it in the Roman empire or the American empire, but there is an argument to be made that while it failed in isolated instances and periods across time, it has continued to be the default over the fullness of time (so far) - thus while societies based upon it have failed in the short term, the actual metal has persisted to be a primary choice for humans over the long term. This would likely remain true, if it weren’t for the innovation of the semiconductor, and the further innovation of energy-backed true digital scarcity. I believe that where gold has failed, bitcoin will succeed.
Obviously I have a very clear bias, however my bias is based upon which system actually has the capability to operate as the superior monetary good, not which one I “want” to be a money.
Ultimately while Zoltan’s thesis is conceivably possible, It is my believe that as more nation-state level actors begin to understand what this technology has actually unlocked and how superior it really is, it will be impossible to trust what one geo-power tells another they have in respect to a basket of commodities, especially when you factor in the opaque supply of said commodities; and when you factor in the option of completely transparent and verifiable digital scarcity the notion of this just seems absurd.
To go back to a commodity backed monetary system would be akin to getting rid of combustion engines and aircrafts and going back to horse and cart. It’s not that it’s “never” going to happen, but i certainly wouldn’t be betting on it.
The only way I could see a system like this being implemented is through force, and even if it were to be implemented the silver lining is that the bitcoin genie cannot be put back in the lamp. The mind virus of bitcoin and superior properties of the bitcoin network are simply too powerful, and as more and more people come to understand how much this empowers them and they begin to take control of this power, even if China wanted to install a global Yuan-CBDC backed by a basket of rocks and shiny metals, there is no doubt in my mind, that the people will choose bitcoin.
Bitcoin is freedom money. No one in their right mind would choose to adopt a centralized shitcoin issued by a tyrannical top-down dictatorship over the only truly verifiably scarce and censorship-resistant asset that gives the power back to the individual.
The design of bitcoin is just so far superior.
History has already shown us on repeat how this story goes by letting a state actor control the money. For the first time in our civilization’s history we have a new, novel and revolutionary alternative that cannot be stopped.
It’s simply a matter of time. Sooner or later everyone capitulates.
The future of money is decentralized.
Hope you have a great day. I’ll talk to you tomorrow.
AK
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Good Morning Everyone,
As commodities continue to surge in an unprecedented way, Credit Suisse released a paper on Saturday titled Breton Woods III which highlights that we are at a major inflection point as the changes to the world order appear to accelerate.
At the heart of this shift is the conflict between Russia and the US, and the actions taken by the US to apply extreme sanctions in response; but it’s important to understand that those events are merely symptoms, and not the cause. The cause is a broken monetary system, which is fundamentally a breakdown of “geo-trust” in the US dollar-backed system.
To first give you some perspective on how extreme the moves in commodities are lets look at a couple of charts.
Gold - Up 15% in 2022
Oil Up 66% (in 2022)
EUR Natural Gas (Dutch Futures) up 220% this year, and over 5700% in the last 2 years. (THIS IS NOT A TYPO!!)
Wheat up 74% (in 2022)
Nickel - Up almost 200% (in 2022)
These are absolutely incredible moves and they demonstrate the wild instability in global commodity markets right now.
Now that you have a bit of a feel for how wild the current moves are, lets get into the article from Zoltan Pozsar at Credit Suisse:
The article begins as follows:
“We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.
A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves…”
Lawrence Lepard discusses this crumbling of the foundations in the clip below and articulates the situation with clarity and the advertisement for state-less money as he puts it, as a result of the weaponising of the monetary system for political reasons.
Pozsar goes on to lay out his thesis - that in prior crisis the US fed has been the backstop, but this is no longer possible given that western nations are the ones imposing the sanctions.
“If we are right, and if this is a “crisis of commodities” – a 2008 of sorts thematically, if not in terms of size or severity – who will provide the backstop?
We see but only one entity: the PBoC!
Western central banks cannot close the gaping “commodities basis” because their respective sovereigns are the ones driving the sanctions. They will have to deal with the inflationary impacts of the “commodities basis” and try to cool them with rate hikes, but they will not be able to provide the outside spreads and won’t be able to provide balance sheet to close “Russia-non-Russia” spreads.”
If their thesis plays out, when we look back at history, this is likely to be the inflection that marks the end for the US dollar as the global reserve, and the rise of the new world order born of a Chinese-driven commodity backed monetary standard. Wild.
The US is trying to hurt the Russian Government by applying sanctions and freezing assets, but in many ways, this is accelerating a move away from a monetary order dominated by the US.
It is sending commodity prices through the roof, disrupting global trade, will force further devaluation of the USD and is likely to significantly accelerate inflation and make it very difficult for the US fed to hike rates - many analysts had priced-in 7-8 hikes in 2022 which now seems unlikely .
The article finishes with the following:
“The Fed and other central banks will be able to provide liquidity backstops… …but those will be Band-Aid solutions. The true problem here is not liquidity per se. Liquidity is just a manifestation of a larger problem, which is the Russian-non-Russian commodities basis, which only China will be able to close.
Do you see what I see?
Do you see inflation in the West written all over this like I do?
This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money.
When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flipside, the renminbi much stronger, backed by a basket of commodities. From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities).
After this war is over, “money” will never be the same again… …and Bitcoin (if it still exists then) will probably benefit from all this.”
This is an absolutely mind blowing piece to read in all honesty. I recommend you take the time to check it out yourself obviously to capture the full detail of his thesis.
Many bitcoiners suspected and theorised for years that in the event bitcoins price rises to insane levels, it likely does so along side major problems in the world - which none of us really want to see.
Part of the challenge here from my point of view, is to accept reality as it is. Instead of how you would like it to be. Accept the mechanics of what is taking place in real-time and avoid overlaying our biases or preferences over how we perceive the world.
That last line is going to be ringing in my head for days though.
“After this war is over, “money” will never be the same again… …and Bitcoin (if it still exists then) will probably benefit from all this.”
While this situation has clearly woken governments to the fundamental and pivotal role of energy within our lives, and i don’t discount the potential for a commodity-backed monetary system to be installed; I don’t see how this fixes the underlying need for trust. And it doesn’t look like we’re moving toward a world where Geo-Powers trust each other more. It appears to me to be a far more adversarial world.
Are we really going to go back to trusting what another country has in reserves because they say so? Are we really going to underpin a global monetary system to commodities that take weeks to ship around the world?
I just don’t see it. Whether or not that perspective is accurate however remains to be seen i suppose.
Obviously no one can predict the future, but the writing is on the wall right now. We are living through the most significant economic war of our lives, and most still have not grasped how significantly the fundamentals that unpin our way of life are being disrupted from energy to food, and everything in between.
After what we’ve seen recently from western nations, If you trust still your government to protect your wealth you deserve to lose it.
Get educated. Custody your keys.
Hope you have a great day and i will speak to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
This morning I just wanted to write to say thank you.
Today is the three month anniversary since beginning this letter. Since beginning I have written & recorded every day (Monday - Friday) and have written 63 pieces and recorded over 300 minutes of audio spanning a massive range of topics from the nuance relating to the Bitcoin networks energy usage and it’s proof-of-work consensus mechanism to the societal and geo-political implications of the world order - and everything in between.
If you haven’t already had a look through the website at past content you may have missed, i’d recommend doing so as much of it will be evergreen.
It’s been a massive undertaking beginning this project, and I’ve had many moments where i’ve questioned the time commitment of it, which is sometimes my entire day, but I began doing it because I believe sharing this information and supporting the proliferation of an open, censorship-resistant global monetary standard for the world will change everything - and i believe this now more than ever.
I hope you are finding these letters useful and it’s offering perspectives you may not of otherwise been exposed to and encouraging a level of curiosity to challenge former assumptions you may have. Also I’d love to hear your own thoughts and feedback so please utilise the comments section on the site to keep the conversation going!
Please share the letters around and encourage others to subscribe if you believe it is of value and to support my work - and if you haven’t become a paid subscriber, please consider doing so. I have structured the cost/content to ensure there is a fundamental asymmetry for you to leverage 💪
It’s been an absolute privilege to have you on this journey so far, and i hope the letter can be a spoke in the wheel of learning for many many more people, as the world awakens to the power of the most sophisticated monetary network in human history, and the deep and profound properties that underpin the network.
ANIMO ET FIDE 🙏
Onward,
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I want to spend this morning talking about bonds, which are certainly not something i’m not an expert in. Lets begin at the beginning - According to Investopedia:
“A bond is a debt or promise to pay investors interest payments along with the return of invested principal in exchange for buying the bond.”
Essentially governments issue bonds as a mechanism to raise capital and to support spending and obligations. In exchange they return an interest payment, commonly referred to as a coupon. They are traditionally considered low-risk because the government backs them. This has been true specifically for US Treasury Bills given the US Dollar reserve status, and the dominance of the US as a global power.
This varies however depending on their ratings, which are applied by a handful of rating agencies. Traditional portfolio construction was based upon the classic 60/40 split. 60% stocks. 40% bonds. The idea here that 40% of the portfolio was very low risk and would provide a small yield and limit overall portfolio risk while the other portion would seek slightly higher risk/return opportunities. In a historically low interest rate environment, like the one we’re in, this traditional allocation is challenged and essentially means people buying bonds are loosing value in ‘real’ terms meaning when adjusted for inflation.
I think the entire notion of a bond is really interesting. While predominantly they’re viewed as a means of earning low-risk yield, it’s not exactly clear what they’re actually backed by. I guess you could say they’re backed by the trust, simply that they will be repaid. They’re also some what of an endorsement of a government when you consider it as simply capital raising. If you believe in a company and their mission you may wish to support them in achieving their goals. While this may not be the lens in which most purchase bonds, it’s difficult to ignore this reality.
Back in November of 2021, El Salvador President Nayib Bukele announced his plan to launch Bitcoin-backed bonds often referred to as Volcano bonds due to their plans to mine bitcoin from the geothermal energy provided by many volcanoes in the region. I wrote a little about this back in the beginning of the year which may provide some more colour.
The bitcoin bond is an entirely new mechanism for nation state capital raising and one that has some extremely interesting characteristics worth exploring. Typically for smaller nations, their government bonds tend to receive lower ratings, and thus attract less investment capital. This often leads them to have no choice but to accept the predatory loans from the IMF. El Salvador’s Volcano bond could dramatically change this dynamic and give smaller nations a potential way to get out from under the heel of the IMF.
It’s essentially a mechanism to crowd-fund outside of the traditional method of borrowing from the IMF where there were previously little other alternatives. Instead of the purchaser needing to trust in the fact the government debt will maintain some arbitrary value, and they will remain solvent and be paid back, they have the backing of bitcoin instead which makes it somewhat of a more trustless and verifiable transaction - if you believe in the long term vision of bitcoin.
The capital raised from the initial $1b bond, will support a $500m infrastructure spend including but not limited to the development of a new city, they’re calling ‘Bitcoin City’ and the mining infrastructure to access the geothermal energy and convert this into electricity as well as a $500m purchase of bitcoin.
The specifics are outlined in the image below with the headlines being:
$1b of notional value
10Y Duration (Maturation: 2032)
6.5% coupon
5yr lockup on bitcoin allocation
Investments of >$100,000 will quality investors for citizenship
Since announcing this plan, El Salvador have come under fire from the IMF who have tried to warn them away from doing this and attempted to discredit the country and Bukele’s decision making. Rating agency, Moodys, also lowered the rating of the countries debt sighting “deterioration in the quality of policymaking” and the decision to adopt bitcoin as legal tender “as a sign of weak governance”.
Obviously the IMF like any bank etc, wants to keep customers, it wants to keep people in debt. In this case countries are the customer, but the basic premise here is no different. So it’s no surprise they have been fairly hostile to the actions Bukele is taking.
There is a really major element to this that i think is being completely overlooked.
The bitcoin (volcano) bond, is an energy backed bond.
It is so powerful, because at the same time as raising this capital, it supports the country in working to achieve energy independence. Perhaps a few months ago if i highlighted how big a deal this was, it may not have hit home with people - but now given the situation with Russia and the energy implications it is exposing globally, this is an absolutely profound feature of the bond.
Not only this, 50% of the investment is directly backed by the hardest asset on the planet which is directly backed by energy at the core of the protocol via proof-of-work.
I honestly believe after giving it a little more thought that this bond is going to be wildly successful and is going to pave the way for many others. Similar small nations will be watching closely how this is received, and if the response is positive we should be prepared for the potential for it to usher in a brand new wave of nation state level crowd-funding.
This is an incredible precedent to be setting, and has the potential to completely change the global dynamic over time, while at the same time providing energy independence for the citizens of the country. I cannot imagine a more significant sales pitch given the global energy dynamic we currently find ourselves in, not to mention the fact that it is 50% backed by true digital scarcity.
Hope you have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I feel like I’ve unloaded a ton of information on you guys this week, and particularly the last two letters where fairly deep (and long) so I thought I’d keep it short today, and offer you a few links to content that i believe are super valuable.
I did want to frame it appropriately before doing so, and offer my perspective on content, but more specifically books, as there is a profound asymmetry that exists that i think few tend to see.
I wrote about this in more detail a while ago linked here 2140.blog for anyone that is interested, but i’ll offer a brief explanation.
First consider what is distilled into a book. In many cases it can be a life’s work or an accumulation of information over decades. It’s also a filtration process, whereby the author is filtering signal from noise for you, so you don’t have to. Then the book is the transmission mechanism for the information from the author to the reader.
The asymmetry is essentially this: Think about what the downside is to reading a book. This could apply to a podcast, or any other content, the only difference is those are often more disposable, and may not have the same signal:noise ratio you’re more likely to get due to the commitment required to write a book.
The downside is very low. Worst case scenario is basically that the book sucks, maybe you wasted $20 and few hours of your time. Where as the upside is that the book could completely change your life, the impacts of which are profound and far reaching and potentially changing the lives of those around you and your community which is to change the world.
With that said allow me to offer some suggestions for the weekend.
Hope you have a great weekend. I’ll chat to you all next week.
AK
Books:
The Bitcoin Standard - Saifidean Ammous
The Price Of Tomorrow - Jeff Booth
The Sovereign Individual - James Dale Davidson
Pods:
Russia Ukraine War / Global Macro w/ Luke Gromen & Preston Pysh
Andreas On Bitcoin Neutrality
Articles:
Bitcoin Is Time - Gigi
Shelling Out - Nick Szabo / Audio here thanks to Guy Swam - Bitcoin Audible
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
US Fed Chair, Jerome Powell testified to congress yesterday under the title of “Monetary Policy and The State Of The Economy”. In the hearing he made some very interesting comments specific to “cryptocurrency” that i believe are worth a mention.
I’m paraphrasing here- but he was asked if Russia “could” use cryptocurrencies to “get around” sanctions.
He responded by saying:
“I don’t have any private information on the extent to which that is happening [Russia is using cryptocurrencies to evade sanctions], but that is something you read about and hear about and I just think [that] it underscores the need for congressional action on digital finance including cryptocurrencies.
We have this burgeoning industry which has many many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there. It was probably no different with rail roads, telephones or the internet and ultimately whats needed is a framework and in particular ways to prevent these un-backed cryptocurrencies from serving as a vehicle for terrorist finance and general criminal behaviour - tax avoidance and the like - So i guess that’s what i would say there, I don’t know the extent to which it’s happening although you do hear that and read about it in the paper.”
I find many things about his comments both hilarious and also thought provoking. The first is that the most senior person in the Federal Reserve, of the country managing the worlds reserve currency (for now) is basing his statement off of rhetoric that you “hear about and read in the paper”. You honestly just cannot make this stuff up at this point. He has no data or any kind of evidence of anything, but despite the fact believes they require congressional action to essentially regulate the industry. If you are unclear of whether or not your roof has a leak and there is no evidence like a body of water on the floor of your house, you don’t just automatically decide we should fix the leak. You determine if infact there are any which is normally fairly obvious.
Second is his clear view of the need for a “framework” for the crypto industry. The third point and most interesting to me is around the ability to censor entities financially. This is a deeply philosophical point. It highlights to me how comfortable many people have gotten operating within a system that has these capabilities and the desire exists to maintain this capability. That is to maintain a network that is not neutral. Where some nodes in a network have power over another. Whether it be to surveil transactions, freeze assets or completely remove access from the system.
This is where what bitcoin enables is just so transformational. It’s a complete system level change and it’s interesting to think about because i think a lot of people are going to feel this way, and to some extent very understandably.
I would expect for most people the idea of having a system that can censor and exclude people is with good intentions. An example would be in the case where someone or an entity wishes to inflict harm - which is obvious and completely understandable and reasonable.
We have existed within a system of control like this for our entire lives, so it’s natural that most would be accepting of this type of a system.
What I think is under appreciated about designing or programming a system that is not neutral, are the higher order effects that are created. Often because we are judging the output of the system over a short time horizon, we fail to realise that this lack of neutrality often leads to the failure of the system.
When it comes to money. This is absolutely and verifiably the case. For evidence of this, just look at what is happening around the world in respect to the US dollar. Russia, China, likely India, and others are looking for alternate ways to transact, due to the weaponization of the system. The censorship and the fact that the system does not remain neutral, is this weaponization.
Now it’s tricky, because we don’t want to enable evil people to do evil things. I think most of us would completely agree that we do not want that. The thing is that the measures taken do not stop evil people. They may stop some, but they do not fundamentally solve the issues. And they do so at the expense of every single participant in the network and the viability of the network itself. Because in order to do so, every other participant is essentially stripped of their rights, like their privacy, to enable the non-neutral capabilities and this fundamentally weakens the network and from a monetary point of view is the beginning of the end.
The slippery slope never stops there due to the incentives of a centralized network, and this is especially true when we’re talking about a centralized monetary network. Individuals closest toward the centre are always going to, over time, use these powers for nefarious purposes and for their own self interest. It’s just the unfortunate reality of human nature. This does not mean everyone will. But there will always be someone or a group of people whose internal value system will be corrupted by the power of the incentives. Despite what we would like to believe - this has been well documented time and time again throughout history.
Bitcoin fundamentally changes this, and in order to be a global monetary layer for anyone on the planet this property of neutrality is absolutely fundamental. It is perhaps the most fundamental property of bitcoin.
It does however trigger curiosity in me and to think about how this changes the incentives, compared with the current system that we’re accustomed to, which is a system built upon central banking. If we think specific to the situation with Russia - how does it impact another parties response like the US. The US want to be able to exercise their superior power against Putin and use it as a stick to retaliate and essentially harm him, as they are opposed to his actions. By removing this power would it change the nature of conflict? Would it mean we’re likely to get to a hot war faster than we would have otherwise without the option to resolve through economic means? Does it mean there would be more kinetic conflicts, because the option to resolve the dispute via economic means is negated? Or does it mean countries like the US would stop trying to impose their will on others because it’s simply to expensive to do so? Would it mean the likelyhood of Russia invading in the first place would be removed?
Saifidean does discuss this in ‘The Bitcoin Standard’ and makes the case that central banking and more specifically a lack of sound money have a strong relationship to war characterised by three fundamental reasons.
Here is a brief except from the book, explaining the three reasons:
“As discussed in Chapter 4 on the history of money, it was no coincidence that the era of central bank‐controlled money was inaugurated with the first world war in human history. There are three fundamental reasons that drive the relationship between unsound money and war.
First, unsound money is itself a barrier to trade between countries, because it distorts value between the countries and makes trade flows a political issue, creating animosity and enmity between governments and populations. Second, government having access to a printing press allows it to continue fighting until it completely destroys the value of its currency, and not just until it runs out of money.
With sound money, the government's war effort was limited by the taxes it could collect. With unsound money, it is restrained by how much money it can create before the currency is destroyed, making it able to appropriate wealth far more easily. Third, individuals dealing with sound money develop a lower time preference, allowing them to think more of cooperation rather than conflict, as discussed in Chapter 5.”
Personally i need to let these topics bake a little longer in my subconscious as it’s still not entirely clear to me that sound money alone solves all the problems, and removes the likelihood of humans essentially defaulting to violence to get their way but I acknowledge there is a strong case to be made and it certainly improves the dynamic in a very fundamental way, but i suspect the permissionless protocol of power projection amongst humans is something that never ceases to be an absolutely necessary capability.
The other side to this is the higher order effects of having a sound monetary standard amongst humans globally and the level of innovation this can usher in, and considering the ways in which that can fundamentally alter society for the better. This is something, as far as our academic version of history anyway, would be novel and it seems clear to me that at the absolute minimum it would be an improvement orders of magnitude from where we are currently placed.
I will say that do i have a deep belief that we have the capability to operate in a far more sophisticated way, specifically how we are with one another, and arrive at the obvious conclusion that we’re all on team human, and establish a way of being guided by the highest of human values centered around win-win dynamics and cooperation.
Lots to think about.
No doubt many people may disagree with me and like the fact that these economic sanctions can be placed on Russia. While i obviously do not endorse the invasion into Ukraine, i do not believe financial censorship and more specifically a system that enables it, is the solution to the bigger picture and I believe that we have to work hard to upgrade the way in which we operate with one another and adopt a system that best aligns our collective incentives.
It would seem likely that the US government (and likely others) will be the first to object to the neutrality of the protocol and will struggle to come to terms initially with the fact that there is an entirely different system from what they have become accustomed.
It’s anyones guess what actions they will take as they bump up against the properties of the worlds most sophisticated monetary network. The best thing any government can do in my opinion is to demonstrate a level of psychological flexibility and acknowledge the new information, and change their minds. Owning and controlling the network is the way of the legacy system. Opting in to a truly open-source, decentralized monetary system that no one can own or control, and is “backed” by electrical energy rather than kinetic energy is the way forward.
Hope you all have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The world order is changing fast right in front of our eyes. The implications of the war that has begun are far reaching and constantly evolving.
The following quote from Vladimir Lenin captures my sense of the situation:
“There are decades where nothing happens and there are weeks where decades happen.”
- Vladimir Lenin
The amount of bad information online has honestly never been higher. I’ve seen videos shared apparently from Ukraine, that was actually from a starwars movie (with storm-troopers in the video!) and that have been shared by mainstream media outlets, as well as propaganda relating to the Ukrainian PM with images of him in full-camo as if he were going into battle that are actually from a year ago. I could go on, but the point is it’s easy to get lead astray right now, and very difficult to separate the signal from the noise.
For this reason, i believe it’s more valuable to focus on the larger themes at play as these, just like higher time frames on a chart, imply a higher signal:noise ratio.
The big theme as we have discussed is that the world order is in flux. It’s incredible to me to witness the way the attention of the masses is as if it were attached to a string. One day it’s COVID and a fixation toward masks and vaccination status - next it’s war.
Now with military conflict breaking out, and all eyes on Ukraine, I’m most curious to see if the situation will escalate, and if it does, how China will respond.
Ray Dalio has written a recent piece that i’d like to point you to, which is insanely valuable. I’m constantly amazed at what the internet has enabled, and to be able to access content like this at zero cost is drastically under appreciated.
Focussing On External Conflict - The Russia-Ukraine-Nato Situation
Ray basically outlines his 2 major concerns. That being 1) NATO being drawn into this war triggering an escalation 2) How supportive will China be to Russia.
The article captures the broader view with clarity and a laser sharp historical context you’re unlikely to get elsewhere and I urge you take the time to read it.
What I wanted to highlight was from the very end of the article where he laid out his Power Principle which is as follows:
“Have power, respect power, and use power wisely.
Having power is good because power will win out over agreements, rules, and laws all the time. When push comes to shove, those who have the power either to enforce their interpretation of the rules and laws or to overturn them will get what they want.
It is important to respect power because it’s not smart to fight a war that will produce more pain than reward; it is preferable to negotiate the best settlement possible (that is unless one wants to be a martyr, which is usually for stupid ego reasons rather than for sensible strategic reasons).
It is also important to use power wisely. Using power wisely doesn’t necessarily mean forcing others to give you what you want—i.e., bullying them. It includes the recognition that generosity and compromise are powerful forces for producing win-win relationships, which are fabulously more rewarding than lose-lose relationships. In other words, it is often the case that using one’s “hard powers” is not the best path and that using one’s “soft powers” is preferable.”
This lead me to thinking about bitcoin - and money as a system of control more broadly. This system is relevant from the perspective of the individual as well as on a larger scale between nation states as we are seeing play out with this current conflict.
It’s important to understand the historical context of economic wars, to appreciate how significant they infact are, and how close it indicates we are from a wild escalation in Kinetic warfare. Ray outlines these in the article, and i’ve touched on these recently but the central point is this:
“Shortly before there is a military war there is an economic war that typically includes:
Asset freezes/seizures
Blocking capital markets access
Embargoes/blockades. “
We are seeing these first two measures being taken in response to Russia invading Ukraine. So a tit-for-tat escalation is a very real possibility and could ensue much faster than what most may realise. Given this possibility it’s timely to consider how best to insulate oneself, that is to protect what power we do have, even in our own small ways. It is historically difficult to protect ones wealth in times of war as Ray points out in the article, and as i’ve stated many times, that i believe bitcoin is the most transformational tool to empower the individual to protect their’s - which is to protect your economic power in the face of uncertainty relating to the impacts these events may have on individual currencies, different assets and markets as well as how individual governments and/or central banks may change the rules of the game to suit their own means, as we have seen in Ukraine.
As Ray states in the article:
“Protecting one’s wealth in times of war is difficult because normal economic activities are curtailed, traditionally safe investments are not safe, capital mobility is limited, and high taxes are imposed when people and countries are fighting for their survival.
Protecting the wealth of those who have it is not a priority relative to the need to redistribute wealth to get it to where it is needed most. When hot wars happen, classically it pays to sell out of debt and buy gold because wars are financed by borrowing and printing money, which devalues debt and money, and because there is a justifiable reluctance to accept credit.”
There is a much larger idea in amongst all this that I’ll get into another time, which is that the monetisation of bitcoin has the potential to dis-incentivise kinetic warfare.
Leaving that aside for now - I think Ray’s perspective ‘that it’s most important to redistribute the wealth from those that have it rather than protect it, is an interesting one. But i also think there are arguments to made against it, given the level of wealth inequality. Remember, the top 1% in the US own more than the entire bottom 50%.
But who is disproportionately harmed by these kinds of conflicts out of the two parties? One can still afford shelter and food, and in many cases the other cannot. I think it’s self evident that the majority of every-day working class people that do not own assets as a means of protecting their wealth, because they live week-to-week to survive as it is, are most harmed as the cost of basic goods or services increases in an extreme way.
I would make the case that an open system that empowers the individual and does not allow one node in the network power over another, or the ability to distribute their value without consent, aligns the true incentives much more appropriately. I also believe we have already seen examples of this be demonstrated in the bitcoin community. We saw over 22 bitcoin raised and donated for the Canadian truckers. We have also seen significant donations to individuals effected by this recent conflict as well as the opportunity to donate in other ways as well.
However, this action should be a choice, and if ones survival does genuinely depend on it, then it would likely be an easy one. The current system incentives those closest to the center of the system to take value from those that can least afford it rather than funding these conflicts themselves, as ray suggests is most important. Instead we have seen US politicians and central bankers literally day trading and focussed toward benefitting from the recent pandemic and global events. This would seem to me like an obvious contradiction and while what Ray says is very likely true, that the current system and the incentives of it, do not line up and incentivise the behaviour he suggests.
For now I think the most critical thing for people to understand is that bitcoin is the most pure and pristine abstraction of money that human civilization has created or discovered, depending on how you think about it. In every previous war, gold has historically been the go-to as a means for the wealthy to insulate themselves from the actions of government/central banks indicating what Ray infers to be ideal, is not actually what happens.
It also meant that everyone that did not have gold or other alternatives and was confined to a local currency was disproportionately harmed economically, and in some respects, funds the war (through the devaluation of the currency) regardless of whether or not they were implicated directly.
Now for the first time, anyone on the planet with a smart phone and an internet connection has the power to protect themselves and opt-out from supporting a system that incentivises war.
This is a major shift, and one I don’t believe most have grasped yet, and the societal ripple effects of such a transformation are difficult to imagine.
As the title of todays letter suggests, I believe we’re in the eye of one of those points within history where decades could happen in days.
Stay alert. Get educated. If you have assets on an exchange now is the time to custody your keys.
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As financial sanctions, bans and the freezing and confiscation of assets become all the rage amongst politicians and legacy media the world over in response to the Russian conflict, and in an attempt to condemn the actions of Vladimir Putin, it’s hard to cite a more significant series of events to demonstrate how Bitcoin truly fixes this.
I really am amazed and completely bamboozled quite frankly, by the fact that so much of the world still fails to recognise the level of risk to which they’re actually exposed and specifically to the counter-party risk which is so multifaceted its scary.
The legacy system is a system of trust that is not backed by anything, and there is an endless number of examples as to why you would be a fool to trust it. A system that strips you of your rights and ability to custody your own assets. A system that disincentives you from holding bearer assets and is based on taking from the future (debt). A system were the rules can be modified and weaponised against you and enable a 3rd party to censor your access.
There is clearly such a giant knowledge gap on the part of bitcoin detractors preventing them from grasping this. It seems at this point that the only thing that is going to help them get the message unfortunately is pain.
As Lyle Pratt said below:
Naturally every central bank has no choice but to be seeking alternatives right now. Trust is fundamentally asymmetric. It takes a long time to build, but can vanish in a split second. Just like in 2008 when the US demonstrated that they would devalue the currency in a historic way at the expense of all those that were forced to hold massive amounts of USD in FOREX reserves due to being trapped by the petrodollar system, it becomes simply impossible for any node in the legacy system to trust that sanctions and financial attack would not one day come for them.
Nic Carter said it perfectly:
I cannot imagine still trusting banks or any financial intermediaries for that matter. Certainly not with any significant level of capital. The notion of that is simply insane as far as i’m concerned.
If that is how i feel, i can only imagine what Putin would be thinking. What would every central bank be thinking? What would the super wealthy all around the world be thinking? Would they be ok with the level of counter-party risk they’re exposed to?
With pressure on all intermediaries including centralized crypto exchanges to censor any Russian accounts Kraken CEO Jesse Powell has been vocal on the critical nature of properly securing your bitcoin keys and taking custody of your wealth which is powerful and demonstrates his principles given the incentives that exist.
In a tongue-in-cheek response to the Canadian government condemning he and others from recommending people custody their assets, Jesse said:
He also discussed recent calls for more censorship, specifically of Russian accounts, in an excellent thread included below - i urge you to have a read.
This is akin to the CEO of a major bank saying “get your money out, it’s not safe!”
Pretty incredible.
To consciously elect to remain in a system that can literally flick a switch and erase any existence of your wealth is absolute madness. A system that will not allow you to custody your own assets and that enables the freezing and/or seizure of those assets is madness.
There really is only one alternative. The greatest risk right now is not bitcoins volatility. It’s storing your wealth in the legacy system where it could vanish over night if your government decided to engage in some kind of war, and steal your money from you to pay for it. This is no longer a fringe idea. Leaders the world over have no choice but to seek alternatives.
Do not wait for pain to educate you. Do the work now if you have not already to insulate yourself from counter-party risk and opt-in to the most sophisticated monetary network in human history. There has never been a better mechanism to transport value across time and space, and that enables you to take the power and responsibility to custody it yourself. Grab that opportunity with both hands and opt-in to the peaceful protest that is bitcoin.
Ever grateful to the genius of Satoshi in moments like these.
Hope you have a great day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As the situation in Europe continues to develop, and world leaders posture and signal to their people about how they intend to act and how righteous they are, rather than allowing our minds to be on the end of the strings of the powerful and our attention to be captured and controlled by the legacy media machine, i want to turn our attention to something far less cortisol inducing being Network effects, or Metcalfe’s Law.
Metcalfe’s law named after Robert Metcalfe states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).
The network grows exponentially as the number of users of the network increases. As discussed previously, this effect is even more pronounced with monetary networks due to the incentive that exists to join, as well as the disincentive that exists not to join; that is the longer you delay joining the network, the fact that those that joined early benefit disproportionately implies you are comparatively disadvantaged.
With all the talk about banning Russia from the SWIFT system, one thing that doesn’t appear to be as well understood about Metcalfe’s law, is that it works both ways.
Not only does the network grow exponentially as the number of users increase, so too does it grow smaller as the number of users decrease.
By removing any nation from being able to interact with, and as part of the network, it actually harms all participants as it directly impacts the protocols network effect, which is the fundamental underlying property that gives it it’s stability and power.
As per the SWIFT website, it states the system is neutral.
The system may have been designed to be neutral, but as we know, it is most certainly not the case. It is vulnerable to human influence and the protocol design does not prevent this. We have seen this demonstrated with Iran being sanctioned and thus excluded from the network in 2012.
If Russia were to be cut off from the system, given Russia’s size and economic significance in the world, and also the clear alliance that exists between China and Russia as well as the China/US dynamic, this move would be far more significant for the overall health of the network and could see Metcalfe’s law begin to accelerate exponentially to the downside as participants are essentially incentivised to seek an alternate system in the face of the current system being weaponised and entities seeking a truly neutral option that insulates them from the political attack of other nations.
Historically speaking, the moment a money becomes a tool that can be used against you and as a means of exerting power over you, it seizes to be a good form of money, and people will naturally seek alternatives.
We have already seen a 30-year deal between Russia and China for the supply of gas in Euros and have discussed the trend of de-dollarization multiple times already. I believe it is evident that we are in the throws of a major historical inflection point as countries transition in response to the changing environment leading to the decline of the US Dollar as the worlds reserve currency.
In the short term Russia, China and the like could trade in euro’s or we may see China try and push for some kind of Yuan-ification. India has said it is exploring ways to setup an alternative to enable trade with Russia in the face of increasing sanctions.
According to one article, government and banking sources said:
“India is exploring ways to set up a rupee payment mechanism for trade with Russia to soften the blow on New Delhi of Western sanctions imposed on Russia after its invasion of Ukraine.”
Whether that is a move by India to try and gain some power in the global currency wars, i am at this moment unsure and don’t have a strong opinion.
What is clear to me is that most are still operating under an old and obsoleted paradigm. Nation states, and the powerful few that represent these want to control these systems as a way of protecting themselves from having the system turned against them, as opposed to the obvious, which is to adopt a system that does not require anyone to control it and thus is truly neutral. This is counter to every system that has come before it. Whether it be China trying to push for the increased use of the Yuan or India doing the same for the Rupee makes little difference. While those alternatives can suffice in the short term, in the long term they would suffer the same fate.
In the face of the invasion into Ukraine, there were significant funds transferred via BTC, ETH and USDT to ‘support the people of Ukraine’. This is Metcalfe’s law playing out in real time. While Ukranians had their access restricted to payment service providers by the central bank, people flock to seek an alternative.
In response there were many people that had an opinion and that bitcoin shouldn’t be used to “support” war and that the network effectively should censor these transactions.
Surprisingly few still seem to get this - Bitcoin is for everyone.
That is not to say I want to support war. I have no opinion or appetite to get into such disingenuous and simplistic arguments.
The point is that in order to be a good form of money and thus the worlds most sophisticated monetary network, the neutral, censorship-resistant nature of bitcoin is absolutely fundamental. It is the very reason that over time i believe every country will come to join and plug in to the bitcoin network. It’s the only system that exists that any country or entity can truly be confident in using, and that cannot be weaponised against them.
As you can see with this situation, the weaponization of money does not solve the problems. If it did, we would have rid the world of child traffickers and pedophiles. Unfortunately we have not. Humans are capable of unimaginable evil, and obviously we should oppose this, but weaponising a monetary system for this means is simply ineffective and over time leads to the systems demise due to Metcalfe’s law.
Bitcoin doesn’t fix everything, but it does fix this.
Sooner or later it is going to seem so obvious.
Hope you all have a great day. Bring the Monday morning energy! 🔥🔥🔥
I will talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As most are probably aware, Russia invaded Ukraine yesterday. The situation is wildly complex and there are myriad potential implications, responses and higher order effects that could transpire as a result. The situation is far too complex for one person to capture in a short letter. I want to focus on a few of the themes i’m thinking about this morning and that i believe are worth paying attention to.
First is that very few people want this. War is brutal, and likely results in a significant loss of life and unimaginable hardship for many. My thoughts go out to everyone that is effected both locally and abroad, and I hope every single citizen and their families are safe. It’s times like this that being on an island a long way away seems like a blessing, and i’m grateful my family and I are fortunate to be living in a place where the thought of another country unloading missles in the middle of the night is not something we have ever been concerned of.
However i do believe these times may very well be changing.
I will try to do my best and view the events as mechanically as possible. This situation has clearly been percolating for some time, and this looks like being the beginning of a bigger shift. The geopolitical chess pieces had been setup and were posturing, and this is the lead domino.
The themes that are top of mind for me this morning are:
China. What will they do if anything? Will they look to strategically leverage this situation and treat it as an opportunity?
How will the US & Allies respond? Will they respond?
Energy costs. Oil and gas particularly and the implications for how this impacts supply, trade and as a result, price. Also higher order societal implications of increased energy costs are major.
US rates. The US rate cycle is the most significant economic driver of much of what we’re seeing in the markets.
Money Printing, DXY and the US Dollar
Bitcoin. People treating it as a risk-on asset are lost in high-time preference thinking.
These previous two letters included below offer some relevant things to think about specific to war in relation to monetary reset, and also some potential higher order effects of the US leaning on the SWIFT system as a weapon against Russia.
What’s fascinating is that Russia appear to have realised they have an edge over the US in the global chess match. While tension has been extreme between China, they are calling the US’ bluff, and moving to invade Ukraine regardless. And not only that, but they will economically benefit. Russia are a net oil exporter, and they produce nearly 20% of the worlds oil. So while the price of oil rises, they are benefiting while the US is a net importer despite being the worlds largest producer they are negatively impacted. As the price of oil continues to rise this dichotomy grows. So Russia have found a huge asymmetry and are exploiting it. The US’ reliance on the importing of oil also means that the likelihood of them trying to cut off Russia from the SWIFT system is low, as this would send oil prices even higher and harm the US citizens disproportionately.
The US focus toward China also provides this edge. If the US did move to support Ukraine in a meaningful way (which i believe is unlikely), that would give China a major edge over the US to move on Taiwan. So the US finds itself in somewhat of a bind.
There have been reports of Chinese jets in Taiwan’s airspace this morning. What is China’s position in response to Russia’s move to invade Ukraine? Do they oppose the move (doesn’t look like it) or do they see it as a reasonable global restructuring much like them taking back control of Hong Kong in 2019 and looking to “reunite” with Taiwan as well?
It’s valuable to think back to the situation in Hong Kong, as it’s easy to get emotionally triggered by events, and to immediately think worst case scenarios - reflecting on history can help provide clarity.
China basically asserted itself on Hong Kong, a major financial hub in the world, and imposed its rule upon the people of Hong Kong. And what did the US or anyone else do? Nothing. Some three years later, and it’s clearly established as part of mainland China and the world has moved on and is distracted by something new. So it’s not hard to see the US and others providing a ton of lip service and talking big, but actually doing very little.
I would be shocked if China do not try to leverage this situation. How exactly likely depends on the US response. Do they wait for the US to deploy resources (if they even do) and be ground down a little before some kind of decisive move, or do they move on Taiwan sooner than later, while eyes are focussed on Europe? Make no mistake - all nation officials around the world will be having these conversations and enacting protocols in response. What they are, and when or how they are deployed is yet to be seen.
All of this comes while the US is talking hiking rates and a cyclical shift. Whether or not this really happens, also remains to be seen. The markets have puked major moves just on talks alone of hiking rates with no actual action, so that very well may be enough to keep the music playing for a little longer.
How does all of this impact bitcoin? On one hand it doesn’t. Bitcoin is an apolitical neutral protocol, and does not care. Block after block of transactions will continue to be mined. Short term price action relative to USD is more of a distraction than anything else in my opinion. The fundamentals of the network are getting exponentially stronger by the day, and the treatment of the worlds first and only truly inelastic global digital monetary network as a risk-on tech stock is frankly laughable. People have so obviously been conditioned to have such a high time preference that most still fail to grasp the essence of the technology and confuse it with a completely elastic good, like equities, which can create more units into infinity, and completely misses the forrest from the trees. It will seem obvious in hindsight.
As you can see I have many more questions than I do answers. In the words of Ray Dalio:
“It’s very clear me that whatever i know, is a fraction of what i need to know”.
These are certainly wild times, and as energy costs continue to increase globally, the higher order effects of this cannot be over stated. The long term time horizon and most severe outcome of which is mass starvation as the price of literally everything increases as a result of rising energy costs, most significantly food cost, and disproportionately impacts societies most vulnerable.
Hopefully we can embrace change, and move away from a system that incentives war, and toward a system that will incentivise energy abundance. We have a long way to go and a lot of work to do to get there, but i believe there is no mission that is more important and meaningful and failure is simply not an option.
This quote by Elton Trueblood captures my feeling precisely:
"A man has made at least a start on discovering the meaning of human life when he plants shade trees under which he knows full well he will never sit."
Hope you have a great weekend. My thoughts are with everyone impacted by this situation and wishing you all well.
I will chat to everyone next week.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
When nation states have disagreements and to some extent oppose one another, there are a number of typical actions that can be taken in response as a means to try and assert oneself and desires upon the other and achieve some kind of a resolution. The most severe escalation of these actions is of course being out-right kinetic warfare - ie guns and violence - but there are other forms of war that typically precede this, including (but certainly not limited to) informational, geo-political, and economic wars.
Economic wars vary in scope from trade wars, as we have seen escalate between the US and China in recent years, to tariffs on specific goods as a means to try and cripple pivotal infrastructure needs or capabilities, or restrictions around the types of goods that are acceptable for import/export. Things can escalate from trade wars to financial sanctioning, and attempts to restrict the flow of capital as a means of more significantly choking and ‘disarming’ a countries ability to operate, and trying to economically suffocate their opponent. Globally this could be by removing access to the SWIFT system or freezing or confiscating locally held assets or accounts.
The US as the world reserve currency have had a fundamental asymmetry in this respect as the cost to impose financial sanctions is minimal, but its effect on an opponent is crippling. Leading to this being a much used arrow in the quiver as you can see from the image below - showing some 37 sanctions in the last 18months alone.
The problem with financial sanctions is that they provide diminishing returns over time, similar to a sharp sword that becomes blunt the more it’s used and ultimately being rendered useless. The use of such actions incentivises a move away from any system that enables this and in the process removes a major source of power from their opponent.
The critical thing to understand here, is that financial sanctions are an act of war. This is not my opinion. This is well documented and continuously demonstrated by history.
What we have seen in Canada is the government declaring an economic war upon the countries own citizens, and invoking emergency powers to enable such actions from being implemented free of any legal due process or really any legal restrictions whatsoever. They have attempted to seize assets and freeze accounts of anyone that opposes them in an attempt to economically strangle and suffocate citizens that oppose their political rule.
If Financial Sanctions are an act of war, then a run on the banks - that is to custody your own assets - is the appropriate response and the single most effective way citizens can retaliate and project power in the face of such an attack.
The following is an indication that this is exactly what is happening.
There are 4 charts below, showing outages from four of the major Canadian banks. The outages are from about a week ago, but according to downdetector.ca the outages continue to be significant and wide spread.
Obviously these institutions are not open, public networks, so we cannot track outflows on-chain like we can with the bitcoin network, but it’s a safe assumption that the coordinated outages of the major Canadian banks are not just a coincidence and are most likely in response to the initial signs of a run on the banks in progress, and in direct response to the disproportionate actions taken by the Canadian government.
I would make the argument that this is the primary reason supreme leader Trudeau has announced they are now revoking the emergencies act, just two days after a vote on it being formally implemented.
I’ve attached a clip below where Jordan Peterson even stated that he had been in contact with a reliable source within the Canadian military and he said this:
“That if I had any sense I’d take my money out of the Canadian banks, because the situation is far worse than i’ve been informed".”
This is an absolutely incredible thing to hear, in amongst a series of fairly incredible events, and at some point the dam has to break.
The bitcoin clinic being run by the Canadian government right now to educate their population on the necessity of self custody is, if it weren’t so heinous, something we should almost be pleased about. Obviously it is horrific and I’d not wish this on anyone.
The facts are simple.
If you do not have custody of it, and you can not project the power to protect it, then it’s not yours.
This should serve as a wake up call to everyone that has been idly sitting by and silently complicit as government slowly erode the rights of citizens, to learn from what is happening in Canada and understand and truly, deeply acknowledge, that these kinds of actions are not a matter of if - they are a matter of when. And as discussed previously - Governments and central banks are planning for it.
It does not matter how much you think you can trust an entity, or how sophisticated you perceive the society or trust in the rule of law. If the system - and the incentives of the system - are such that they can, then they most probably will.
History has already told this story many times. Although it may be new in our lives, that does not mean it is new. It’s simply new to us.
The current dynamic makes me even more grateful for the mission people like Jack Dorsey have undertaken at Block to develop and improve the ability to self custody ones bitcoin. I saw this tweet this morning from Nick Staney, a product design engineer at block, about the product they are working on and it sounds like it could completely change the game. Which is absolutely necessary, given most people still leave funds on centralized exchanges and do not seem to take seriously the true power of self-custody.
Lets see how things continue to unfold. The temperature is clearly rising. It’s never been more critical to get educated and understand what actions you should take to best deal with a world that is constantly changing, is wildly uncertain and feels increasingly volatile with each passing day.
If you do one thing - learn about self custody and take control of your keys.
The future is decentralized and the world is running a global marketing campaign on the need for censorship resistant money that cannot be confiscated.
Central banks won’t like it and will actively fight it. Bitcoin doesn’t care.
This neutral, apolitical protocol is changing the world in front of our very eyes.
It is inevitable.
Hope you have a great day - I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I can see the initial etchings of an interesting trend that i believe is worth paying attention to. The trend is of intelligent people that did not understand bitcoin and why the world needs it, but are slowly but surely being awoken to its power and necessity and demonstrating the psychological flexibility to change their mind. Which is a competency I have a ton of respect for, but few demonstrate.
One of the most notable people recently is David H Hansson who goes under the twitter handle @dhh. David is the creator of Ruby on Rails, an open-source web framework that he created in 2003 which has enabled many of the major platforms you have most likely used or at least know of like airbnb, Twitter, Github and Shopify. He also co-founded a company called base-camp and most recently one called Hey - which is to use his own words, focussed toward “turning email into something you want to use, not something you’re forced to deal with.”
DHH is a super interesting character, and given his background and verifiable vision, certainly at minimum specific to technology, the fact he did not see why the world needs bitcoin speaks volumes.
He put his thoughts on “paper” in an article called “I was wrong, we need crypto”.
While I don’t believe he gets everything right in this (and I actually reached out via email to offer some alternate views), there is no doubt he has seen the light, so to speak, and clearly has a line of sight now to the critical need in the world for bitcoin, much to his surprise.
As he says:
“I still can't believe that this is the protest that would prove every Bitcoin crank a prophet. And for me to have to slice a piece of humble pie, and admit that I was wrong on crypto's fundamental necessity in Western democracies.”
He goes on to outline exactly as we have discussed recently - that tyranny is the ultimate marketing campaign for bitcoin. Nothing promotes censorship-resistant, un-confiscatable money like having your bank accounts frozen and being unable to buy groceries because you donated $25 to a good cause.
His specific reasons for the skepticism and inability to have a line of sight to the “why” i think is a very common one amongst individuals in privileged and seemingly well ordered and functioning societies - which is simply that they don’t need it - Yet!
He explained as follows:
“To say I've been skeptical about Bitcoin and the rest of the crypto universe would be an understatement of epic proportions. Since the early 2010s, some of my most ferocious Twitter battles have been against the HODL army with the laser eyes.
There's just so much to oppose: Bitcoin's grotesque energy consumption, the ridiculous transaction fees and low throughput, the incessant pump'n'dump schemes in shitcoins, the wild price swings in the main coins, the obvious fraud that is Tether, the lack of real decentralization in most of the current web3 infrastructure, and on, and on, and on.
Beyond all these very real problems and challenges, my bigger beef was actually fueled by a lack of imagination. I could see the fundamental promise of a digital currency free of banks if you were living in a failing state like Venezuela or an overtly authoritarian one like China or Iran, but how was this relevant to the vast number of Bitcoin boosters living in stable Western democracies governed by the rule of law?”
The level of confusion that the shitcoin casino and all the bs around “web3” and the noise relating to energy consumption and politically motivated rhetorics has had on the minds of the many, including proven technology visionaries like DHH cannot be over stated. If someone like dhh dismissed it, then it is safe to assume many others have too for similar reasons.
He ends the article highlighting a phenomenal twitter thread that I’ve been meaning to write about and share for a few days. Which outlines the critical nature of our ability and freedom to transact, and how everything flows from this.
He wrote:
“But wherever this leads us next, it's clear to me now that I was too hasty to completely dismiss crypto on the basis of all the things wrong with it at the moment. Instead of appreciating the fundamental freedom to transact that it's currently our best shot at protecting.”
The thread is below, I strongly urge you to read it.
It is clear that many people have been distracted by rhetoric and personalities and have failed to do the work in understanding the protocol and learning from history. As the global power grab continues to gain steam, we should expect more people to join dhh and begin to rethink and challenge their former assumptions.
Sooner or later, everyone is going to understand why they need bitcoin. In the exact same way as they did the internet. It’s the whole reason i began writing this letter! What is obvious to me and many others now, will at some point in the future be obvious to everyone. My hope is simply, that it is not too late.
Get educated. Stay open minded. Take custody of your bitcoin.
This is the way.
Hope you all have a great day. I will talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Power projection is a concept that I have discussed before in depth - but if you are not familiar with it, I suggest reviewing in the letter linked below to have a thorough understanding of the concept and its significance.
You can find it here:
The concept of power projection was first introduced to me by Jason Lowery who is a member of the US Space Force and is completing his thesis at MIT on Bitcoin.
Jason is absolutely brilliant. He has been sharing snippets from his thesis online for feedback and proof reading. He shared one that really caught my attention, and I thought I would share it with you here.
Here is the piece from Jason’s Thesis:
“5.2 To Test if Someone doesn't Understand Bitcoin, Ask for their Opinion about its Energy Usage
I argue it's impossible to fully appreciate the strategic significance of Bitcoin without understanding the fundamental, systemic implications of hashing. People's misunderstanding of hashing and, more generally speaking, the primary value-delivered function of power projection, shows clearly in data. Throughout coding, I repeatedly observed respected technical experts across multiple disciplines illustrate a surprising lack of understanding of the purpose of hashing or how it's designed to solve a very precise systemic security flaw that no other popular protocol has adequately solved. Their ignorance most commonly manifests itself in the form of two arguments: (1) Bitcoin's hashing infrastructure should strive to decrease its energy consumption, (2) Bitcoin's hashing industry should strive to become more efficient.
To address the first argument regarding decreasing energy consumption, now that the reader understands the virtue of brute force power competitions, we can understand why encouraging a hashing infrastructure to project less power is functionally equivalent to encouraging a military to project less power. This is a ridiculous proposition that illustrates a gross misunderstanding of the primary value-delivered function of hashing. It should be obvious to the reader why it's not in any user's rational best interest to advocate for weaker military defense at a higher price. Yet, that is precisely what people do when advocating for Bitcoin to lower energy expenditure while simultaneously hoping for a higher valuation (higher valuation directly translates to higher hash defense infrastructure budget due to block subsidies and transaction fees).
As anyone who understands power projection protocols like hashing knows, the more energy intensive a blockchain's respective hashing defense industry becomes, the more severe the real-world sunken and opportunity cost is required to systemically exploit its consensus rules. Thus, higher energy expenditure improves security. Users of hash-secured blockchains should therefore encourage it to use more energy and require increasingly more expensive hashing infrastructure - because that is precisely what deters belligerents from attacking. The only rational response from someone who understands Bitcoin's security protocol is "Bitcoin needs to use more energy.”
To address the second argument regarding increasing hash rate efficiency, it should first be noted that the more appropriate way to measure the security level of hash-secured blockchains at scale is to measure how much energy and infrastructure backs its hashing apparatus, rather than focusing exclusively on the hash rate itself. One should be concerned about how much real-world power is dedicated to defending the blockchain through its hashing protocol. This is because real-world energy expenditure and sacrifice is what actually deters real-world belligerents from exploiting the blockchain's consensus rules - not hash rate. Said differently, the attacker is afraid of the financial harm that would be caused by the immense sunken and opportunity cost of attacking the network, which is derived from the fixed and marginal costs of the infrastructure and energy behind the hash rate, not the hash rate itself. So why the obsession with hash rate? It's simply an easier proxy metric to quantify the blockchain's real-world power output and infrastructure cost. Everybody knows there's a direct, positive correlation between the two, and it would be extremely difficult to continually keep precise track of the variable cost of energy and infrastructure dedicated to a blockchain's hashing protocol.
Satoshi clearly understood that keeping fixed and marginal costs of hashing infrastructure and energy expenditure prohibitively high was the key to deterrence, because Bitcoin has software in place to throttle the difficulty of its hashing competition to ensure that it remains sufficiently cost prohibitive in the real world to perform an attack regardless of the system's combined hash rate. This point cannot be emphasized enough: The protocol is designed to offset increasing hash rate efficiency by hiking the difficulty level of its hashing competition ad infinitum. It intentionally creates a permanent headwind that causes hashing infrastructure of any size or efficiency to lose its competitive edge. Consequently, no amount of improvement in total hash rate or hash rate efficiency should be expected to reduce real-world difficulty. Building faster, more efficient, cheaper computers and finding cheaper sources of energy to improve the operational effectiveness of hashing should not be expected to decrease the total real-world energy expenditure and infrastructure cost of defending Bitcoin. No amount of efficiency is going to make it easier for the hashing industry to chase an infinite horizon it was programmed to never reach. A past total hash rate of 10 TH/s will be irrelevantly closer to infinity TH/s than a future hash rate of 1,000,000,000,000,000 TH/s; what matters is how much energy and infrastructure it the hashing industry uses, and the more the better.”
This is some high level deep knowledge. Super powerful, and surprising how few people seem to truly understand this.
We want the bitcoin network to use more energy. The more energy the better.
This does not mean we want the energy consumed to negatively impact the environment. Those two things should not be conflated; but in order to secure a global monetary network for the planet, and for the network to be truly adequate to full-fill its promise, it requires the consumption of energy to properly secure it, and be capable of serving this purpose. Without the tether of energy use to the real world, it will simply never be possible, as the security model would be in adequate leading to a lack of trust due to its known lack of security and we would remain trapped in the legacy paradigm of having to trust predatory central bankers.
This new paradigm will incentivise the sourcing of cheaper and cleaner energy over time, and it is this element of the bitcoin network that will lead to an abundant energy future for human civilization built upon the most secure and anti-fragile computing network known to man. All incentivised by a software protocol designed 13 years ago by an anonymous person or group.
Simply incredible!
Wishing you all well. I’ll talk to you tomorrow.
AK
“If you don't believe it or don't get it, I don't have the time to try to convince you, sorry.”
- Satoshi Nakamoto, 2010
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As the situation in Canada sadly continued to escalate over the weekend, with the police initiating violence toward peaceful protestors. The police chief was asked about their intentions for filming the protests and if they planned to use the footage they were accumulating to identify people and actively perusing them following the protest.
He responded as follows:
“The simple answer is yes. If you are involved in this protest, we will actively look to identify you and follow up with financial sanctions and criminal charges, absolutely. This investigation will go on for months to come.”
So effectively, the police force has outlawed the rights of the citizens to express themselves, and if they have expressed themselves they will be hunted down and treated as criminals. Wow
It’s worth clarifying that under the framework of a democracy, to peacefully protest is indistinguishable from participating in such a framework. Comedian Rob Schneider frames it perfectly:
As part of its war against the countries own citizens, the government of Canada have been contacting financial institutions and providing names of private citizens, and entities - essentially a blacklist - instructing these institutions and service providers to freeze their funds, and restrict their access to financial infrastructure.
This is analogous to the Chinese credit score system, and we are seeing it installed in the G7 nation of Canada. Where the government deem who can or cannot transact, and what is deemed acceptable or not. While these emergency powers are only supposed to be available for 30 days under the law, it is not obvious given the circumstances in which the powers have been invoked, if that will actually be adhered to, or if the situation will be manufactured to install such powers in a more permanent fashion.
While legacy monetary technology enables this, and incentivises these actions - free and open-source software (FOSS) built upon an open protocol is the antidote - and it is literally the only antidote that exists.
Nunchuk.io is an open-source multi-sig bitcoin wallet, and was contacted by the Ontario Superior Court of Justice requesting certain actions be taken against specific individuals or entities.
Below is there response, and it’s beautiful.
You absolutely love to see it.
The legacy system is operating under a paradigm that we are in the process of moving away from, but they have not yet realised it, and the power of this system is still unknown to most.
This new paradigm is built upon the worlds most secure computing network, and is completely independent of any government or state actor. A truly open and global decentralized system that no one owns or controls. With free and open-source software built on top of this network, that anyone can build and contribute to, from anywhere, and that anyone can install on their device at no cost.
The power of what this enables is so major, it seems to elude most people.
Closed networks are good for controlling others. Open networks are good for empowering the individual.
Get educated and empower yourself. Take control of your keys, and support open-source software development.
This is how we win.
Wishing you all a powerful start to your week. I’ll chat to everyone tomorrow.
AK
Monday Meme:
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Good Morning Everyone,
There is a powerful meme that tries to capture the cyclical nature of human behaviour over time and the relationship between prosperity and societal regression, destruction and rebirth.
The cycle is as follows:
Hard times create strong men
Strong men create good times
Good times create weak men
Weak men create hard times
…and so the cycle repeats… Hard times create strong men…
There are plenty of data points that suggest we have lived through one of, if not the most prosperous periods in human history, and an equally large number of data points that suggest it has created an inordinate number of weak men as a result.
I’m as much a product of these “good times” as the next person, so i want to clearly state and acknowledge that I try to check myself in this respect to avoid becoming a statistical truth, thus a weak man, but absolutely acknowledge this possibility.
If the current trajectory in Canada is anything to go by, we are approaching some very hard times ahead.
This tweet from Pomp captured the state of play perfectly.
The Canadian government have now begun to cut-off and restrict citizens access to bank accounts and the financial system, both personal and corporate accounts, for essentially wrong think.
To attack individuals that are politically opposed to a tyrannical government and rather than respecting, listening and trying to achieve peaceful conciliation, supreme leader Trudeau has demonstrated that if you hold your money in a bank and regulated institution, that ultimately, it’s not your money; and they can restrict how you spend and express value, and restrict your access to the system if you oppose them.
Deputy supreme leader Chrystia Freeland said this, in response to whether people donating to gofundme or givesendgo will be targeted:
“The names of both individuals and entities as well as crypto wallets have been shared by the RCMP with financial institutions, and accounts have been frozen, and more accounts will be frozen. Crowdfunding platforms and payment service providers have started the registration process with FINTRAC. In terms of the specifics on who’s accounts are being frozen, you now have the regulations, the financial service providers have those regulations as well, and they working with law enforcement will be making the operational decisions.”
This is an absolutely chilling statement.
It is a historically bad trajectory that the Canadian government seems to be intent on, and offers a glimpse into a future where cash no longer exists and you are forced to use government issued and controlled central bank digital currencies (CDBCs).
This is a world where dissenting voices, and those who politically oppose government actions are financially silenced and easily shunned from the economy. These are the hallmarks of a top-down dictatorship, and not values of a civilised western democratic nation.
We also saw crowdfunding platform givesendgo get hacked, and all user data relating to the freedom convoy donation campaign being doxed online, which included the names and personal details of over 92,000 people, in what appears to be a very obviously politically motivated attack.
The political elite are waging war on the people of Canada, and they are being enabled by a silent majority, that believe their propaganda and lies.
With each passing day, i believe the likely-hood of a run on the banks increases, as ever more Canadians are woken up to the way the system is being turned against them, and that the financial infrastructure they have trusted for years is being weaponised as a political tool to control them and keep those that oppose the political elite powerless.
This is absolute power corrupting absolutely, in real-time.
The silver lining is that hard times create strong men, and strong men create good times. I believe the overwhelming majority of Canadians agree on much more than they disagree on, and that in the fullness of time, most will come to realise it.
The values of privacy, self-sovereignty, truth and freedom that bitcoin is built on, have never been more important and essential than they are today, and will continue to be a beacon of hope for many of us in amongst a world gone mad.
Truth will win. A future built upon an open, global monetary protocol that dis-incentives bad behavior by a powerful few at the expense of the many will seem so obvious in hindsight. Grateful as ever to be here for that journey with you.
Resist the lies. Bitcoin is the mission.
Hope you all have a great weekend, and i’ll talk to you on Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
US Congressman Warren Davidson has submitted a bill to Congress to support and protect the right to self-custody your bitcoin and transact peer-to-peer (P2P). This comes in the wake of dictatorial powers being leveraged in Canada against the countries own citizens, and as we witness the ongoing attack on civil liberties in many other countries including Australia and New Zealand all concealed under the disguise of safety.
This is an interesting proposal, as ultimately the bitcoin protocol is permissionless, and requires no approval from anyone to be able to custody your keys, however I do still believe there is some value in this act being submitted.
Firstly, simply facilitating this kind of nuanced conversation amongst people in government can only be of value in my opinion, as it likely serves as a productive way to educate individuals on the value and power of self-custody, and also the risks and responsibilities associated. It could also cast a light on this concept, and serve to demonstrate that the desire exists to be able to custody your own property in society more broadly, and that is a very powerful meme to inject into the culture.
While the document does not appear to have been added to the US Congress website yet, the senator spoke with Bitcoin Magazine about the proposal.
He was asked:
“This feels timely, especially after the Canadian government has doubled-down on restricting the funding for and bank accounts of the protesters there. In your mind, what’s the relationship between self-custody and free speech?”
Congressman Davidson responded:
“People are talking about [free speech] with the trucker convoy. If this [protest] happened in America, some would be cheering, some would be upset. My point is that it should be even-handed. We shouldn't use money as a way of controlling people. Of course if there’s criminal activity, you should go after that. But imagine if the same thing were done to a crowdfunded BLM movement. That wouldn’t be okay. It’s not okay with the Freedom Convoy, either.”
The fact that it is well recognised amongst politicians that money has been weaponized against the citizens as a means of control, should concern everyone, but it’s incredible how few people seem to understand this. The congressman taking this position however, is obviously a step in the right direction.
At the same time, it’s appropriate to be skeptical and cautious, as we have seen many US politicians use bitcoin as a political tool recently, and the true motives of these individuals should be heavily scrutinized, and they should be judged on their actions.
Ultimately though, bitcoin doesn’t care.
It is an apolitical and completely neutral protocol, that no single entity has any control over. It was built to operate under the adversarial conditions of human nature, and has operated flawlessly for 13 years, and it will continue to do so regardless of what any government or nation state wants.
As always, it’s never been more critical to get educated and understand the specifics of self custody, as is being very clearly demonstrated right now in Canada. If you give governments the ability to leverage monetary power over you, they will take it.
Suck the oxygen out of the room. Opt-in to the most sophisticated monetary network in history, and take that power into your own hands.
Have a great day. I’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Yesterday Canadian supreme leader Trudeau invoked the ‘emergencies act’, formerly the ‘war measures act’, in the G7, formerly democratic nation of Canada.
The war measures act has only been invoked 3 times in the countries history:
During WW1
WW2
1970 “October Crisis”
The Emergencies Act has never been used since being established in 1988, until now. If you want to see the supreme leaders announcement i’ve included it below.
I think it’s important to really gain some perspective on the situation in Canada, and to fully appreciate the true nature of the conflict.
While many countries around the world have been removing restrictions relating to the pandemic including Denmark, Sweden, Finland and Norway; Canada has continued to force lockdowns and vaccine mandates on its population.
As a result of these ongoing and sustained measures the truckers of Canada began to protest, and assemble in large numbers to peacefully demonstrate and express their opposition to the insane covid hysteria, and the ongoing erosion of their rights.
It deserves mention, that none of these people likely want to be doing this. Most just want to be working and living their lives, free of government infringing on their ability to do so. They are sacrificing their time, and their ability to earn an income and in the depth of their winter, where temperatures are extreme, and -20’ celsius is not uncommon.
These are brutal conditions to be away from home and out in the cold, but it should help to echo how serious these citizens believe the situation is.
Now after multiple weeks of sustained protest and resistance, the government have essentially signaled as a result of this emergencies act, that these people do not have the right to protest and are massaging the use of the rule of law, to be able to treat the peaceful citizens effectively as terrorists. Absolutely insane.
Deputy PM Chrystia Freeland announced the following measures in response to the Emergencies Act being invoked:
“We are announcing the following immediate actions:
We are broadening the scope of Canada’s anti-money laundering and terrorist financing rules, so that they cover crowdfunding platforms and the payment service providers they use. These changes cover all forms of transactions including digital assets, such as cryptocurrencies.
The illegal blockades have highlighted the fact that crowdfunding platforms and some of the payment service providers they use, are not fully captured under the ‘proceeds of crime and terrorist financing act’. Our banks and financial institutions are already obligated to report to the financial transactions and reports analysis center of Canada or FINTRAC.
As of today, all crowdfunding platforms and the payment service providers they use, must register with FINTRAC and they must report large and suspicious transactions to FINTRAC.”
There has never been a more powerful marketing campaign in bitcoins 13 year history, against political money, and in support of a neutral, censorship resistant monetary protocol and the separation of money and state, than what we are seeing in Canada right now.
The moment it becomes a crime to send money to a friend, loved one or simply a fellow citizen you wish to support that is peacefully expressing themselves, is the moment that a nation, and much of the world wakes up to what bitcoin is actually solving for and why it is so unbelievably powerful.
No government deserves this power over any one of us, nor is any government capable of wielding this power, and as previously discussed over time, absolute power will always corrupt absolutely.
While Canada begins to look more like a dictatorship akin to that of soviet Russia, the true value of having an open, global, borderless and censorship resistant monetary network becomes more obvious by the day.
If you have not seen the following speech by Brian Peckford, who is a former politician and the last remaining Canadian alive, responsible for the Canadian charter of rights - the very rights that these truckers wish to defend - I recommend you take a look.
Although it is hard to see now, out of the darkness comes the brightest light. Bitcoin and the resolve of the powerful and principled Canadians will lead this beautiful nation back toward better days.
Wishing all our beautiful Canadian friends and family well in these challenging times.
I appreciate you all 🧡
Hope you have a good day. I’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Alex Gladstein shared a great thread after visiting a mining facility in Norway. The KryptoVault facility is located in Hønesfoss, which is about an hours drive from Oslo.
The facility harnesses the power of running water (hydro) to generate electricity to power the bitcoin miners, and secure the network. Making the electricity generation almost free, beyond the setup and facility maintenance costs of course.
According to the companies website:
“In Norway, we have 100% renewable energy. In fact, Norway has the greenest and cleanest electricity in the world with 95% hydropower and 5% wind power.”
It really is incredible when you consider that these machines are being powered by running water, and the incredible network incentives of this open global protocol have been the invisible force to motivate humans to access this energy, which not only is creating a business of the future and jobs for some locals but it is also powering a completely public, open-source and borderless global monetary network for the entire planet.
The other thing that is unique to this mining facility is the way they are trying to integrate and support their local community.
One of the largest parts of running a mining facility is heat management and cooling systems. At this facility they have developed a completely novel solution to support the sustainable forestry industry by utilizing the heat generated to dry timber.
With the help of bitcoin miners, what often takes 2-3 months in the Norwegian summer sun, takes as little as 4 days.
This is just one small, yet significant example, of a new and novel innovation that many of us believe this industry is going to usher in, and as discussed in yesterdays letter, in alignment with the laws of nature, and in a completely decentralized, and bottom-up way.
No government or governing body had to create any rules or regulations to force KryptoVault to access this energy, or to leverage it in this way. It is entirely by design. As a direct result of the incentives of the network. They are financially incentivized to do so, and it is to the direct benefit of both their local community and also the bitcoin network.
The bitcoin network is in the early stages of ushering in an energy renaissance, and is going to dematerialize energy and support an abundant energy future for human civilization like nothing we have ever seen before, and at the same time supporting the most sophisticated monetary network in human history. This is just the beginning.
It’s impossible to be anything other than wildly optimistic about the future with developments like this taking place
Hope you have a great day, and i’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
There is a powerful metaphor that demonstrates the conundrum we find ourselves in when trying to analyze, assess and gain a clear recognition of a system, from inside of that system.
It is that, of a fish in water.
“Fish don’t know they’re in water. If you tried to explain it, they’d say, “Water? What’s water?” They’re so surrounded by it that it’s impossible to see. They can’t see it until they jump outside of it.”
This metaphor is equally applicable to how we perceive money, and the relationship of money to government or the state.
Australia was on a gold standard in alignment with the British until the end of world war one, at which point the British empire was essentially broke, and chose to transition away from a sound monetary standard to a fiat standard, in order to devalue the currency (siphon value from all who hold the currency), by increasing the money supply and enable them to pay their debts to the US.
The US famously moved from a gold standard to a fiat standard in 1971. Since this time, which is now over 50 years, essentially the entire world has been on a fiat standard.
Obviously we’re not born understanding anything to do with money - infact most never understand it.
Much like the fish in water, given we have not had a standard based on sound money since ‘71 in the US, and even earlier elsewhere, it’s unlikely you would have any concept of the change to the monetary system, and how it impacted you, as it’s essentially all you have known. It’s been the water around you for your entire life, which makes it near impossible to view the world outside of that system and imagine the world could have been any other way.
But the world has been different prior, and when viewed through a wider historical lens, this period of time is more so the exception to the rule, rather than the rule itself.
This is interesting to me, and in many ways explains the difficulty so many have in understanding bitcoin and how it changes absolutely everything. It is a completely foreign system, compared with the current system of ‘water’ which is all they have ever known.
The relationship between money and state is at the core of our existing system.
I read an incredible article over the weekend by Allen Farrington, which i’ve since re-read about five times, to try and really digest the significance of what it brings to light.
I highly recommend you have a read for yourself. It’s short, but profound.
Here is a except from the article:
“While not a singularly causal factor, it is certainly not a coincidence that the three great empires just cited [Roman, Spanish, Brithish] all collapsed more or less in line with the rate of debasement of their currencies in pursuit of economically destructive militaristic ends.
But the fiat era created a dramatic historical anomaly. For the first time in recorded history, the cost of creating new money literally was zero. This has had profound effects on political economy. While money can always buy power, power could now buy money, and without economic calculation. There is no cost too great to seizing power, and next to no incentive not to give it a shot, because any costs can later be paid back, and then some. This, we believe, is the root cause of the cult of toxic bigness now endemic across the developed world,
Rather than a naturally homeostatic process of increased size tending to lead to inefficiency, in the fiat era, the bigger you are — either as a business or a government — the more powerful you become, hence, entirely perversely, the more efficient you become. Of course, the less efficient everybody else becomes because they are transparently being stolen from. The more communal capital is consumed, the more energy the capital consumer can direct towards seizing power and paying back himself, but likely nobody else.
Bitcoin fixes this. And in a remarkably simple way; it undoes everything just described. It returns a cost to money — a higher one even than gold — and makes toxic bigness unsustainable. Hence, Bitcoin isn’t so much explicitly a pro-localist tool. If anything, the reality is even more profound: localism itself is natural, healthy, sustainable, and right. Bitcoin destroys the historically anomalous countervailing force and, in doing so, will let localism happen without having a particular bias of its own beyond the far more abstract concerns for sustainability, efficiency, accountability, humility, and truth — all natural bedfellows to localism.”
So powerful.
While money can always buy power, under a fiat standard, power could now buy money.
And if history is anything to go by. Power will. Until absolute trust in the system is dissolved, power will continue to buy money at the expense of the population.
This is the fiat feedback loop, and we can see this all around us in the world today if you are paying attention. There is a reason the world has become overly politicized, and it is primarily as a result of this feedback loop between money and power.
The need to decouple money from the state has never been more obvious, and the sooner people realise it, the sooner we can transition to a new system that is designed to operate in alignment with the laws of nature, a system that incentivizes localism and the expression of the highest of human values like truth.
This can be difficult to see from within the current system, but as soon as you plug-in to the bitcoin network and begin to express value in a new way, you have an opportunity, perhaps the first opportunity in your life to view the fiat system from the vantage point much like the fish jumping out of the water.
Once you realise the water is all around you, and you can see it, you can never see the world the same way again.
The world needs a decentralized, censorship resistant protocol to enable humans to express value in a truly open and transparent way, and that’s exactly what we’ve got.
The future already exists. It’s just waiting for you to realise it.
I hope you all have a great start to your week, and i’ll talk to everyone tomorrow.
AK
Must-watch clip re Canadian Truckers
Monday Meme:
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Good Morning Everyone,
One of the common concerns that you hear from people that do not understand bitcoin and the lightning network - or even know about lightning typically, is that it’s too slow, and that it cannot process enough transactions and that’s why the newer shinier xyz shitcoin is more pretty and exciting, and thus going to change the world.
When in actual fact, what you tend to find, is that those individuals are just crippled by the effects of the fiat mind virus, and are a product of the fiat system. They are in most cases suffering from a severe case of CDHTPD - Catastrophic and debilitating high time-preference disease.
Obviously I just made that name up, and while it is not real in the sense that it’s not a medically recognized disease, the difference between a high time preference and a low time preference is a societal-altering difference. They are polar opposites, and the point of arrival depending on your time preference is a key determent on the way you behave throughout your life as well as how and what you choose to focus on when allocating your time. It determines how you perceive the meaning of value, and how you express value fundamentally and the way in which you orient yourself in the world.
For clarity, someone with a high time preference is someone that is extremely sensitive (read: fragile) to time (time = volatility), and is very short sighted and focussed primarily on the shorter-term time horizon. High time Preference is concave.
A low time preference would be the opposite. Someone that is focussed on the long term, and prioritizes the future over the present. Low time-preference is convex. Anti-Fragile - meaning one gains from the volatility of time.
The classic marsh-mellow test is one well known example that demonstrates the psychology of time preference in children.
It is true that bitcoin alone as the base layer, broadcasts transactions roughly every 10 minutes as transactions are confirmed and a block is mined, the block height increases, and the number of transactions per block is limited to the size of the block, which since 2017 was changed to be measured by ‘weight units’.
The current average number of transactions per block vary, but for simplicity sake we can say is likely to be somewhere between 5-10 p/second. If you would like a little more detail on this, this link will be clarifying.
What is obviously missing from this is Lightning, which is a second layer network built on top of bitcoin. Lightning radically changes the throughput capability of the network. Theoretically, the lightning network can process millions to billions of transactions per second and at almost no cost.
The concept and term ‘Lightning Service Provider’, or LSP, was originally coined in an article in 2019 by Roy Sheinfeld. Roy is also co-founder and CEO of Breez - which is an awesome lightning wallet and podcasting 2.0 application, which is well worth checking out if you haven’t already. The idea of an LSP is similar to that of an ISP for the internet.
Wikipedia describes an ISP as follows:
“An Internet service provider (ISP) is an organization that provides services for accessing, using, or participating in the Internet. Internet service providers can be organized in various forms, such as commercial, community-owned, non-profit, or otherwise privately owned.
Internet services typically provided by ISPs can include Internet access, Internet transit, domain name registration, web hosting, Usenet service, and colocation.”
Everyone connected to the internet these days, is connected via an ISP. ISP’s were one of the key mechanisms in enabling the internet to scale to the extent it has around the world and allow more users to join the network.
In a similar way, bitcoin has established itself as the trust or value protocol layer of the internet, and lightning service providers are going to play a pivotal in supporting the growth and onboarding of users to the bitcoin and lightning network.
The lightning network as it is today, is still beyond many ‘mainstream’ users, although for anyone with a tiny bit of interest and curiosity it’s easy enough to get a node running and open up some payment channels, but as i found out recently, if you have any issues it can get pretty technical pretty quick.
One of the larger constraints regarding opening and maintaining lightning channels is liquidity. I think this is likely the larger barrier that really drives the need for LSPs over time, as many people that interact with this network won’t have several btc available to be locked-up for use as liquidity by the lightning network.
As explained in a great twitter thread, the key functions of an LSP will be:
Provide liquidity to the network
Support nodes with new channels
Routes data and payments
Rebalances channels among users
Drives reliability and redundancy
It’s likely that large holders, exchanges, platforms and service providers built on top of these networks operate as major LSPs with thousands of smaller ones operating and maintaining channels with smaller liquidity pools and contributing to decentralize and further strengthen the network.
This in my opinion is where the early majority phase of network adoption happens, and it likely happens in a way where people do not need to worry about any of technical aspects and simply enjoy the benefits of near-free and instant lightning payments anywhere in the world 24/7 x 365, while LSPs take care of the logistics in the background.
Lightning has been in development for years, and is just now starting to really come into its own, with almost 35,000 nodes currently online. While those with a high time preference are being distracted by jpegs (NFTs) of rocks and apes, i believe most are underestimating the potential of the lightning network, and specifically the role for LSPs to play to on-board users.
Simply put. If Bitcoin is equivalent to TCP/IP, then Lighting is akin to HTTP.
We are witnessing the adoption of an entirely new global monetary protocol layer for the very first time, and most people are missing it, because they cannot see further than their nose.
Maintaining a low time preference is a super-power in a world conditioned for instant gratification.
Hope you all have a great finish to your week. Bring the powerful Friday energy 💪
Really appreciate you sharing these letters with as many people as possible to support my work. (I think $50 for an entire year is a pretty tiny cost?)
The value and trust layer of the internet is being built and anyone is free to join.
LFG
I’ll talk to you all on Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
There has been a flood of significant announcements this past 24hrs as bitcoin price relative to the melting USD shitcoin rallies toward $46,000 - an almost 40% increase now from the lows.
Perhaps the most significant of them is the Russian Government and Central bank agreeing to recognize bitcoin and crypto as a form of currency. Only last month the Bank of Russia proposed banning crypto mining over concerns it could endanger the countries financial system. Now we’re seeing a full 180.
According to Russian publication Kommerstant, that reported on the development:
“The government and the Bank of Russia have agreed on a future regime for the circulation of cryptocurrencies in Russia before February 18, they will prepare a draft law on the circulation of digital currencies in the Russian Federation, in which cryptocurrencies are recognized as an analogue of currencies, and not digital financial assets.
Their circulation in the legal sector will be possible only with full identification, through the banking system or licensed intermediaries. Operations equivalent to more than 600 thousand rubles. must be declared, transactions outside the legal sector for such amounts will become a criminal offense and an aggravating circumstance under the Criminal Code, fines will be introduced for the illegal acceptance of cryptocurrencies as a means of payment. Mining and related issues of DFA are not affected by the concept within which the project is being prepared.”
The big picture of what is going on here in my opinion, is a move away from the US dollar by Russia and others, specifically China, to insulate themselves from financial sanctions from the US, alongside the decline of the US as the world super power.
I believe we are seeing the beginning of the end, for the US Dollar as the world’s reserve currency.
Years gone by, there was no alternative to the SWIFT system. So financial sanctions were very effective, and if imposed, would completely exclude a country from trading with the world. However the game board has changed in profound ways over the last few years, ways that most still do not realise, and Russia are acting accordingly.
We have seen Russia agree to a 30 year contract with China to supply gas via a new pipeline, that is to be settled in euros. A strong US narrative has been baking over the past couple of weeks about a war breaking out between Russia and Ukraine, the validity of which has been hotly debated, and also the US’ intention in fanning this narrative. We recently saw Chinese supreme leader meeting with President Bukele, and most recently the two Russian leaders met face to face with a promise to collaborate more against the west and released a detailed joint statement following the meeting.
The statement is long, and demonstrates the position of China and Russia by referring to the two throughout the entire 5000+ word document as “the sides”. The document begins as follows:
“Today, the world is going through momentous changes, and humanity is entering a new era of rapid development and profound transformation. It sees the development of such processes and phenomena as multipolarity, economic globalization, the advent of information society, cultural diversity, transformation of the global governance architecture and world order; there is increasing interrelation and interdependence between the States; a trend has emerged towards redistribution of power in the world; and the international community is showing a growing demand for the leadership aiming at peaceful and gradual development.
At the same time, as the pandemic of the new coronavirus infection continues, the international and regional security situation is complicating and the number of global challenges and threats is growing from day to day. Some actors representing but the minority on the international scale continue to advocate unilateral approaches to addressing international issues and resort to force; they interfere in the internal affairs of other states, infringing their legitimate rights and interests, and incite contradictions, differences and confrontation, thus hampering the development and progress of mankind, against the opposition from the international community.”
The statement goes on to expressly condemn the actions of Australia, the UK and the US:
“The sides are seriously concerned about the trilateral security partnership between Australia, the United States, and the United Kingdom (AUKUS), which provides for deeper cooperation between its members in areas involving strategic stability, in particular their decision to initiate cooperation in the field of nuclear-powered submarines.
Russia and China believe that such actions are contrary to the objectives of security and sustainable development of the Asia-Pacific region, increase the danger of an arms race in the region, and pose serious risks of nuclear proliferation. The sides strongly condemn such moves and call on AUKUS participants to fulfill their nuclear and missile non-proliferation commitments in good faith and to work together to safeguard peace, stability, and development in the region.”
Without getting ‘stuck in the mud’ on the politics, it is undeniable that the global landscape is shifting in major ways, and as the US appears to be declining, China and others like Russia are leveraging the opportunity to re-assert themselves on the international stage in what is a wildly complex game of power projection.
It will be interesting to see how the situation specific to Russia develops, and to what extent they adopt bitcoin. The move to do so however, alongside the obvious de-dollarization, demonstrates their intent clearly, and while they will do their best to regulate it, as previously discussed, they will simply be leading the trojan horse into the city.
I think the situation with facebook serves as a good analog for what i believe will play out. Facebook wasted years working on their Libra project and Calibra wallet, which was to be a closed system controlled by a powerful few. They wasted billions of dollars in the process and in the end, the regulatory blow back was too much, and the project appears dead in the water.
If facebook simply adopted an open, public, global protocol like bitcoin, it would not only have saved the last number of years and billions of dollars, but the innovation potential as a result will only be obvious in retrospect.
I believe the same is true internationally between nations.
While western nations are focussing on trying to control everything, and limiting the freedoms of their citizens, the most strategically advantageous thing any of them can do, is to adopt this open global standard as quickly as possible. Of the major nations, the one that does this first, stands to benefit disproportionately over time.
Check mate.
Hope you all have a great day, and i’ll chat to you tomorrow.
AK
Canadian Trucker Update:
Bitcoiners have now raised almost 1.5 billion sats or 15 btc.
Donate here:
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Good Morning Everyone,
The US department of Justice has made its largest financial seizure ever, seizing approximately 94,000 bitcoin in relation the 2016 Bitfinex exchange hack. The original hack resulted in approximately 2000 unauthorized transactions totaling nearly 120,000 bitcoin, worth around $70m US dollars at the time.
In a public statement the US DOJ wrote:
“Two individuals were arrested this morning in Manhattan for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at approximately $4.5 billion. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.”
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
The two individuals arrested were married couple Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31.
The document goes onto outline some of the specifics leading to the seizure:
“According to court documents, Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan. The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack. After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.”
There is a ton of debate on bitcoin twitter, as to whether or not this story really checks out, as the notion that someone who stole 120,000 bitcoin from an exchange would store their keys online on a cloud platform like icloud, google or dropbox is difficult to believe. Then when you look a little deeper at some of their online content it gets really weird.
As you can see this post from Lichtenstein about security, where he said:
Or this one from Heather Morgan:
Either way. The seizure has been made, and the US now holds more than 94,000 bitcoin - more than any other country on earth, that we know of. According to bitcointreasuries.net the next largest holding is the Ukraine with some 46,000 btc.
Presumably the captured bitcoin will be returned to Bitfinex whom they were stolen from, but this remains to be seen.
This should act as a good reminder for us all. Not your keys, not your cheese.
Your keys in many sense are your bitcoin. These keys should never been put on a computer. They should definitely never be stored online, and they should not be shared with anyone. Ever.
It is only when you hold your bitcoin securely, that it is impossible to confiscate, and over the coming years I believe this property is going to become ever critical.
Hope you all have a great day, and i’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As Bitcoin price ascends back into the mid 40’s (currently $44,074) - up 34% from the lows, KPMG Canada have announced they have added Bitcoin & Ethereum to their balance sheet. It’s unclear as yet how much of each has been acquired and what the actual distribution between the two assets is, but my guess is that it’s a bitcoin-heavy position.
KPMG was founded in 1987, and is regarded as one of the major four accounting firms globally. The company employ 236,000 humans, and achieved in excess of $32b in total revenue last year. It’s a massive business, and the fact that they have now joined the likes of Tesla, Square and Microstrategy in adding bitcoin to their balance sheet is huge, and is likely to really send a shockwave around the world and amplify the game theoretic dynamics specific only to bitcoin as a result of its inelastic supply.
The Company said in it’s statement:
“KPMG in Canada has completed an allocation of cryptoassets to its corporate treasury, the firm's first direct investment in cryptoassets.
The allocation includes Bitcoin (BTC) and Ethereum (ETH), as well as carbon offsets to maintain a net-zero carbon transaction to deliver on the firm's stated environmental, social and governance (ESG) commitments.”
Also worth noting, while they have not disclosed the amounts it appears they won’t custody the assets themselves, instead giving this responsibility to Gemini.
“KPMG in Canada acquired Bitcoin and Ethereum on its balance sheet through Gemini Trust Company LLC's execution and custody services.”
This is yet another strong indicator, of the institutionalization of bitcoin the asset, and a demonstration of the institutional interest in other digital assets, and the ecosystem more broadly.
While you likely know my views on most of these other “assets”, it’s unlikely this trend is reversing anytime soon, and almost certainly leads to many more people gaining exposure to these networks, and hopefully is a catalyst for the early majority cohort of the distribution, to begin to learn about the critical elements of the bitcoin protocol and specifically, seek to self-custody their holdings.
The game theory is playing out before our eyes. More companies will continue to add bitcoin to their balance sheet in 2022, and I believe more nations will adopt it as legal tender following El Salvadors lead.
No doubt KPMG aren’t doing any of this for the freedom-go-up (FgU) characteristics of bitcoin, the beautiful thing about the protocol is, that it doesn’t matter. KPMG will offer bitcoin to its customers in Canada initially as a pilot, and then globally. They will expose hundreds of thousands, if not millions of people to this technology and these people will be lured in for number-go-up tech. KPMG is simply helping to wheel the trojan horse into the city.
Over time, these people will learn about what this technology truly enables, and they will seek to self-custody their bitcoin and stay for freedom-go-up.
It is simply a matter of time. Bitcoin is inevitable.
Hope you have a great day, and i’ll talk to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The wild and rampant censorship train seems to have well and truly left the station and is gaining momentum. There is an incredible level of pressure being applied to Joe Rogan and his podcast, with Spotify caving to political pressure removing 113 episodes of the podcast so far (jremissing.com).
Alongside this, is the extraordinary situation in the city of Ottawa. Following Gofundme’s wild financial censorship of over $10m in donations to the #truckersforfreedomconvoy2022, the mayor has now declared a state of emergency labelling it a national insurrection. At the same time, bitcoiners have raised over 6.4btc for the Canadian Truckers Freedom Convoy.
You can view the bitcoin raised here, view each transaction and message attached and also contribute on-chain and via lightning.
I believe much of what we are seeing in the two scenarios above, and much of what we have seen all over the world over the last 18 months is explained In a recent article by Ray Dalio titled:
“The Rising Risk of Civil War: Following in the Footsteps of History”
In the article Ray outlines:
“the US appears to be on a classic path toward some form of civil war. In this post I’d like to show you both what that path looks like and where the US appears to be on it.”
Through his analysis, Ray has identified an archetypal pattern that exists and repeats throughout history and uses this framework to help him interpret what is happening in the present, and may be upcoming in the future.
He outlines the cycle as follows:
"Stage 1, when the new order begins and the new leadership consolidates power, which leads to . . .
. . . Stage 2, when the resource-allocation systems and government bureaucracies are built and refined, which if done well leads to . . .
. . . Stage 3, when there is peace and prosperity, which leads to . . .
. . . Stage 4, when there are great excesses in spending and debt and the widening of wealth and political gaps, which leads to . . .
. . . Stage 5, when there are very bad financial conditions and intense conflict, which leads to . . .
. . . Stage 6, when there are civil wars/revolutions, which leads to . . .
. . . Stage 1, which leads to Stage 2, etc., with the whole cycle happening over again.”
He estimates that the US is in stage 5 of this archetypical cycle, and against the markers and characteristics he outlines, seems disturbingly likely.
Some of the forces that bring about big internal conflicts include:
the country and the people in the country being in bad financial shape
large income, wealth and values gaps within that entity
severe negative economic shock
As the US has now surpassed $30T in government debt or more than 130% debt-to-GDP and there is a clear move away from the dollar by countries like China and Russia, the fed is increasingly becoming the (only) buyer of last resort.
“A classic marker of being in Stage 5 and a leading indicator of the loss of borrowing and spending power, which is one of the triggers for going into Stage 6, is that the government has large deficits that are creating more debt to be sold than buyers other than the government’s own central bank are willing to buy. That leading indicator is turned on when governments that can’t print money have to raise taxes and cut spending, or when those that can print money print a lot of it and buy a lot of government debt.”
Sounds familiar, right?
Other indicators identified include:
Decadence
Bureaucracy
Populism and Extremism
Class Warfare
The Loss of Truth in the Public Domain
Rule-Following Fades and Raw Fighting Begins
This next section really stands out in relation to what we are seeing right now in relation to censorship, polarization, populism and the ability to reach social consensus and agree on a shared reality. That is an ability to agree what is fundamentally true. This is at the very core of the societal fabric.
“Out of disorder and discontent come leaders who have strong personalities, are anti-elitist, and claim to fight for the common man. They are called populists. Populism is a political and social phenomenon that appeals to ordinary people who feel that their concerns are not being addressed by the elites. It typically develops when there are wealth and opportunity gaps, perceived cultural threats from those with different values both inside and outside the country, and “establishment elites” in positions of power who are not working effectively for most people.
Watch populism and polarization as markers. The more that populism and polarization exist, the further along a nation is in Stage 5, and the closer it is to civil war and revolution. In Stage 5, moderates become the minority. In Stage 6, they cease to exist.”
While in the article Ray is speaking specifically within the US, I think these symptoms are being seen in many nations around the world with an observably high level of populist leadership in recent years, and wild polarization of opinions and an inability to reach societal consensus. I’ve certainly never lived in a time where a persons private medical status has been such a wildly divisive and polarizing point of contention.
The sections explaining class warfare and the loss of truth, are striking in how observable and relevant they are, highlighting the tendency for simplistic and binary thinking in times of hardship, the use of the media as a tool to manipulate the populous, and also the demonization of those in a separate class, producing a scapegoat class which many believe to be the root of all evil.
The outcome of which should concern any rational human being.
“In Stage 5, class warfare intensifies. That is because, as a rule, during times of increased hardship and conflict there is an increased inclination to look at people in stereotypical ways as members of one or more classes, and to look at these classes as either being enemies or allies. In Stage 5, these things become much more apparent. In Stage 6, they manifest themselves in open fighting. A classic marker in Stage 5 is the demonization of those in other classes, which typically produces one or more scapegoat classes which are commonly believed to be the source of the problems. This leads to a drive to exclude, imprison, or destroy them, which happens in Stage 6.
Not knowing what is true because of distortions in the media and propaganda increases as people become more polarized, emotional, and politically motivated. In Stage 5, those who are fighting typically work with those in the media to manipulate people’s emotions to gain support and to destroy the opposition. It is well-recognized this is now happening. The perceived truth in media, both traditional and social, is lower than at any other time in our lifetimes.”
At minimum, i believe there is value in leveraging the work Ray has done here, and being open to utilizing this framework, if for nothing else, than to help you potentially understand some of what may be happening around you, and give you the best chance of successfully navigating this period.
For me personally, his assessment resonates in a profound, and also somewhat unsettling way. It seems clear to me that much of what has typically played out in history is playing out in real time right now, and in multiple countries around the world.
We have protests all over the world. Division is so extreme to the extent that families and close friends are being manipulated by these tactics and tricked into turning against one another, and our ability to agree on a shared reality has never been more difficult.
The unvaxed so far have clearly been a scapegoat class, and whether that continues or not remains uncertain, but seems likely. It’s very easy for me to imagine Bitcoin, and bitcoiners being labelled as one of these classes also, and being blamed for a crashing economy, despite the fact it’s actually the best solution we have from a monetary perspective.
What i’m confident in, is that the truth is anti-fragile, and lying, deception and those that engage in these practices knowingly or unknowingly are inherently fragile, and in the fullness of time, the truth wins. Understanding the dynamics of the game-board gives you an edge and offers you a chance to not be a puppet of someone else’s game. I intentionally removed all print, radio and free-to-air TV from my content diet over 6years ago, and I don’t believe it’s a coincidence that the propaganda seems so obvious to me, while most of my family have a different opinion, and they consume that content every day.
I’m sure many of you can relate.
Cultivating a clear mind through meditation has never been a greater superpower than it is in today’s disturbed and distorted world, and maintaining a strong community is the ultimate hedge against a world gone mad.
I understand for many people it’s likely not obvious what much of this has to do with bitcoin, for those of you where this is the case, i urge you to continue to do the work in understanding bitcoin with a low time preference, and I can assure you that over time, it will become more clear.
The monetary system is at the base layer of society as we know it. It effects every facet of our lives, far beyond what most are aware of. The current system is broken, and is increasingly being used for political means against many of us, to impose rules upon us, and to silence voices that a powerful few oppose - and this trend is very likely only to accelerate. This is well beyond the scope of what money as a technology is actually intended, and actually leads the current form of money to fail over time as it corrupts absolutely.
We now have a truly decentralized protocol that is immune to the attacks of the past, and accounts for the absolute worst of human nature, which offers us a potential way forward, and out of the historical archetypal loops by preventing us from imposing our worst values on less powerful members within the network, and guiding us (incentives) toward our highest values and making this the path of least resistance.
I hope this is of value to you. It certainly has been to me.
If you have the time i recommend reading the article in full, as well as the book.
Hope you all have a powerful start to your week.
I look forward to talking to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I got reminded recently of a powerful analogy I heard from Michael Pollan originally, that provides a lens to think about the effect of psychedelics on the default mode network of the brain.
The default mode network is a region, or network in the brain that is understood to handle many internal tasks when one is not focussed on the outside world.
ScienceDirect explain the default mode network as follows:
“The DMN is a set of brain regions that exhibits strong low-frequency oscillations coherent during resting state and is thought to be activated when individuals are focused on their internal mental-state processes, such as self-referential processing, interoception, autobiographical memory retrieval, or imagining future.”
This is the area of the brain that is operating when you are worrying about something, or when you are being self-critical and judging yourself or ruminating on past events, or imagining about the future.
Whats super interesting about this section of the brain is it seems to develop very sticky patterns of operation, and once these patterns are established they can operate in the background of the operating system very unconsciously and in a way many people simply are not aware of.
He explains it something like this…
If you imagine the default mode network is like a mountain covered in snow, and over time you have ski’d down the mountain over and over many times, and you have established clear tracks from doing so leading you to tend to opt to ski the tracks that are well known and established as opposed to going into unknown territory.
He explains the effect of psychedelics on this part of the brain like a dumping of fresh powder covering all the old tracks, and installing a new fresh state on the mountain, that provides the opportunity for you to establish new paths, and form new patterns and modes of internal operation.
In a recent conversation with Michael Saylor, Jack Dorsey explains:
“If Bitcoin existed before Twitter started, i think we would see completely different business models. I don’t think we would be as dependent on an advertising business model. I think there would be a much healthier balance between multiple business models at once instead of this over dependence on one. I think we’d see a lot less of the issues that advertising systems can bring up in terms of privacy and everything we’re seeing around surveillance capitalism as well.
So the fact that the internet didn’t have this mode of transport and didn’t have this protocol and didn’t have this currency forced [it] into very traditional models that became massive at scale and then can become quite dangerous at scale as well so i’m very excited to see the new models that emerge, because we now have bitcoin, and we’re now the closest we’ve ever been to a native currency for the internet. Which to me, changes everything.”
“There was a time early in bitcoin's history when there was less of a focus on bitcoin as a currency aspect and just as a transport, and more on the blockchain technology. Blockchain technology is amazing but the network's power is what people do with it and the use cases, and the use case for the internet to have something like is i think as fundamental as tcp/ip or http or smnp, which is a mail protocol.
These open protocols create companies, they create projects, they create entirely new cultural and societal shifts that i think ultimately lead to more trust and more transparency as time goes on and and diminishment of all these barriers and boundaries that we've erected”
As Jack explains, Bitcoin is likely to facilitate to the internet, what psychedelics do for the default mode network of the brain.
I believe Bitcoin is going to usher in a tsunami of new businesses, new models and new ways in which those businesses operate as a result of a fresh coat of powder on the previously well developed and clearly carved out incentive structures of the legacy framework.
Just like It was impossible to envision how the internet would fundamentally change society 20 or 30 years later, it’s equally difficult to imagine what impacts this open, decentralized protocol will facilitate in a similar time frame, but i believe Jack has a clear line of sight toward these potential futures, and is absolutely right in saying it leads to more trust and more transparency over time.
That’s a future i’m here for, and I’m going to do whatever I can to move us toward it.
Onward and Upward!
Hope you have a great finish to your week, and I’ll speak to you on Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The last week has seen incredible scenes in Canada as massive convoys of truckers, have been protesting Trudeau’s government and the ongoing erosion of the rights and freedoms of the citizens of Canada via lockdowns and vaccine mandates.
While supreme leader Trudeau and state media channels attempted to discredit the Canadian truckers labelling the estimated 70,000+ people a “a small fringe minority”, the protests have inspired many others globally to do the same including in Germany and Australia, aswell as sparking on the ground protests in Australia’s capital, Canberra.
Clearly many in the Canadian community did not agree with the narratives of Trudeau the tyrant, and responded by donating over $10,000,000 to the ‘Truckers For Freedom’ movement, via popular fund raising site, gofundme.
In predictable fashion, Ottawa City Council have called for gofundme to censor the transactions of hundreds of thousands of people that donated to the cause, and have been applying political pressure, and said they have also considered applying legal pressure and also asked the PM to do the same, to prevent these funds from being released and passed on to, who they were actually intended.
This is blatant financial censorship, and demonstrates how fundamentally broken the legacy model is, and how egregiously it can be pressured and controlled. The entire notion of a private company is being systematically dismantled in real time.
As long as parties need to trust an intermediary in the middle of their transaction, the system will always be inherently flawed.
It is absolutely mind blowing to see this level of financial censorship in a formerly democratic nation like Canada, but it should serve as a signal to the rest of us that the financial system has been fully weaponized and will be wielded against us. If you express a non-consensus view, particularly one in opposition to a tyrannical regime, you should set your expectations accordingly.
The saying “bitcoin fixes this” has never been more accurate, and situations like this while destructive and even effective in the short term, only accelerate the move to a decentralized monetary standard in the long term, as hundreds of thousands of people are awoken to the ways in which the legacy system will be used against them as a method of control.
Thankfully we do have bitcoin, and it works. Right now.
We do not need to continue to operate in a world where someone else gets to decide whether or not you are allowed to send $20 in support of a cause.
You are no longer forced to engage financially in a system that thrives on the capability to apply political and even legal pressure on an entity in the middle, be it Spotify or Gofundme, and have executive level power over the ultimate outcome.
The future is already here, and the Canadian truckers and many others are getting a 101 in decentralized systems designed to operate under adversarial conditions.
In an inspiring response to gofundme’s censorship, bitcoiners immediately started sending sats in support of the truckers in a completely open and permissionless way demonstrating the power of this censorship resistant protocol with over 298 contributors sending in excess of 22,000,000 sats.
What is particularly cool about this, is how open and transparent it actually is. Someone queried the instigator about the specifics:
In response he was advised that funds were to be transferred to a multi-sig wallet held by 3 individuals and they would allocate funds at their discretion.
Fully verifiable, transparent and in the open, and with no need to trust a bank or any other financial intermediary to do what they say they will do. And best of all, no individual or entity on the planet can exercise power over you and your ability to transact and express value. So powerful.
We are only just scratching at the surface of how transformational this innovation can be for human society.
While many political actors continue to choose authoritarian measures, they do so at their own peril as they fail to realize they are at the same time incentivizing and facilitating the rise of a new system. This is the power of an apolitical protocol that is truly neutral and censorship resistant. You love to see it!
Hope you all have a great day, share these letters around, and i’ll talk to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Fidelity Digital Assets have come out with a new research paper entitled:
“Bitcoin First: Why investors need to consider bitcoin separately from other digital assets”
The paper is well worth a read and i’ve linked it above. Essentially Fidelity very succinctly explain, what many people seem to fail to understand about bitcoin -
What it actually is?
That bitcoin is the most pristine version of ‘money’ ever realised by human civilization, and is at the same time, the most sophisticated monetary network in history.
Hopefully if you’re reading this, then you are already well ahead of the audience this paper seems to be aimed at, but its extremely positive to see this major asset management firm, really get it.
Within the papers executive summary, they highlight the following key points:
“Bitcoin is best understood as a monetary good, and one of the primary investment theses for bitcoin is as the store of value asset in an increasingly digital world.
Bitcoin is fundamentally different from any other digital asset. No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any “improvement” will necessarily face tradeoffs.
There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks. Rather, the rest of the digital asset ecosystem can fulfill different needs or solve other problems that bitcoin simply does not.
Other non-bitcoin projects should be evaluated from a different perspective than bitcoin. Bitcoin should be considered an entry point for traditional allocators looking to gain exposure to digital assets.
Investors should hold two distinctly separate frameworks for considering investment in this digital asset ecosystem. The first framework examines the inclusion of bitcoin as an emerging monetary good, and the second considers the addition of other digital assets that exhibit venture capital-like properties.”
Bitcoin is both an asset and a monetary network.
This single distinction is of major significance. Regardless of whether or not you have any interest in the underlying unit of account as part of the 21m capped issuance - the capability of the network is indisputable at this point and enables the most secure method of information transfer, that is value transfer, between peers in an essentially trustless manner that has previously never been possible digitally.
The article goes on to review the properties of money, that scarcity drives value and how the consensus mechanism and design of the protocol essentially ensure the near-zero probability that it could ever change.
It’s fascinating to me, the way they refer to bitcoin writing things like:
“How bitcoin may position itself against the rest of the digital asset ecosystem”
When in actual fact, we’re referring to an inanimate object. Not even a physical object. A code-base, a language, that can be run on a computer anywhere in the world, and by connecting to the internet and joining the network spawning the worlds most sophisticated monetary network of all time. This still blows my mind when you really get to the fundamentals of what we’re actually talking about here.
It’s much less a case of bitcoin positioning itself as anything, but rather people actually beginning to understand what it actually is and treating it accordingly.
This technology has been operating on tens, then hundreds now thousands of computers on earth for 13 years, producing block after block consistently and without interruption, operating flawlessly, never forcing a single person to use the protocol or to join the network. Simply executing transactions and transmitting information, while humans try to make sense of what it is and form their beliefs about it - and it will continue to do so indefinitely while a consensus exists of its monetary superiority. Pretty incredible!
And with each person that does, the network effect grows stronger, and stronger.
The article goes on to state that they believebitcoin has the potential to be the primary monetary good as a result of the power of monetary network effects.
“We won’t be so bold as to predict there will only ever be one money, but we do believe that one monetary good will come to dominate the digital asset ecosystem due to the very powerful effects of networks.
Many investors are familiar with the power of network effects, where the value of a given network increases exponentially as the number of its users grows.
Monetary networks are no different. However, they are even more powerful than other networks because the incentive to choose the right money is much stronger than any other choice of a network, such as a social network, telephone network, etc.”
They go on to discuss the reflexivity of the bitcoin network:
“There is also a reflexive property to monetary networks. People observe others joining a monetary network, which incentivizes them to join as well as they also want to be on the network where their peers or business partners reside.
This can be observed on a smaller scale with payment networks today as platforms like PayPal and Venmo have grown at an accelerating rate.
In the case of bitcoin, the reflexive property is even more pronounced because it doesn’t just include passive holders of the asset, but it also includes miners that actively increase the security of the network. As more people believe bitcoin has superior monetary properties and opt to store their wealth in it, demand increases.
This in turn leads to higher prices (particularly as supply is inelastic or unresponsive to price). Miners are then incentivized to increase their capital expenditure and computing power as higher prices leads to higher profit margins. More computing power devoted to bitcoin mining leads to higher security of the network, which in turn makes the asset more attractive, leading once again to more users and investors.”
I don’t think this can be overstated.
Fidelity manages more than 3 trillion dollars in assets, and if they believe Bitcoin is likely to be the single best monetary good on the planet, what do you think they will tell their clients to do? The demand for this asset is going to get absolutely wild.
[correction: Fidelity total Assets under management is in excess of $10,000,000,000,000 (trillion)]
It blows me away to read this kind of stuff from massive institutional asset allocators. It’s the first piece I’ve read that really gets to the core of Bitcoin and does a good job of accurately outlining bitcoin and appropriately differentiating it from VC like bets in respect to other “digital assets” (read: shitcoins).
I have absolutely no interest in gambling on shitcoins, when we’re living through the real-time monetization of the worlds most pristine monetary good and network.
It’s never been more obvious than it is today.
There has never been an open, global monetary standard like it.
Sooner or later, everyone is going to realise it.
Seize the asymmetry before they do, and opt-in to the peaceful revolution that is the bitcoin network.
Hope you have a great day, and i will chat to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The chorus of authoritarian sociopaths has been increasing over the last couple of weeks in a bizarre attempt to pressure Spotify to cancel Joe Rogan.
You know we’re living in a strange time when some cohort of people (read: authoritarian lunatics) think some guy should not be able to express himself and have open conversations on the internet that they do not like, and instead of them simply “changing channels”, said individual should be deleted, de-platformed and silenced altogether. Least of all some old hippie like Neil Young who is famous for writing a song about “rocking in the free world”. Absolutely mental.
Joe Rogan released a 9min video in response to the criticism apologizing if he’d “pissed anyone off” and telling a pretty funny and ironic story about working as a security guard when he was 19 at a Neil Young concert. Well worth a listen.
The underlying dynamic here is that Joe Rogan’s podcast distribution is exclusively via Spotify’s platform now, and Spotify is a traditional centralized US tech company.
The inherent vulnerabilities of centralization are on full display here, and while Spotify seem to have stood their ground reasonably well so far, in my opinion it’s only a matter of time until they lose the fight and are forced to conform whether by political pressure or new laws and regulations.
This serves as a perfect advertisement for Podcasting 2.0. A decentralized and permissionless distribution mechanism with censorship resistant payments enabled by the lightning network.
The primary difference here is that these centralized platforms are typically advertising machines and advertising, if personalized, entails surveillance. The ability to pay for content you value, in a value-4-value model, via a censorship resistant protocol seems like an obvious way forward.
Even though we have not yet seen this kind of pressure on other dominant content platforms like substack, it’s likely that at some point the inevitable happens, whereby platforms like ghost.io and others stand to benefit.
It’s still very early and there will continue to be a ton of development in this area, but there is no doubt the need exists and likely continues to become more and more pertinent over time. Apps like Sphinx and Breez are doing a great job of enabling this kind of interaction, and we’re likely to see an explosion of innovation in this space.
The future of content, speech, payments and online human interaction is fully decentralized, Peer-to-peer and censorship resistant.
I hope you have a great day, and keep on rocking in the free world.
I will chat to everyone tomorrow.
AK
“Freedom is not given, it is taken.” - Subhas Chandra Bose
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
As most of you are probably aware, the ability to custody your bitcoin is at the absolute core of the bitcoin ethos and is as fundamental to bitcoin, as breathing is to life.
You have most likely heard the saying:
“Not your keys, not your cheese”
or
“Not your keys, not your coins”
The understanding of this is demonstrated by the actions you take, and how you secure your keys.
Most people that give custody of their keys to a 3rd party, do so without being aware of the hidden risks, and a true understanding of what they are actually giving up, and in doing so demonstrate a failure to truly understand what this technology enables and how it differs fundamentally from the existing predatory surveillance system.
The on-ramps and off-ramps (exchanges & other 3rd parties) are best thought of as a point of control. They are a gate in which regulators will try to force you to go through, and when you do, strip you of your privacy, enable financial surveillance over you and anyone you interact with and remove your ability to operate pseudonymously by linking wallet addresses to your real world identity.
It’s worth highlighting for anyone that thinks “oh well, i have nothing to hide”, that this is aside from the point. The point is, that if these measures actually achieved what they purport to be solving, we would have rid the world of pedophiles and child traffickers like Jeffery Epstein - but they do not, and obviously this is not the case.
These measures are not in good faith what they are advertised for. They are not only ineffective and dangerous, but are in complete opposition to the the individual freedoms we should all wish to preserve.
In recent weeks there have been some major developments that signal the next major battle ground, as governments and a powerful minority of pseudo-elites continue to fight to prevent the redistribution of power from them in the center, back to the edges, and to maintain their power and control by keeping control of the money.
This next battle ground is your right and ability to self-custody.
Mechanisms like the “Financial Action Task Force" (FATF) Travel Rule and Address Ownership Proof Protocol (AOPP) are likely the first steps of this assault on our right to privately own and hold property.
FATF is a bureaucratic intergovernmental entity that was established in 1989 between G7 nations to combat money laundering. ← check the link to see how well that’s working out..
Address Ownership Proof Protocol (AOPP) is an automated mechanism to provide confirmation that you own an address you are sending to, when sending from a KYD’d exchange platform.
While AOPP seems to be required only by Swiss companies for the time being, it is likely that efforts continue, to link identities to wallet addresses and attempt to remove these rights over time. It has been encouraging to see some pivotal open-source projects including Bluewallet, Sparrow and Trezor reject the implementation of AOPP in response to the communities uproar.
Bitcoin OG Marty Bent put it well in his recent piece.
“Anyone in the "crypto" industry who is eagerly attempting to comply with FATF guidelines should take a moment to employ some introspection and ask why they are here in the first place. Bitcoin was created to completely obliterate this type of demonic control. Those who tell themselves that they align with the mission of Bitcoin should reject FATF guidelines and engage in civil and corporate disobedience.
Enough is enough. No more bending the knee to tyranny."
It has never been more critical to educate yourself and get up to speed with what is taking place. Get clarity on why self-custody is fundamental, and take complete and total responsibility - It has never been more important.
I hope you have a great start to your week, and i will chat with everyone tomorrow.
AK
Monday Meme
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Good Morning Everyone,
UK Prime Minister Boris Johnson, said recently that the UK are in discussions with the US administration about banning Russia from the SWIFT system, in response to the possibility of Russia invading Ukraine. Russia stated the European countries will not be able to receive gas, oil and metals from Russia in the event they were disconnected from using the SWIFT system.
SWIFT stands for ‘Society for Worldwide Interbank Financial Telecommunication’ and acts as an intermediary and executor of financial transactions between banks worldwide. SWIFT is legally a Belgian entity, which was established in 1973.
The cooperative is owned by member banks and governed by a 25-member board of directors. The organization is overseen by the G10 central banks which includes:
The European Central Bank (ECB), Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Great Britain, the United States, Switzerland, and Sweden.
The entire SWIFT system is run off 3 data centers, located in the US, The Netherlands & Switzerland along with a “command and control” center in Hong Kong, now considered mainland China.
So the SWIFT system, is essentially a closed, centralized communications protocol operated by central banks with a democratic like governance structure to enable a cooperative payment network (in an adversarial environment) and (presumably) to prevent the system from being corrupted from any individual having ultimate power over it.
What we are seeing however, is the weaponizing of this payments system with threats being made to exclude certain network participants, and demonstrating a lack of neutrality at the SWIFT protocol layer.
Given SWIFT is a Belgian company, it complies to Belgian and European law - not that of the US, so the US don’t have any legal power over the company.
So far Iran is the only country to have been cut off from the system (that we know of), which happened back in 2012 after they were blacklisted by the European Union and amid pressure from the United States.
While the US have no exclusive or over-riding power over SWIFT, they could employ similar tactics like the threat of sanctions against the platform directly, as in the case of Iran, to pressure SWIFT to cut-off Russia’s access.
Regardless of the fact, what this highlights to me, is the vulnerabilities of the current system and while best efforts were likely made to prevent the system corrupting, the technology to do so did not yet exist.
Even without Russia being cut-off from this global payments standard, the mere threat of such an action would likely motivate any player to seek alternatives. In my opinion this kind of a move is likely to backfire against the US and only further motivate the existing trends - specifically that of de-dollarization.
This is a powerful real world example highlighting the vulnerabilities of centralized systems, where network participants must trust a 3rd party, and political power can be wielded to influence the rules of the network.
The world of central banks and nation states is an adversarial environment, and in such an environment, a system that requires trust in a centralized entity is always destined to fail in the fullness of time.
This makes the SWIFT system inherently flawed as a global standard, and sooner or later we are going to see this system be made obsolete. No country will actively choose a system requiring trust, when they know full well, they are operating in an environment where it cannot exist.
One by one, countries will make a move to adopt a protocol that is truly decentralized and requires no trust in any 3rd party intermediary. One that cannot be controlled or influenced by an individual entity. Where no network participant has any power to censor or exclude another. A truly neutral protocol that simply processes transaction after transaction. That is completely a-political and cannot be weaponized to attack a network participant for individual gain at the expense of the network. A system that incentivizes cooperation and humans to play win/win games instead of zero-sum games, despite operating within an adversarial environment.
This transition couldn’t come soon enough.
I hope you have a great finish to your week, and I will talk to everyone Monday.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I’ve been looking at the following chart for weeks, and it continues to provoke deep thought and enquiry.
The chart shows US federal debt as a percentage of GDP (Gross domestic product), and highlights a fairly obvious trend. That is, that times of relatively high debt to GDP have historically been a catalyst for some kind of war.
This trend begins with the American Civil War which began in April 1961, with debt/GDP in the early 1850s bottoming in the low single digits and rising to around 30% at the peak. This was followed by WWI which began in 1914 (one year after the US fed was established) and saw peak debt/GDP only slightly higher than the prior.
It only took 25years between WWI and WWII in 1939 with debt/GDP absolutely skyrocketing to almost 125% - orders of magnitude higher than the previous. The Bretton Woods Conference and subsequent monetary reset signaled an end to the second world war in 1944.
Since WWII we have had perhaps one of the most peaceful periods in history. However the writing is currently on the wall with debt/GDP printing all-time highs, at the same time while we experience levels of civil unrest in countries all around the world in reaction to government responses to COVID-19.
So are we heading for a World War? I have no idea, but the trend here is compelling.
It sparks me to wonder:
Is war a catalyst for monetary reset? or is it the other way around..
Is monetary reset a catalyst for war?
I do not know the answer for sure. But it seems clear to me that of the American Civil War, WWI and WWII, the two have gone hand in hand.
We now live in a much more global, interconnected and inter-reliant world than ever before, and this world and the geo-political dynamics are punctuated by nuclear capabilities which somewhat stalemates the nature of power projection, as the result of a nuclear conflict would be catastrophic.
Clearly high levels of debt, just like household debt, have higher order effects, and cannot be sustained over time. It’s interesting to think about our current debt based system, and be curious about the relationship between high levels of debt, which create stress and inequality (among other things), and how this trend has compounded over time, and to wonder how things would be different if we adopted a system that prevented these kinds of dislocations and excessive debt bubbles were not possible to inflate.
The elasticity of the fiat standard appears to have enabled a lot of progress, and one could make arguments for the efficacy of this. It’s also possible that it’s simply prolonging the inevitable, and by doing so, the eventual outcome be significantly more extreme.
All i know, is that we’re living in an upside down world, where debt (liabilities) is treated like assets, and assets like liabilities, and that at some point the trend will revert to the mean.
Whenever this happens - Would i prefer to hold a debt based asset or the most pristine collateral that’s ever existed?
You already know my answer.
This is something that everyone needs to figure out for themselves, but one thing is for sure.. You would rather be a year early than a single day late.
Something to think about…
Wishing you all well, and I will talk to you on Thursday (Aussie Day tomorrow).
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Bitcoin is now down 50% from the highs in November, and the class of 2021 are underwater and panicking. As shown by the fear & greed index, printing 11, an “extreme fear” read.
To demonstrate our (humans) irrationality, F&G index was at a 95 (Extreme Greed) while price was rallying at the beginning of 2021 and price was around the $37,000 region. Pretty funny how volatile human psychology is. Same price, but bi-polar market sentiment.
It is in these time when the tourists really show their hands, and reveal their psychological concavity (fragility).
While I would prefer price to be going up, if i had a choice, and the price of Bitcoin relative to melting USD ice cubes to be increasing, that is simply not how markets work and I have been calibrated (painfully) by the market over years to understand and accept this.
As humans, we crave certainty. Many people will try to tell you, “fill in the blank” is the reason the market is pumping or dumping, but the truth is, you would have to a completely delusional to think you know the reason millions of people scattered around the world are performing a specific action. This is just a classic case of humans seeking certainty.
All we can truly know, is that markets move up and down based on an imbalance between buyers and sellers.
We are so psychologically primitive. People naively think they can just buy something and it’s just going to go up in value, and it’s going to be easy. Not so fast..
The way I’ve explained it to friends is that markets are like an olympic level event. A global olympics, that anyone can enter without having to pass any tests or having met any prior requirements. Anyone is welcome to participate and compete.
If you think you can participate having done zero training, against the best in the world, in an event you know nothing about and have no experience in whatsoever, and you blindly think you can win, you’re completely out of your mind.
Bitcoin is no different (for now).
I think about times like this as if they were a test.
This is how a market tests your conviction. Your thesis. Your position sizing. Your entry. Your time preference. Leverage used etc etc.
Below are a few thoughts on how to best handle market draw downs, things to think about and potential actions to take:
Review your thesis, and whether or not anything has changed.
Re-visit fundamentals. What has changed?
Understand your time horizon. Lowering your time preference is a super power.
If your time horizon is years, why are you looking at an hourly chart?
Do you have a line in the sand clearly defined, where you accept you were wrong and take a loss? Think through the actions needed to take, if this were to happen.
Question previous assumptions.
Journalling your thoughts and feelings to better understand your psychology is a game changer.
Treat these times as a time to focus on deepening your knowledge. Re-read a book that had a significant impact on you.
In the case of Bitcoin, i believe these times are for accumulating. These are the times where the emotional and immature market participants demonstrate they have not done the work, and bitcoin changes hands between those who keep their btc on exchange, to those that lock it away in cold storage.
<10% of the total supply remains to be issued. Hash rate is currently printing all time highs. Companies like intel and Block are investing in mining. El Salvador and MicroStrategy are aggressively buying and accumulating. Fidelity wouldn’t be surprised to see a central bank acquire bitcoin in 2022. We have recently seen countries like Lebanon and Turkey experience crippling levels of inflation.
Most critically, i do not believe the fed can tighten in a meaningful way, sustained over time. The system is such that they will HAVE TO continue to print. The current monetary experiment is built upon an impossible expectation of infinite growth, in a world of finite resources.
These are just a few of the things that come to mind when i think about the market at present. I cannot imagine being concerned about short term price, with less than 10% of bitcoin issuance remaining when a single bitcoin is valued at $36,248 USD - for what is an inanimate object; an entry on a shared digital ledger, maintained by a decentralized computing network that no one owns or controls.
But it’s not just any digital ledger, and over time, more and more people will come to understand this technology, and the market will price it accordingly.
I think Odell put it best:
Stay focussed on the long term. Bitcoin is the mission.
I hope you have a great start to your week, and I will chat to you tomorrow.
AK
Final Thought:
“My bitcoin can stay in cold storage, longer than the market can stay irrational.”
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Good Morning Everyone,
There has been a congressional hearing in the US overnight under the heading “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains”.
Straight out of the gate i simply reject the premise of the title, at least how it relates to Bitcoin, suggesting there is something to be “cleaned up” or as if it is dirty.
From what i have listened to so far, many of the critiques made, are items that have been proven false already. There are a couple of fundamental and foundational points that stand out to me, and I think in order to have any meaningful, productive and valuable discourse on a topic like this (which is riddled with misleading terms like blockchains), these items need to be properly addressed and fleshed out by experts that actually understand the technology to avoid the broken record-like behavior of politicians and anti-bitcoin activists that continue to espouse the same false narratives from years gone by.
The first is the use of the term cryptocurrency, and the grouping of these as if they were a single entity. As if any of the some 16,000 shitcoins, most of which are out right scams, have anything to do with Bitcoin (Spoiler alert: they don’t).
Secondly, and perhaps most importantly is the on-going comparisons between PoW and PoS “blockchains” and the repetitive arguments made against Proof-of-work, specific to the networks energy usage, which ignore the absolute fundamental nature of this consensus mechanism to enabling what Bitcoin is.
In an effort to avoid re-hashing many items already discussed specific to energy, let me simply refer you to a couple of earlier letters on the topic.
By far the most succinct explanation I have read about Proof-Of-Work comes from Gigi, who has written extensively on the topic.
As Gigi accurately states:
“a failure to understand proof of work is a failure to understand Bitcoin.”
The thing with proof-of-work, is that it’s complex, so it’s not surprising most do not understand it.
If i was to try and simplify it I’d simply tell you that to have a truly decentralized system like bitcoin, there is currently no alternative technical solution in existence that actually achieves this outcome. That is the bottom line.
However to simplify it misses the beauty of this innovation and fails to capture how incredible PoW actually is. To better explain the complexities let me simply read through Gigi’s thread.
Hopefully you found this useful.
I hope you have a great day and i’ll chat to you next week.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I shared a chart in a recent letter, that showed the Bitcoin Networks user growth compared with that of the internet. If you missed it, i’ve included it below..
The chart below was taken from a post by Willy Woo.
It’s a super interesting chart, and i believe the comparison between the growth of the internet, as a network, is very analogous to that of the Bitcoin network. The chart shows that in 1997 the internet (represented by the thin purple line) had around ~120m users. Bitcoin is represented by the thick green line, and shows that as of Jan 2021 there were ~135m network participants, meaning that Bitcoin relative to this specific metric is comparable in adoption to that of the internet in 1997.
Back in the early nineties (93/94) when i was 12 or 13 i used an IBM ‘Thinkpad’ laptop at school. This laptop had one of those little pointing devices in the middle of the keyboard, like a little finger joystick to control the mouse. It had a color 7” LCD display, which at the time was still pretty new - Black & white displays were still common. It also had a 4.4kbps PCI modem. Vintage tech.
I used to go to the school library at lunch or after school and stand behind the librarians desk. This was the only place in the library that had a telephone point that i could use to connect my modem to. I would connect to the internet and to various mIRC chat rooms, and bulletin boards, speaking with people on the other side of the world.
The world wide web (www) was only just getting started. One of the very first web browsers was called Mosaic and it became popular due to its graphic user interface (GUI) and that it enabled images as well as text.
Using a computer back in this era as a kid was viewed as strange and was not well understood (at all). It was very fringe and the perception was that you had to be a massive nerd to be interested in this kind of thing. People did not imagine if you fast forward 20 something years that 80% of the worlds population would use a laptop, let alone would carry a computing device (smartphone) with them everywhere - even to the toilet!
There was no Google, Facebook, Amazon or Netflix. The use cases in which these businesses were built, were for the most part, not possible yet, and certainly non-obvious to most. I don’t think many people (on earth) realised how big search would actually be, and the implications of it when google was first founded in 1998, let alone in ‘93 or ‘94.
If facebook did exist back then, it would have been much less compelling. The user-base may be a few hundred weirdo’s around the world communicating from their basements in plain text. The ability to be broadcasting from wherever you are at almost any moment was not possible. There were no smartphones with cameras, the data transmission was so slow and cost prohibitive to have large data plans, sending things like photos and video was essentially not possible, and certainly not at any kind of scale.
It’s important to understand that the network effect is like a self reinforcing feedback loop. Increased user growth, the continued development on top of the underlying protocol, as well as innovations in hardware, infrastructure and data transmission speeds and availability, all mix in, to enable the internet as we know it today.
Only with an open global protocol standard is this possible.
This open global protocol (TCP/IP) that everything has been built upon, is still the foundation of all the incredible benefits we enjoy from the internet today, and this has completely changed the way humans communicate, interact and transmit information and the speed of that transmission. Back in the 90’s there were a handful of broadcasting networks that had a complete monopoly on the broadcasting of information at scale.
Compare that to today, where anyone can create a youtube channel, a twitter account, create a podcast and can transmit information to the world. It is a complete reimagining of information transmission and global human communications.
In 1994 Tim Berers-Lee founded the World Wide Web Consortium (W3C), an international community devoted to developing open web standards.
It’s incredible to look back at the standards this community developed, especially in comparison to those of Bitcoin.
According to the world wide web foundation, these standards were:
Decentralisation: No permission is needed from a central authority to post anything on the web, there is no central controlling node, and so no single point of failure … and no “kill switch”! This also implies freedom from indiscriminate censorship and surveillance.
Non-discrimination: If I pay to connect to the internet with a certain quality of service, and you pay to connect with that or a greater quality of service, then we can both communicate at the same level. This principle of equity is also known as Net Neutrality.
Bottom-up design: Instead of code being written and controlled by a small group of experts, it was developed in full view of everyone, encouraging maximum participation and experimentation.
Universality: For anyone to be able to publish anything on the web, all the computers involved have to speak the same languages to each other, no matter what different hardware people are using; where they live; or what cultural and political beliefs they have. In this way, the web breaks down silos while still allowing diversity to flourish.
Consensus: For universal standards to work, everyone had to agree to use them. Tim and others achieved this consensus by giving everyone a say in creating the standards, through a transparent, participatory process at W3C.
Many of these standards and ideals exist within the bitcoin protocol.
If Bitcoin’s network adoption is relative to the internet in 1997, this provides a very powerful analog to try and gauge the current position of Bitcoin adoption through the arc of time, and highlights how early we actually are in the development and adoption of this technology.
The chart projects Bitcoin user growth at 2025 to be around ~1b users, and if you extrapolate it further, very likely >2b users by 2030.
In the exact same way as the internet, due it’s open, public and bottom-up nature, built upon a single global standard; as the number of network participants increases so to does the self-reinforcing effect, like a positive flywheel, where the growth of the network begins to accelerate and compounds at an incredible rate, unlocking new possibilities and capabilities that were previously inconceivable, just like we have seen with Google, Facebook, Amazon, Netflix and many others.
If you ever get stuck looking at short term price action with any concern, hopefully this context and perspective can be of value. As the saying goes.. “When in doubt, zoom out”.
The Bitcoin network is currently growing FASTER than that of the most powerful and transformational global networking protocol ever developed, which has changed humanity in ways that are difficult to truly grasp. By the end of this decade the number of Bitcoin users is projected to increase by almost 15x (1500%).
With every new user, comes more development, more innovation, better tools, better hardware and more incremental improvement, making it ever easier for more and more users to come on line and join this network.
The internet of money is being built before our eyes, and it is early days. Focus on getting educated and understanding how the world is changing. Zoom out, and prioritize the long term over the short term. The next decade is going to wildly exciting and full of opportunity. I couldn’t be more grateful to have had this experience in the 90’s, as it has laid the foundation for my understanding and conviction in the present.
There is no doubt in my mind. The future is built upon an open, decentralized and global standard.
I hope you have a great day, and i’ll speak to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Alex Gladstein popularized this concept of Bitcoin as a trojan horse based on the story from greek mythology.
According to Wikipedia:
“The Trojan Horse refers to a wooden horse said to have been used by the Greeks, during the Trojan War, to enter the city of Troy and win the war.
The Greeks at the behest of Odysseus constructed a huge wooden horse and hid a select force of men inside, including Odysseus himself. The Greeks pretended to sail away, and the Trojans pulled the horse into their city as a victory trophy. That night the Greek force crept out of the horse and opened the gates for the rest of the Greek army, which had sailed back under cover of night. The Greeks entered and destroyed the city of Troy, ending the war.”
The idea here is that bitcoin as the trojan horse is not what you think it is.
Most people have been lured into Bitcoin through greed, and the desire to obtain more than what they have; as an investment and a way of making money. Many have viewed it as some kind of get rich quick scheme.
This is a profound design feature - and not a bug. Bitcoiners refer to this as number go up (NgU) technology. The fact that the price of the asset continues to go up and to the right over time, is the bitcoin protocol’s marketing strategy, completely baked in from the beginning. It’s a design feature based around the predictability of human behavior. Based on our dopaminergic biological and neurological systems that drive us to seek reward and gratification, to accumulate resources for our survival and in an almost preprogrammed way in an effort to rise in the dominance hierarchy.
It is this NgU tech that in most cases lures a person in, to acquire the asset, like a bee to honey or a moth to a flame.
Once you have been sufficiently motivated and acquire the asset, you continue to learn more about the technology as it appreciates in value and you become more attached to the phenomenal investment you made, and pat yourself on the back for your sound decision making.
Meanwhile, inside this trojan horse of bitcoin and this beautiful NgU tech built upon the foundation of true ultimate scarcity, is a hidden feature, that is ‘freedom go up technology’ (FgU). This FgU tech is the greek army on the inside of the mythological trojan horse, and the greek army outside the city of troy on their way back to be let in the gate under the cover of night by their men.
This FgU tech is insanely complex and multifaceted.
Fundamentally, it is an emergent technology to enable and support societal organisation and cooperation. A tool to align human beings based on our highest values in a completely bottom-up way, and a catalyst to stop power from concentrating in the center and to allow it to be redistributed back toward to the edges. To empower the individual.
It is the decoupling of money and state. A completely pure and pristine vision of money. It is the ability to express value and transact with anyone you wish, for whatever good or service you wish, on a completely neutral and open protocol that has no interest in your political views, your ethnicity or the color of your skin. A protocol available to anyone with a smart phone and an internet connection. That is borderless and does not care about the arbitrary lines on a map drawn by humans. A protocol where no entity has the ability to get in the middle of your expression and censor your transaction, that is your speech, because you have an opposing view, because of who you are or because of who you are associated with.
This NgU tech is not only appealing to individuals however. There is a complex game theoretic element to the design of this trojan horse that has already begun to propagate in the form of corporations and nation states. Obviously these are simply structural frameworks in which to organise human capital and facilitate cooperation, so the psychological tendencies are the same as above. The difference with this layer is that over time, it will become an imperative for these entities to lead the trojan horse into their city as well, to acquire bitcoin, and the ones that do it soonest benefit disproportionately, gaining an advantage over those that wait.
Fidelity Digital Assets team wrote this on the subject in a 2021 wrap up:
“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future. We therefore wouldn't be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”
Powerful stuff. One thing to highlight from this quote is that they don’t say anything about a central bank buying it, rather that they may “acquire” it. It is not clear to me if they believe this would be by purchasing, mining or some kind of value creation, and in support of the network or by theft, or some attempt at confiscation or some other means.
Most importantly, this means that regardless of whether or not the nation state operates based on a set of values; a set of ethical and moral standards in support of, and in the best interest of the population, or is an oppressive and tyrannical dictatorship, the game theory of this beautifully designed trojan horse incentivizes them to lead the wooden horse into their city, and by doing so, they will usher in the ‘freedom go up’ tech baked in to the core of this incredible emergent protocol.
Over time, as this technology is better understood by the citizens, it will enable the most incredible ground swell of bottom-up innovation on a scale that is likely to dwarf anything we have ever seen before.
As always, wishing you well.
I hope you have a great day, and i’ll speak to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
I watched a clip last night of Chinese President Xi Jinping address the World Economic Forum, outlining his vision for the world, values he see’s as necessary and some priorities and areas of focus for future. It was quite strange to watch, as his audio had been muted and had someone else narrating essentially what he is saying, rather than providing subtitles to his audio.
His primary points included:
Embrace Cooperation and defeat the pandemic
Resolve various risks and promote steady recovery of the world economy
Bridge the development divide and revitalize global development
Discard Cold War mentality and seek peaceful coexistence and win-win outcomes
It got me thinking about Ray Dalio’s framework for the changing world order, outlined in his book titled ‘Principles for Dealing with the Changing World Order’, and where we may be in the present cycle.
The image below lays out the birds eye view of the cycle from the book, with the second image zooming in a little.
While the image above shows where we may be in the current cycle from the perspective of the US, it got me wondering, where are we from the perspective of China? If in fact, Ray’s thesis is on the money.
Please understand this is not a judgement on whether or not any of this is good or bad. Where possible, I try to avoid thinking about it in those terms. It’s simply a mechanical assessment of the situation rather than a moral, ethical or ideological one.
Whether China are at 5, 6, 7 or 8, it seems difficult to dispute that they are on the rise, while the US is in decline. That much seems difficult to make a case against at this point.
As you can see in the cycle above, a loss of reserve currency is part of this cycle. In the last 500 years it happened from the Dutch Guilder to the British Pound and most recently again from the British Pound to the US Dollar.
Is the world is going to go through some kind of Yuan-ification? Potentially. We are certainly seeing a trend of de-dollarization that is likely to continue. What i’m confident about, is that money as a technology has no place being controlled by any central government or entity. As i’ve said many times here already, it’s simply too great a power to be allocated in that way, and ultimately leads to the system corrupting, and some form of monetary reset. Over time, it is a fragile architecture.
The Chinese President made this analogy, reflecting the collectivist mentality central to socialist or communist styles of governance.
“Facts have shown once again that amidst the raging torrents of a global crisis, countries are not riding separately in some 190 small boats, but are rather all in a giant ship on which our shared destiny hinges. Small boats may not survive a storm, but a giant ship is strong enough to brave a storm.”
While this is true in many ways; of resources, skills, production capabilities and others, decentralization is a strength and not a weakness. While it is most ideal to cooperate and seek to play positive-sum games, the game of trying to force our values and ways of life on others, in my opinion, is a loosing one.
It is anyones guess how things progress throughout the 2020s. I remain increasingly convinced we’re in the throws of a period of rapid change whereby 100 years of change likely happens in a decade. Whether we label it the great reset, the changing world order, or the fourth turning makes little difference.
I’m just grateful there is an escape hatch, a mathematically deterministic monetary standard available to anyone that wishes to opt-in and that no one can control. That is open, borderless, neutral and censorship resistant. A global standard to provide some certainty in a world that has never seemed more uncertain.
While the values and principles of Bitcoin are clearly in opposition to those of China, it provides the rest of the world with a way out. It will be fascinating to see which countries choose to pull this lever and opt-in and adopt a global monetary standard built on rules without rulers.
Hope you have a great day, and i’l speak with everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Canadian Politician Pierre Poilievre, gave a powerful speech in the Canadian house of commons last month. It’s so strangely refreshing to hear a politician actually make sense and have a thorough understanding of what they’re talking about, rather than just playing words games, deflecting, blaming and a general avoidance and lack of true intention of actually addressing anything meaningfully. It’s crazy this stands out, and even seems novel in the time of COVID hysteria, but it certainly does. I’ve attached the video below. I urge you to watch it in its entirety, as Pierre gives an excellent explanation of money, as it turns out, inspired by Saifedean’s book “The Bitcoin Standard”.
The speech was predicated on the following:
The government asked parliamentarians to approve another $7+ billion dollar expenditure ($7,000,000,000). Mr Poilievre posed the question to the government officials, the majority of which were from the finance committee. He asked:
“Where does the money come from?”
After minutes of silence, he received the following response:
“The money is within the governments broader macro economic framework, and I cannot speak to that”?
This highlights the parasitic culture of dishonesty (and/or ignorance) that has corrupted governments, certainly Canada’s in this instance, but all around the world, which are built upon an experimental monetary system that is predicated on the same underlying characteristics.
In this example, you and I, and all the free people of a country are the host, and the government is obviously the parasite.
According to the CDC the definition of a parasite is:
“A parasite is an organism that lives on or in a host organism and gets its food from or at the expense of its host.”
The person that responded is either genuinely ignorant and has no idea, in which case the decision to appoint them to a finance committee should be questioned aggressively or; they do not want to answer honestly.
As Pierre clarifies; for those in parliament money comes from 1 of 4 places.
Taxed (theft)
“Printed” (Purchases Government Debt)
Borrowed
Re-allocated spending from 1 of the above.
Now i’m no expert on the political dynamic of Canada, nor do i have any interest in becoming one. I’m sure Pierre has flaws, as we all do, and no doubt there is an element of political theatre to his speech, but the crust of his message should not taken lightly.
The current monetary system is fundamentally broken. The primary purpose of money, as a technology, is to enable us to transport value across time and space.
This system enables government to steal value from the people of that country through inflation with absolutely no accountability to reality, that is to a world of scarce and finite resources. It enables a level of spending beyond what government actually have at their disposal from the population via taxation.
This system incentivizes government to print money, that is to increase the money supply, as it is politically the most frictionless option in the short term. In the long term however, it leads to catastrophic outcomes. It enables and incentivizes government to grow beyond what is truly necessary, functional and ultimately in the countries best interest, which manifests entirely new higher order problems, many of which we’re seeing in the world around us today.
It is this inflation of the money supply that distorts everything between us, as money is on one level a complex language that communicates and helps us to simplify what is otherwise an extremely complex world. It ultimately leads to major civil unrest and brings out the absolute worst in humans as our systems are corrupted and short circuit as happened famously in Germany in 1933.
Bitcoin is the antidote to this broken system, and thus it’s no surprise that many governments have scrambled as to how to deal with it. Bitcoin allows you to transport value across time and space like nothing else that has ever existed. It will preserve value into the future for hundreds of years and many governments do no want you to be able to do that.
It is with this tool, that the oxygen will be sucked out of the room for these governments that wish to operate in opposition to the interest of the people, and that has the potential to usher in an entirely new paradigm of human co-operation, over time.
It’s never been more critical to get educated and understand what is going on around us. The best tool is to opt-in to the peaceful protest, the open source computer software of the bitcoin network and preserve your wealth across time and space from being inflated away by reckless government actors.
Check out Pierre’s speech, it’s well worth the 20 minutes.
Hope this finds you well, and i look forward to speaking with you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
In a tweet this morning Jack Dorsey announced his intentions to build an open Bitcoin mining system. Jack first signaled that this was being considered back in October last year, and that the hardware would be based on custom silicon and fully open source for individuals and businesses worldwide, built in the open and in collaboration with the community.
Fast forward three months, and it’s now confirmed and is happening. One of Jack’s colleagues posted a thread discussing the companies thinking so far.
They discuss many areas of potential focus and improvement, but what really jumped out at me was this comment.
This is a big time bet by Jack and his team. Jack is prioritizing his resources, both personally and that of his companies, to build hardware that supports a future that is fully decentralized and permissionless. Jack is not just some random kid on the internet with some crazy hair-brained idea that has as low probability of executing.
Jack is a known quantity with a proven track record. He has already built multiple multi-billion dollar companies, and has demonstrated a rare ability to identify trends in technology and in building companies of the future. For example, Twitter was launched all the way back in 2006, before the iPhone or Facebook. So he had a strong conviction that it was of value more than 15years ago. Some people around the world still have never even used the platform.
In my opinion, this is a major inflection point.
Its estimated 80% of the humans on earth in 2022 have a smart phone. 8/10. That is a staggering figure. Could we be moving to a world where 80% run bitcoin miners? Call me crazy, but I honestly think it’s possible, even likely. If the hardware is readily available, reasonably priced and “just works” out of the box more and more people will adopt it.
People will look back on this time and wonder why no one else had done this already, and that it was so obvious upon reflection. But the truth is it’s not obvious, and it requires an incredible level of vision and conviction to execute that few have.
The implications for the network have never been greater. Decentralization is inevitable. The current system is being decommissioned and a new system is being built before our eyes in real time. In the open and in collaboration with the community.
Powerful.
I hope you have a strong finish to your week, and I look forward to speaking with you on Monday.
Before i go - if you’re finding these letters valuable it would mean a lot if you could share with your friends and family so we can help as many people as possible make sense of the shift that is taking place and be best prepared for the future. Appreciate it.
Chat to you Monday
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Yesterday in an email to the bitcoin developers mailing list, Jack Dorsey along with Alex Morcos and Martin White, announced the formation of The Bitcoin Legal Defense Fund.
The Bitcoin Legal Defense Fund is a non-profit entity designed to defend developers from lawsuits and unwanted legal issues that may discourage developers from contributing to Bitcoin and related projects like lightning.
To quote from the email:
“The Bitcoin community is currently the subject of multi-front litigation. Litigation and continued threats are having their intended effect; individual defendants have chosen to capitulate in the absence of legal support. Open-source developers, who are often independent, are especially susceptible to legal pressure. In response, we propose a coordinated and formalized response to help defend developers. The Bitcoin Legal Defense Fund is a nonprofit entity that aims to minimize legal headaches that discourage software developers from actively developing Bitcoin and related projects such as the Lightning Network, Bitcoin privacy protocols, and the like.”
You can read the full email attached below.
The fact that bitcoin developers are being targeted legally is wild when you consider many of them contribute for free at their own cost, to what is a completely free and open source community project.
It raises many questions that our society is either not equipped to deal with in its current iteration, or seemingly somewhat unwilling to have honest conversations about.
How do we consider code legally? Is code speech? Are we free to express ourselves openly and freely? or are we not ? and if not, why not?
These are questions that need answers, and we need to think deeply and carefully about the way in which we answer them, as they lead us down diametrically opposing paths, and the impacts could not be greater.
Are we really living in a world where contributing code to a free and open source project can bring about legal attacks? Clearly it seems to be the case. How stereotypically dystopian that is.
The formation of the fund however shows a powerful level of clarity and commitment from Jack, Alex and Martin to have identified the need for this fund and to have executed on this. Jack said earlier in the year at the bitcoin 2021 conference:
“I don’t think there’s anything more important in my lifetime to work on and I don’t think there’s anything more enabling for people around the world.”
He went on to say:
“Whatever I can do, whatever my companies can do to make Bitcoin accessible to everyone is how I’m going to spend the rest of my life. If I were not at Square or Twitter, I’d be working on Bitcoin. If it needed more help than Square and Twitter, I would leave them for Bitcoin. But I believe both companies have a role to play and I think anything we can do as companies to help find the right intersection between a corporate narrative and a community open narrative is for the best.”
Since stepping down as CEO of twitter less than two months ago, Jack’s actions have been in complete alignment with these words. This is yet another powerful intentional action taken.
Developments such as this, really serve as a powerful reminder of the mission and how big the vision of Bitcoin actually is. The mission of Bitcoin is so far beyond that of an investment or some kind of get rich quick scheme.
As the saying goes, most get into it for number go up (NgU) technology, they stay for freedom go up (FgU).
Bitcoin is the trojan horse.
This is about freedom. To free our human society from the predatory behaviour of central banks and governments. To install a truly free market and fundamentally recalibrate society from the current short term rent seeking nature, where bad behaviour is incentivized, power centralizes and ultimately corrupts, and those who lie, cheat and steal the best win; to a world where the monetary system - that is the base layer of our society - is in complete alignment with our highest values and is programmed in to prevent the worst in us from corrupting the system.
Wishing you all well.
Hope you have a great day, and i’ll speak to everyone tomorrow.
AK
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Good Morning Everyone,
In the early hours of the Australian morning while most were still sleeping, big tech, specifically Google’s video platform Youtube, were busy maintaining their horrific record in relation to censorship.
The Bitcoin Magazine channel was deleted mid-livestream overnight.
Youtube’s apparent reason for deleting the channel was that to educate people to buy bitcoin is “encouraging illegal activities”.
I haven’t seen the livestream, so I have no idea what was being discussed, and while there are obviously rules relating to financial advice, it would appear wildly inappropriate, beyond extreme cases, to simply delete a channel in this way without first communicating with the other party, providing clear and specific feedback about the issue and giving an opportunity for them to correct it.
Perhaps in severe cases a warning in the form of a strike needs to be issued, or rare cases of instant deletion may be warranted, but for most cases it is fairly straight forward and is solved through a basic level of communication.
It’s important to acknowledge that while people that create channels on these platforms are not owners of the platform, they are in many cases best considered business partners to these companies. Creating content is the basis for platforms like Youtube to exist, and it is off the back of content creators that Youtube are able to sell advertising and profit from this work, and it is the very feature of allowing anyone to create and broadcast content that created the platforms network effect in the first place.
The trend of censorship on big tech platforms, like Google/Youtube, Twitter and Facebook is absolutely out of control, and continues to demonstrate the need for censorship resistant platforms, and as will become increasingly obvious to more and more people over time, the need for censorship resistant money.
No single entity can be trusted with wielding this power. It is simply too great.
While there is every chance that the channel gets reinstated, due to the fact they have a reasonably large following, the bigger issue is that we do not have an adequate structural framework established with theses platforms that maintains a reasonable and fair balance of power. The relationship is completely asymmetric in favour of the platform and against the content creators.
While they will get away with this in the short term, due to their dominant market share and the giant tail wind that is the network effect, it’s in the interest of these businesses to address this, or be super-seeded over time by a superior technology platform that addresses this issue and demonstrates a level of respect for their business partners, or better yet, simply does not have the ability to censor in the first place.
With each new instance, more and more users are being exposed to the problem and will subsequently seek alternatives. While the problem is not going away immediately, with each passing day we get closer to a solution.
Hope you have a great day, and i’ll speak to you tomorrow.
AK
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Good Morning Everyone,
There is a wild situation unfolding in Kazakstan as the country have seen massive increases to the cost of energy, specifically LPG (liquified petroleum gas), resulting in large anti-government protests, with the president of Kazakstan calling on Russia to send troops to support the government in quelling protests. It seems the government had a cap on energy prices and the removal of this allowed prices to increase, sparking violence and disorder across the country, unbelievably with the President ordering troops “shoot to kill” if people do not surrender. Wow.
According to an article from January 4th:
“It all began with the phased transition to electronic trading for LPG that began in January 2019 and concluded on the first day of this year. The idea was to gradually end the subsidizing of prices for domestic fuel consumers and to allow the market to dictate prices instead.”
It would appear that as a response to the protests the president has initiated a near-total internet blackout to limit communications of the people, in an attempt to reduce the populations ability to co-ordinate and organise. I can only presume it would have been the president, given the entire government cabinet resigned last week as a result of the chaos.
Netblocks have shown major disruptions since Jan 6th and reported that while it appeared connectivity was briefly reinstated yesterday, it has again been shutdown.
This is an obvious measure to be taken by a state actor, given basically all communications these days are via this protocol (TCP/IP) - including a large percentage of phone calls, which operate via VOIP (Voice Over IP). It does make me wonder if we are likely to see this in more countries as a tool, as more and more governments around the world face an increasing level of opposition for a variety of reasons including rising energy costs as well as restrictions in response to the pandemic.
What has this got to do with Bitcoin?
According to CBECI, Kazakstan is home to approximately 21.9% of Bitcoin mining hash rate (as of August 21) due to the low cost of energy. So the current situation is of particular interest in respect to how the internet blackouts impact mining operations, and the network more broadly.
The network hash-rate hit an all-time high on the 1st of Jan, and has since dropped around 19% from 209 EH to just below 170 EH. In yet another demonstration of the power of a decentralized and globally distributed computing network, there has been no impact to the networks ability to process transactions as block after block continues to be mined like clockwork or blockwork perhaps better said.
If we zoom out a little the trend is very clear. (see below)
Didar Bekbau, CEO of mining operation Xive.io (pronounced Z-ive) based in Kazakstan, posted a great thread to help the community better understand the situation and provide a boots on the ground perspective.
He states that the majority of riots are in the south, and the majority of miners are located in central and northern parts of the country and doesn’t think it will have any major impact longer term.
Didar posted as recently as 11 hours ago that half their mining rigs are back online, and expects the rest to be online within the next few days.
The situation in Kazakstan highlights internet connectivity as a very real attack vector not only for individual mining businesses, but the network as a whole, and while localised attacks like this one have little impact overall, more widespread outages where major nation states coordinated to shut down the internet, could potentially have a very material impact on the network.
According to Blockstream CSO Samson Mow, Satellite + alternative broadcasting methods would provide the necessary failsafe to protect from these kinds of attacks in future.
To quote Samson:
“I think a lot of governments will try to regulate bitcoin, but it’s going to be a very challenging thing to do because the nature of bitcoin it is unregulatable, it’s just information. A lot of people think bitcoin is money, but actually ‘we think’ bitcoin is money. Bitcoin itself is just information.
So Bitcoin in order to become the foundation of a global financial system, a new global financial system, has to have redundancy so it cannot be reliant on just terrestrial internet.”
The idea behind Blockstream satellite is first of all it’s cool, but secondary it’s also a needed technology. With Blockstream satellite we’re broadcasting these blocks, so even if an undersea cable is cut for whatever reason, a country cannot be cut off from the network because they can still receive bitcoin blocks over Blockstream satellite.”
Obviously most of us would prefer to see less aggressive and less authoritarian styles of behaviour from nations states, however as the internet continues to dilute their concentration of centralized power, there are a variety of indications this unfortunately may not be the case; and if the network is to remain secure it would seem like it is an imperative for miners to take this risk seriously and put in place appropriate measures to protect from these kinds of attacks.
It will be interesting to see how this develops within the mining industry over the next couple of years and how seriously the threat is taken, and in years to come if we will look back at this unfolding situation in Kazakstan as being somewhat of a canary in the coal mine.
Either way it certainly prompts me to deploy a level of gratitude that loved ones are safe and secure, and also hope for the best for those people impacted directly by this situation.
Hope you all have a great day, and i will chat to you tomorrow.
AK
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Good Morning Everyone,
A debate erupted (pun intended) on Saturday with American fiat economist Steve Hanke intentionally mocking El Salvadorian President Nayib Bukele over his plans to utilize geo-thermal energy from an inactive volcano to mine bitcoin, and to power the proposed “bitcoin city”.
He said in a tweet:
Lets be clear. Hanke is the epitome of a fiat economist. His twitter bio states he is also an FX and commodities trader. Assuming he is actively participating in markets as per his own words, it’s important to appreciate his motives, and the incentives at play. That’s not to say what he says is automatically untrue, but in this instance it seems that he is either wildly ignorant to the particulars related to geothermal energy and volcanoes, or has a very strong bias against El Salvador. I don’t know for sure, but my money is on the latter.
I view betting against Hanke in a similar vein to betting against fellow washed up fiat slave Paul Krugman who has been ridiculed and basically laughed out of existence online for the last 15 years for his comments comparing the internet to fax machines.
Honestly you can’t make this stuff up. I used to connect to bulletin boards from the school library when i was 12yo in the early nineties, and I could have told you that back then that the internet was going to be HUGE. Perhaps he was short a bunch of tech stocks at the time and was talking his book.. ? We’ll likely never know.
Anyway…
President Bukele fired back highlighting Hanke’s obvious lack of understanding in relation to geo-thermal energy in a high quality twitter dunk.
To quote Bukele:
Hard to argue against the idea of building a city below an active volcano. Not sure who could possibly think thats a good idea .. ? Hanke’s comments seem to suggest he thinks so. Pretty classic.
You’ve got to love the fact that conversations like this can happen on the internet in a completely open way and public way. Pre-internet when a small number of corporations had a monopoly on broadcasting, it was easy for them to discredit those they opposed, and difficult for people to set the record straight and call out the nonsense and counter. Not any more!
Just another example of how powerfully the way we communicate globally has changed. Access to this kind of discourse in my opinion is absolutely incredible, and the value of it is certainly not lost on me.
The debate continued with Steve Hanke calling for a feasibility study, and stating El Salvador already has a huge energy deficit and that they import 22% of their electricity.
President Bukele does not waste a second and unleashes a jordan-esque dunk session on Hanke and shows he is clearly underestimating the Salvadorian President.
In a phenomenal thread that i recommend you read as he includes some images and further data, he completely pulls apart Hanke’s attack, and frankly gives him a real dressing down.
Bukele highlights the following:
El Salvador does not have an energy deficit. They import energy because it is still cheaper in some respects to do so. Maximum energy consumption in El Salvador is 1,030 MW, while the installed capacity is able to produce 2,065.79 MW
Bukele outlines the $1b natural gas plant project he started at the beginning of his presidency projected which would output 380MW of electricity 24/7, in a cleaner and more economical way than anywhere else in their region.
The plant will start producing as of May this year
This will enable El Salvador to export energy, and remove less sustainable supply.
El Salvador are building a water damn that will generate a further 66MW of clean energy
Despite the countries size (21,000km2), there are more than 170 volcanos.
El Salvador have dug 4 new wells to increase energy production from geothermal, and plan to do more.
Regarding the “inactive” Conchagua Volcano - Bukele estimates a 90% chance of finding a well generating more than 42MW - enough alone to power bitcoin city.
Bukele finishes with the following:
My main takeaway from this is that Bukele is clearly being underestimated. He is focussed and has prioritized energy which is without question to the benefit of the countries citizens. He demonstrates competence on the topic of energy, and is betting on it. He is running El Salvador like a CEO of a company. He is getting the attention from the world, because instead of talking and playing games, and playing politics - he is executing.
Very hard to hate. Especially in a world fixated on case numbers, masks and general covid hysteria.
While I have no doubt it’s not all sunshine and roses, ofcourse Bukele has his flaws as we all do, but it’s very difficult to want to bet against him. Especially when his international collegues are making it so easy. The majority of leaders, certainly those in the west are making Bukele look like something akin to a political version of Jeff Bezos.
Although it feels like the bar has never been lower politically, and most in the west continue to demonstrate an utter lack of competence, posturing and virtue signalling with very little actual results to show for all the words, Bukele and El Salvador continue to move ahead with their strategy and continue to innovate inspired by a new technology and a world of new possibilities. Exciting stuff.
Hope you all have a great start to your week, and i’ll speak to you tomorrow.
AK
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Good Morning Everyone,
In a really valuable conversation with Preston Pysh, Nic Carter highlighted the situation in Myanmar, and pointed out what an interesting and telling example it is for the potential fork in the road that more countries are likely to face in the upcoming years as political monies become more and more encumbered and weaponised.
For those that are not aware of the situation in Myanmar (Burma), the short version is that the country had enjoyed a brief period of democratic rule in recent years, in amongst a turbulent history. The military had been heavily intertwined within the countries governance structure and in February 2021 a military coup was initiated to take control of Myanmar from the NLD party, and declared a state of emergency within the country.
NLD leader and Nobel peace prize laureate, Aung San Suu Kyi was detained under house arrest following the coup, and in December 2021 was jailed for incitement against the military and for breaching COVID-19 restrictions.
Where this gets particularly interesting is in relation to what has happened monetarily following the coup, the role of money, and what impacts the technology of money have in situations of conflict. What qualities and monetary characteristics become more important, and why.
There are two opposing local forces - the military and the shadow opposition government. The military have adopted the Chinese Yuan as their settlement currency while the shadow government have adopted Tether, a US-backed crypto stablecoin.
Not only is it compelling to see a real world use case of a government adopting a non traditional monetary system as their settlement layer, it’s fascinating given the fact that 10 years ago, it was not possible, or certainly nowhere near as frictionless. So the dynamics at play here are somewhat novel and may provide a glimpse into the future, as to how future conflicts may be impacted as a result of this emergent technology.
To quote Nic:
“ On the one hand you have the coup government, which is a Chinese-backed coup which happened earlier this year. They de-dollarized their settlement currency. They went from dollars to Chinese Yuan. I think that’s very indicative of the way the world is going, especially in the Chinese sphere of influence, is de-dollarization, and that’s one trend to keep an eye on.
The other thing that happened virtually at the same exact time, was the opposition government, the shadow government, that was deposed in the coup adopted Tether officially as their currency. A stablecoin, a dollar backed stable coin.
And these 2 things happened at the same time. So on the one hand you have official de-dollarization and Yuan-ification and at the same time from the opposition, you have crypto-dollarization happening because the opposition government wanted to raise capital from the Burmese diaspora worldwide, they needed an efficient settlement currency, but they couldn’t be encumbered by lets say the Burmese banking system. They had to do something outside of that system.
I think this was such a telling little anecdote. It’s kind of two visions of the future, and it’s what I would take to US policy makers that are thinking about stablecoins and think about the crypto market.
They’re very scared of stablecoins US policy makers, they kind of hate them, they fear them, and they think stablecoins are a threat to the dollar. Some of them think stablecoins are a form of counterfeiting etc… But just look at this little example.
You have on the one hand this secular long-term threat to the dollar, which is a competing currency, competing for global reserve status from a rising hegemon; and then at the same time the dollars reach is actually expanding through crypto rails, through stablecoins acting as extensions of the dollar.
The stablecoins are backed by dollars and then they’re issuing claims against them circulated on blockchains, and because they are circulating on these credibly neutral infrastructures with no censorship hopefully, depending on the blockchain, that is this frictionless way to distribute dollars to the worlds population, to places that need dollars, and they need dollars in a less encumbered way than sort of the good old US dollar in the legacy system, which is very encumbered, very politically encumbered.. and I just thought that was such a telling little story. Thats sort of like, two forks, and here’s world one, and here’s world two - which one would you sort of rather? “
There are clearly some big themes here, particularly in respect to the Yuan-ification of countries within the Chinese sphere of influence. This is something that is only likely to increase.
Secondly, is the optionality and potential tool stablecoins could be utilized as by the US in the face of the declining power of the US dollar, and as more countries de-dollarize.
Finally, is the need for “money” to be neutral in order to be truly effective and valuable as money. The best form of money has no utility, contrary to common belief. As soon as utility exists like the ability to surveil transactions, or censor transactions and apply sanctions, these powers are inevitably wielded as an exercising of power, and incentives certain participants to look for an alternative, which ultimately reduces the value to the item as an effective money over time as less and less people are willing to accept it.
It’s not obvious to me how the situation in Myanmar plays out, but i think it is somewhat of a microcosm of what is taking place around the world more broadly. The fact that alternate monetary levers now exist seems extremely positive, as the legacy systems has become increasingly weaponised as a means of wielding power and control.
Clearly we’re in the early stages a major global monetary disruption. One can only hope it incentives and enables humans to better cooperate rather than opting for violence. Time will tell.
I hope you have a great end of your week and i’ll chat to everyone on Monday.
AK
"The measure of intelligence is the ability to change". - Albert Einstein
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Good Morning Everyone,
Nasdaq-listed company BTCS has announced a world first corporate dividend that has the option of being payable in Bitcoin. They are calling it a Bividend.
The bividend will act as a typical dividend whereby share holders on the registry at the ex-dividend date, will be entitled to a dividend from the company which they can opt-in to having paid in bitcoin, or otherwise receive as normal in USD.
Interestingly, the divided is not the usual income & capital gains dividend that most would be familiar with. It is a "Return of Capital Distribution” dividend. Meaning there is no obligation for anyone receiving this to pay any tax based solely on it, as it is considered as “a distribution in excess of an entity’s current and accumulated earnings and profits”.
CEO Charles Allen stated the companies reasoning for the offering as follows:
“We want to reward our long-time shareholders for their continued support and encourage financial freedom by providing the means to enable direct ownership of Bitcoin and other digital assets.”
For now this unique dividend seems to be a one-off, and the company have not stated any clear plan for it to be adopted as a permanent standard.
“BTCS is very much in the growth phase. That said, the Company is evaluating the appropriateness of future Bividends.”
Clearly the development was received positively by traders & the market, with BTCS share price jumping 66% at the high, and closed up 47% on the news.
This is an interesting development, and it likely paves the way for other corporate entities to experiment with new and unique methods of capital distribution. It will likely attract plenty of attention and it certainly further legitimises the use of Bitcoin within traditional markets.
It’s important to me that i separate myself from the people that use any announcement to hype something up and give the impression that because of xyz -this thing is going to the moon.
After looking into what BTCS actually does as a business, i cannot honestly say it is of particular interest to me. It seems like they basically run a heap of nodes for so called “decentralized” Proof-of-stake blockchain protocols, or companies better said, and give investors a way to gain exposure to these companies in a traditional way.
The use of blockchain this and blockchain that on their website screams nothing positive to me. There is nothing special about a blockchain as a data structure on its own. It’s a term that has been way over used and leveraged to signal to investors that basically do not know what a blockchain is or does and essentially associate it with bitcoin, to raise capital and facilitate a flow of funds from the pockets of said unsophisticated investors that do not understand the technology they are considering investing in.
What is positive however and important to highlight, is the fact that they are choosing to distribute this capital in bitcoin. In a way that encourages participants to custody their own bitcoin, learn about what that means and involves, and likely learn more about the digital asset by doing so.
This can only be positive, and it will be interesting to see how the market continues to view this development in the lead up to, and post the companies first bitcoin dividend.
I hope you have a great day, and i’ll chat to everyone tomorrow.
AK
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Good Morning Everyone,
The process of phase transitions, that is transitioning from one state to another, is interesting to think about, particularly in respect to money - and bitcoin.
Water is one of the best examples. it can exist in four distinct phases, or states.
Solid ←→ Liquid ←→ Gas ←→ Plasma
Money has undergone many phase transitions over time, from animals and produce, to shells and physical objects, to metals, coins and various commodities like gold and silver, to paper fiat money and most recently in the context of history to ones and zeros on private databases.
The worlds reserve currency, the US Dollar, has also undergone multiple phase transitions.
From physical gold coins (One dollar = 371.25 grains of pure silver = 24 grains of gold), to Paper Certificates backed by gold, to paper backed by nothing.
The phase transitions in respect to money seem very clearly defined. The form from say a gold coin, to a gold certificate cannot be confused. But if you think about how the transition will have actually taken place, it would have seemed a little more gradual.
There would have been a period of time where both are still accepted as one is being ‘phased out’ and as the newer form gains acceptance, is widely circulated and the new norm is established and the final transition is complete.
Thinking about water transitioning from liquid to solid; when precisely does it stop being liquid and become ice? Is it when it is 30% frozen? 50% ? 80% ?
Obviously at the completion of the transition it is clearly solid and is unmistakably ice, but there is a period during this transition between liquid and solid states, where it is some of both states in varying degrees.
Applying this lens to the transition that is underway in relation to bitcoin helps to provide some valuable clarity, as it can be difficult to discern where we are when we are in-between a phase transition, and are neither liquid or solid, rather some variation of both.
People often comment about mass adoption of bitcoin, and for it to be ‘successful’, mass adoption is needed, but what is not well understood is that for bitcoin to become widely accepted as the best form of money, it does not require 100% of people to adopt it, to believe it, to own bitcoin or utilise the network. Infact there will be a descent slice of the population that will not want anything to do with it until there is literally no longer an option. That cohort of people are known as the laggards.
The law of diffusion of innovation separates the population into 5 categories as outlined in the image below.
I’ve attached a short clip where Simon Sinek does an awesome job explaining this, and why it’s such a powerful concept to understand.
As he explains:
“ if you want mass-market success, or mass-market acceptance of an idea, you cannot have it until you achieve this tipping point between 15 and 18% market penetration; and then the system tips.”
Willy Woo estimated the number of Bitcoin network users to be around 135m. I’ve seen other estimates around 200m. Either way, this is a tiny fraction of a 7b+ human population. At 135m it’s around 1.75%.
Using the law of diffusion of innovation as a guide, it seems likely that we are passed the initial phase where the innovators adopt the technology and are somewhere in the early adopters phase, although i’m just speculating. From network user estimates it seems clear we have not yet reached adoption from the early majority, but this seems inevitable at this point, given the amount of legacy institutions that have announced various bitcoin product launches forthcoming for their clients.
The bottom line is, if we are in the midst of a monetary phase transition, and i believe we are, we are much closer to the beginning of the transition, than the end. 16% of the population will wait until the water has completely frozen to announce it is now ice. By which time the majority of the population have transitioned, and the opportunity to benefit disproportionately has been and gone.
As with the internet in the 90s, social networks were inconceivable due to the small number of network users. It was not until the network effect had taken hold, and a critical mass of people adopted the technology, that the use case of social networks became a possibility. In the very same way, it is inconceivable to imagine all the ways in which this transition will transform society and the ways in which we operate as a result.
All i’m confident of, is that it’s early days, and the tipping point is yet to come.
I expect that the move from early adopters to early majority will be absolutely breathtaking.
Hope you have a great day and I’ll speak to everyone tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
January 3rd 2021 marks 13 years since the Bitcoin genesis block was mined by Satoshi, and this entire shift began. Pretty wild to think about how much has changed in 13 years. The very first iPhone for example was released only 18mths earlier.. Life was very very different.
Above you can see the codebase from the genesis block with a message inscribed by Satoshi which reads:
“The Times 03/Jan/2009 Chancelor on brink of second bailout for banks”
Here is the image of the newspaper Satoshi was referencing.
13 Years on and at the time of writing, block 717,072, is about to be mined. The price of this nascent asset has gone from a fraction of a cent, to a high of $69,000 US shekels, and the market capitilization of the asset hovers around $1T USD with huge adoption from all corners of the world.
Individuals all over the planet run the software and verify the networks transactions (these are known as the nodes). More and more mining hash power continues to come online with each passing year to secure the network and in search of the remaining 10% of the 21m issuance.
It really is crazy to think about how much has happened in 13 short years.
We have seen a nation state in the form of El Salvador adopt Bitcoin as legal tender (let that actually sink in!) along with a host of corporations adding Bitcoin to their balance sheets including Tesla, Square and Microstrategy. These developments were among the first. It is unlikely they are going to be the last.
We are now into the 4th halving epoch, and the strength of the network is only moving in one direction - up and to the right. The network has operated exactly as designed producing block after block for 13 years straight, with no traditional hierarchical structure, no CEO, no head decision maker, no HR manager hiring the best talent and no ultimate judge and jury that can be called upon. This point is not trivial.
The network is operated by a truly decentralized and globally distributed group of individuals that ultimately believe that this innovation is significant and have chosen to dedicate their time and energy towards furthering it. No one approved them to do this, there was no job application or interview process - it’s simply on the basis of whether or not they add value, and the market determines this. Many do not even operate under their known ‘real world’ identity, they operate under pseudonyms.
It is a completely new kind of framework for human organisation and cooperation. A brand new system, unlike any other we have ever conceived in the history of civilization.
A completely flat, bottom up structure organised around a software protocol that was first bought online 13years ago, that no one can own or control, or hold physically, with no rulers, that exists nowhere but is everywhere. It really does defy belief. It’s so serendipitous, and the more you learn about it, the more incredible it becomes, and unlikely it seems. Yet here we are.
Happy 13th Birthday Bitcoin (for yesterday Aussie time)
Hope you guys have a great day, and i’ll chat to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Turkish Supreme Leader Erdoğan is currently walking a path that history has not been kind to. As discussed, Turkey has been the most recent country to cave to painfully high levels of inflation which have seen a flight from the local currency, the Lira, to just about anything else, as citizens seek to prevent their wealth being siphoned away at a record rate.
While many will attempt to seek safety in other assets, a likely majority of unsuspecting individuals, that are not educated on these topics, and blindly trust their government to save them, will be crushed as prices for basic goods soar.
It’s important to understand for context that Turkey is not nothing. Turkey is a G20 nation with a population of 83m humans, so for the people that live under the delusion that wherever they live is immune to these kinds of happenings, think again. Venezuela was at one point the 4th largest economy in the world!
Now it’s 435 trillion Bolivars to 1 USD.
When sustained levels of inflation exist it acts as a negative flywheel, or feedback loop. As it persists, more and more people lose confidence in the currency, which further amplifies the problem as more and more people look for a way out to preserve their purchasing power.
This leaves government in a very challenging position, having to essentially choose between austerity, whereby they raise rates which is typically very unpopular or redistribution which involves devaluing the currency and can happen in a more stealthy way.
Through these periods the propaganda tends to be strong in an effort to persuade the population into believing in the mission, and the importance of making sacrifices for the greater good. It’s typically a very collectivist type of messaging.
See below supreme leader Erdogan doing just that as he addressed the nation in mid December:
He says:
“ Neither interest and exchange rate speculators nor sworn domestic and foreign enemies of Turkey nor a handful of greedy people can determine the future of our country and nation. Together we will make sacrifices and finally we will reach our goals. While the world, developed and developing nations altogether are struggling, and we continue to grow. It means we are close to our goals.
Likewise, while all these countries falter not knowing what to do, we are advancing, totally locked onto our goals and close to the victory. “
The problem with inflation is the government response doesn’t stop at currency devaluation and redistribution. As you can see in the clip below. The Turkish government have implemented a program for local police to go around to small businesses checking prices, and giving fines if they’re deemed too high.
This is a classic example of naive government intervention in the market, and is highly unlikely to lead to any positive outcomes.
The mechanism of price in the market is so complex. The price or something is the distillation of so much information. Every cost by each different party involved in producing x good or service. Attempting to manage this essentially by force is just madness. If people are over charging, the market will naturally correct for this and competition will enter the market and drive down prices, and/or people will look for alternate suppliers.
If you want to get more deeply acquainted with the history of price controls, check out “Forty Centuries of Wage and Price Controls: How Not to Fight Inflation” here, by Scheuttinger & Butler.
Erdogan has now created an incentive scheme to try and motivate citizens holding gold to convert back to the Lira. While it appears that this initially is an opt-in scheme, it will be interesting to see if it becomes a more forceful push and sees the government outlaw holding gold, as the US did in the 1933 when FDR made it illegal for citizens via Executive Order 6102.
These actions are typical, and well document. They are the classic symptoms of failing political monies and the result of charging humans with the impossible task of managing a monetary policy. The hubris needed to actually believe one firstly understands something as complex as markets in the first place, then also that knows the exact measure to take to correct the issue, is at this point laughable.
How many times will we need to see this story repeated through history to learn the lesson?
It’s not that i don’t trust governments ability to manage this. It is that i know that over time, they have a 0% success rate. The time has come for citizens of the world to wake up to this reality, and opt out of this repetitive silliness.
Ultimately the decision is yours. Will you choose to blindly trust a government of pseudo-elites to manage the money, and all the likely implications or will you trust in a decentralized protocol that is open and public, and has a predictable predetermined monetary policy backed my cryptography and mathematics, that anyone can verify.
In my opinion, it is no longer even a choice. A small select few humans have no place managing the money, and have demonstrated this time and time again. We are emotional animals, and the incentives that exist do not support positive win/win outcomes over time.
It is time for naive interventionism to be removed as an option when it comes to monetary policy. We must stop pretending humans are capable of doing something that we have proven incapable of, and allow the people in government to focus on doing things that they are actually competent in doing, and focussing on adding value to the society, without the distraction of having to pretend they know better than the market.
The disruption of money and state is well under way. It is free to opt in. Anyone can do so. You will not be forced or coerced into making the change - it is completely your choice, and your choice alone. But with everything going on, it is time to pay attention and consider your options.
Hope you have a great start to your week and i will speak to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The price of Bitcoin at the time of writing this is $47,136 when priced in melting USD ice cubes.
From the low in January 21 to now, price is up approximately 69%
From Low to high price rallied 147% in 2021
Lets compare that to major market indicies…
The Nasdaq (NQ1!) which is predominantly comprising of tech & financials, is up 31%, with the S&P (SPY) up 31% for the year. Both have printed new all time highs in the month of December, and look set to print new monthly closing all-time highs while Bitcoin is currently lagging and continues to consolidate sideways in a range.
Gold (GLD) is down 7% but has been ranging and consolidating since printing a high in August 2020. Current price of gold is down 12% from the highs. Silver is looking far weaker down 31% from its highs in the same month.
Oil (USOIL) was a star performer in 2021 up 79% from top to bottom, and continues to look extremely powerful into 2022.
You will notice that i choose not to get too distracted by short term price action in these letters, as i think it is far more valuable to focus on the developments on and around the protocol and to maintain a low time preference in relation to price relative to the US Dollar.
This is primarily due to my overarching thesis that over time, the USD as the unit of account (UOA) will change, and the most critical measurement from the perspective of UOA is the number of sats, or bitcoin. 1 BTC = 1 BTC
If everything else is essentially leaking value, or melting, while BTC over time retains it, then to measure your wealth in anything else makes little sense in my mind.
The 3 core pillars for something to function as money are:
SOV, MOE, UOA
Store of value. Medium of Exchange. Unit of Account.
Bitcoins initial widely accepted, beyond being something to speculate on is as a store of value. Thought of by many as digital gold - despite my belief this comparison falls well short of the true reality, for many its a useful analog to help people in developing their understanding of the asset.
As a medium of exchange the USD is far and away a better tool as MOE for now. But over time, this is likely to change. Whether it be to bitcoin or a variety of different currencies or monies.
Bitcoin is primarily addressing the properties needed to make it functional as a medium of exchange in higher layer solutions, like the L2 scaling solution, the lightning network.
But in my opinion where the rubber really meets the road, is where Bitcoin becomes widely accepted as a unit of account. Where other items are measured against the perceived value of BTC as a preference to other ‘monies’ because its a better proven SOV. It’s not commonly discussed or really acknowledged, but this process has already begun within the crypto space with other tokens and ‘assets’ being measured in both USD terms, and BTC terms.
Vijay Boyapati discussed this recently in an awesome podcast with Stephen Livera.
Money is very special. And, and the reason it has this premium is because people value it for the functions of money that it provides society that we really need. We really need the function of a store of value, really need the function of a medium of exchange. We really need the function of unit of account. and I think that the importance of that insight, is that money doesn’t get its value from its utility.
Once you make this change in your mind, the reality of what is happening around you becomes much clearer. It’s easy to accumulate things in USD terms (or fill in the blank with any political money), because they are melting ice cubes, but it becomes clear that it is far more difficult to accumulate relative to BTC as the annual compound growth rate of the asset is so powerful. Or atleast it seems so, when everything else around it appears to be depreciating at such a rate.
It is still early days for this nascent asset, as the worlds population grapple with trying to understand it and how best to treat it. If you are reading this, you’re already ahead of the wave that is coming. Despite the price in USD terms, it is still very early days in my opinion and there is a ton of work to be done.
I could not be more optimistic for a future with bitcoin in it, and feel deeply privileged to be alive during this mammoth transitional phase. 2022 is going to be the year that many people are forced to reconsider their preconceptions in relation to this asset, and I look forward to welcoming them into the community.
I appreciate you all.
Happy new year!
I’ll chat to you in 2022
-AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Afternoon Everyone,
Following on from yesterday’s letter..
Let’s address how much energy the Bitcoin network actually uses.
Cambridge Bitcoin Electricity Consumption Index is the most-cited source estimating current annualised electricity usage at 126.25 TWh.
To get a perspective of what this means - The entire world uses in excess of 170,000 TWh per year of electricity.
This means that the Bitcoin network at peak estimated consumption uses <0.1% of the worlds energy.
To quote Lyn Alden from an exceptional piece she wrote on the topic:
Bitcoin’s energy usage is a rounding error as far as global energy usage is concerned. And I mean that literally; when scientists estimate that the world uses a certain amount of energy in a given year, they can easily be off by a couple percentage points in either direction, let alone a couple tenths of a percent. Bitcoin is estimated to use less than one tenth of one percent.
Plus, a large percentage of the energy that Bitcoin uses is from otherwise-wasted energy sources.
I recommend you read Lyn’s article linked above for a deeper dive.
I think it is also extremely helpful to understand why the bitcoin network uses this energy, and the fact that this is actually a design feature of the system, and not a bug.
The act of ‘mining’ using the proof-of-work consensus mechanism is what secures the network. It is counter-intuitive but you actually want it to be expensive and thus difficult for any individual to amend the blockchain by adding a block. The immutability of the global ledger is critical. If anyone could easily do so, the network would be vulnerable to easy and frequent attacks and render the system useless. The expense to do so, which is the projection of power, deters would be attackers and thus secures the network.
This is necessary for a global monetary system and in actual fact, as you can see below, in comparison to the current system it is wildly efficient, contrary to what you may have heard.
According to ARK Invest analyst Yassine Elmandjra:
Traditional banking emits 1,368 Megatonnes (Mtoe) of carbon per year and gold mining emits 144 Mtoe. Bitcoin emits 61 million Mtoe, less than 5% and 45% of traditional banking and gold mining, respectively.
As Nick Szabo said in his article ‘Unenumerated’ in 2017
“Prolific resource consumption and poor computational scalability unlock the security necessary for independent, seamlessly global, and automated integrity.”
The other thing to mention in respect to total electricity utilisation that is very much relevant, is the total number of network users. The current number of network users is relatively small compared to a pre-existing technology like the internet, and a common concern is that as this number grows, then so will the total electrical consumption, and the network clearly has plenty of growth likely ahead of it.
Estimates of this number vary, and the truth is that it’s impossible to ever truly know the total number of network users - we can only ever estimate.
In 2021, estimates show approximately 106m users. An obvious concern would be if the electricity usage increases linearly with network user growth then the resources required to run the network could become more significant - but this is not how the system works. There is limited space per block, and limited blocks mined p/day, and its unlikely for this to change. The scaling will happen on a L2 solution like the Lightning Network, and the base layer is preserved in order to optimize for security.
To quote Lyn again:
In the very long run, if Bitcoin is wildly successful and becomes a systemically important asset and payment system used by over a billion people at 10-20x its current market capitalization, it should reach several tenths of one percent of global energy usage.
The point is that the Bitcoin network is and forever will be a rounding error as far as global energy consumption is concerned, whether it’s successful or not, and its energy usage won’t exceed its long run utility (however high or low that utility ends up being).
The next fragment in this conversation is the sources of energy used. Below is a chart showing the global energy consumption by source.
As you can see, a very small fraction of total energy consumption is derived from renewables, and anyone that knows anything about the complexities of supplying base load electricity to a grid will tell you that it’s highly unlikely that renewables are going to be able to provide for this any time soon. To rely on renewables for anything more than a minor bump to overall capabilities would commit us to descending back into the dark ages, and i mean that literally.
Estimates of Bitcoins energy sources vary significantly from a 2019 report suggesting 73% of mining is carbon neutral while the CCAF indicated in a 2020 report that the figure is closer to 39%.
Given that it’s been established that total energy usage is essentially a rounding error globally, the complaint that the energy is primarily derived from fossil fuel sources is trivial, and to get distracted by this narrative would be a mistake as the percentage mix even at the lower end is still close to half and it is only likely to increase over time.
What is much more relevant to highlight is how bitcoin actually incentivises the sourcing of renewable energy. Infact, bitcoin mining is a major innovation in this respect.
Bitcoin mining as a technology can be moved basically anywhere and can monetize resources that would otherwise not be economical to do so for various reasons whether it be transport or cost. So if the energy is cheap or near free, miners are incentivised to find it, and use it. This is such a big deal, and it is still not well understood. Take El Salvador for example:
They are now building a mining facility to convert the previously untapped geo-thermal energy into electricity from a nearby volcano. This energy has always been available - but never utilised. This could be used to support the grid if needed, and if not they can monetize it and be mining bitcoin from a free energy source.
There is a huge amount of complexity and nuance to this topic, but i believe it will prove to be one of the most significant energy developments in decades, and will lead to a reduction in consumer energy costs over time helping us to utilise previously inaccessible energy sources and create powerful incentives that will drive competition in the market place.
Jack Dorsey’s company Square published a whitepaper on the topic, and provided the following in summary:
Bitcoin miners are unique energy buyers in that they offer highly flexible and easily interruptible load, provide payout in a globally liquid cryptocurrency, and are completely location agnostic, requiring only an internet connection. These combined qualities constitute an extraordinary asset, an energy buyer of last resort that can be turned on or off at a moment’s notice anywhere in the world.
As i said yesterday - it really boils down to the following:
Do we value having an immutable monetary network completely separated from ‘the state’ and political actors? A single global monetary network with the properties that the Bitcoin network provides.. A network that is available to anyone, but is owned by no-one. And if so, how much energy as a percentage of societies resources is an acceptable allocation for the benefit this technology affords us as a global people?
In my opinion to argue against the value of the network and the bottom-up innovation it incentivises is equivalent to simply not understanding it. It can only be done from a position of ignorance. I have not heard a single argument against it, from someone that has actually done the work to understand it.
We have a global settlements layer, a single global monetary standard, that from an energy usage perspective, will always be a rounding error, and incentivises the use of cheap and previously unused renewable sources that can drive down the cost of electricity production worldwide for consumers and lead to greater availability and reduced cost to supply. And this innovation is still largely not well understood. Imagine the impact after another 10-20 years!
Hope that’s helped to clear up some questions.
Hope you have a great day, and i’ll speak to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The energy usage of the Bitcoin Network has been discussed and hotly debated for years. From an article in 2017 claiming “Bitcoin Mining on Track to Consume All of the World’s Energy By 2020“ (which was clearly nonsense and a classic example of clickbait headlines) to Elon Musk tweeting about Tesla suspending Bitcoin payments due to concerns about rapidly increasing use of fossil fuels for Bitcoin mining. It is clear that there is still a perceived issue by some, and a lack of confidence for many relating to Bitcoin and the networks energy usage.
Over the next 2 days i’m going to put your mind at ease so you clearly understand the nuance of the conversation, as I believe most that are of the opinion the networks energy usage is an issue, do not really understand the nuance and specifics, and are failing to accurately depict the entire scope of the conversation to present an accurate perspective.
Before we get into some numbers, I think it’s important to frame what we’re really talking about here.
We have a lot of things in the world that use a lot of energy, and contribute huge emissions to our environment that receive little attention and seemingly no one is complaining about.
We could debate whether the electricity used by all washing machines or clothes dryers on the planet is an acceptable allocation or the fact that the US alone uses more electricity on Christmas lights than entire countries annually!
I don’t hear anyone complaining about the resources deployed to sustain the military forces of various countries around the world. I guess it has been accepted they would rather have some defense capabilities than be helplessly dominated and slaughtered by an opposing force.
First of all to be able to pose the question of “is the expenditure of energy worth it?”, you would need to be able to answer what ‘it’ is.
In my opinion the entire conversation boils down to the following:
Do we value having an immutable monetary network completely separated from ‘the state’ and political actors? A single global monetary network with the properties that the Bitcoin network provides.. A network that is available to anyone, but is owned by no-one. And if so, how much energy as a percentage of societies resources is an acceptable allocation for the benefit this technology affords us as a global people?
To answer would require one to actually understand the impacts the technology of money actually has on society. It’s certainly also not to say the impacts are entirely negative. It’s quite a big question, and fair to say it’s something that is difficult to fully answer.
While in developed nations you could make the case for the system functioning and providing value, and perhaps the upside negates the negative externalities to the freedom, rights and sovereignty of the populous. However, many people live under oppressive tyranical regimes where the monetary system is used as a tool against the better interest of the people.
In the US for example, the wealth gap that exists has become so extreme due primarily to the monetary system and policies of the Political class resulting in major societal friction, division and severe negative higher order effects that ultimately impact everyone to some extent. This creates a level of fragility that may become catastrophic. At minimum it is a major destabilzing force within the society which seems unlikely to be the optimal implementation possible.
I’ve attached a chart below showing this, whereby the blue line which represents the top 1% and the share of total net worth held vs the bottom 50%. As you can see, the top 1% now have a greater share of the total net worth than the bottom 50% combined.
I’ll leave it there for this morning, and continue this conversation tomorrow.
Hope you have a great day, and i look forward to speaking with you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The notion of needing permission and also the psychological dynamic it creates is really interesting to me and something I’ve been giving more and more thought to. It is something that is baked into our cognitive operating systems from a foundational level as children, and certainly expanded upon through traditional schooling and into adulthood and in the workforce.
We are built and conditioned for obedience & compliance, and to seek permission from a figure of authority from day dot. As a child in school, you typically need to put your hand up to be able to speak or ask a question - likely even to go to the toilet. As an employee, If you want to take time off you must seek permission.
In the time of COVID Hysteria, you need permission to enter shops and businesses and even to travel from Australia during the last 21 months - you needed to request permission and provide your reasons for wishing to travel. At one point permission was revoked to even allow you to visit a park.
This extends into the realm of payments, and your ability to interact with another individual and express or receive value. If you want to be able to pay someone for a good or service across some distance whereby cash does not function, a bank account is required. To obtain a bank account you must seek permission from an institution providing this service, and then again to send a payment.
If this is not available to you or not granted what do you do?
If you are required to seek permission, it highlights your position in a system or a hierarchy. If it were your system, or you were higher or more dominant in the hierarchy you would be the one providing this permission, as opposed to seeking it.
If we apply this understanding to our current monetary system, it highlights that this is not our system - it is someone else’s.
It is a system we do not control. It is however a system that we participate in. Unknowingly to many, and for the most part willingly.
Thinking about the current system of Money via this lens is interesting.
While technically we participate in the current system of money by choice, as it’s to our benefit to do so. It’s predominantly a function of it having been the best option available. Prior to Bitcoin, there were very few alternate ways to operate beyond this system. To send gold coins around as payment is slow, it carries greater risk, the fee to do so is higher and most merchants would not accept them nor know what to even do with them.
Given how significant the system of money is within society, this seems suboptimal.
Money whether we like it or not has a profound impact on how we exist. It is a technology that you interact with likely every single day and often multiple times per day on some level. The amount of money you have determines where you can and cannot live, where you can or cannot go, or travel to. What food you buy. The types of clothes you buy or can’t
buy. The type of education your children are afforded, or not. The tools and technology you have access to. The list goes on.
This impacts the communities and groups of people you interact with and has a huge impact on you, and others, very fundamentally. Affecting the standards you may accept, the societal norms you learn, the choices you make, your habits, behaviours.. even your thoughts. Extrapolate this for everyone of us, and you have a wild simplification of the impact money has on you, me, and human society as a whole.
To suggest that we need permission to express value, which is a fundamental expression, is as absurd as suggesting we need permission to communicate, or that any entity has power over who we communicate with or express value to.
We now have a system to enable this. That is no ones system, and it is everyones system. It exists everywhere. It is a system that requires no permission to participate. It is completely flat. No network participant is dominant over any other. It is not controlled or governed by any central group or entity whose permission we require.
You can choose to plug in to this system, and operate within the rules of the network, and the network will facilitate your request providing the rules of the system are not breached.
One can hardly imagine how this is going to alter our way of life, when you consider the wide ranging implications of the current monetary system and the acceptance and normalization of a hierarchical power structure being built into this base layer technology and conditioning us to seek permission, often without even realising it.
Exciting times.
Hope you had a great Christmas, and i’ll speak to you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
In a fascinating conversation with Anthony Pompliano that i highly recommend you listen to, Jason Lowery, a member of the US Space Force discusses some of the ways that he is thinking about the Bitcoin network and dives in to some wildly powerful comparisons between the role of a military in maintaining the social contract in a society, and that of Bitcoin’s mining security model in maintaining and securing the network from any kind of attack.
To quote Jason:
“All civilizations - All living creatures, obey the social consensus protocol that those who project the most kinetic power in the most clever way, earn the right to set the state and chain of custody of limited resources”
As Jason highlights, this social consensus protocol, which can be thought of as the way in which we establish the pecking order among any animal, including humans, for who controls this state and chain of custody over all property is a completely permissionless system. No one grants anyone else permission as to whether or not they can do this, it’s simply down to who can project the most kinetic joules, or energy over the other.
As Jason states:
“What’s really really fascinating about bitcoin specifically is that it takes this exact same power projection game, but instead of kinetically derived joules, it’s electrically derived joules and that is really really interesting. It works effectively the same exact way as militaries do.”
“What’s the role of the military? The role of the Military is to project so much kinetic power that it’s too expensive not to cooperate with whoever owns that military.”
This is blowing my mind at the time of writing this and it’s likely going to take me some time to fully digest how powerful a concept this is and really just triggers me to pause and marvel at the design and engineering masterpiece that is Bitcoin.
Basically in the very same way as a physical military, Bitcoins military, the miners, project so much electrical power, via Proof-Of-Work, that by doing so make it so expensive to try and attack the network, that it is essentially a fools game to try.
There is also a fundamental asymmetry built into the Bitcoin militaries security model, where by the cost to attack the network is increasing with every single block that is mined, day after day, week after week.
To attack the system you have to go back and re-do every piece of work by deploying the financial and electrical resources to do so and be able to provide proof that it has been done and achieve consensus among the network participants - meanwhile the cost to mine bitcoin and secure the network, does the opposite, and continues to get cheaper and cheaper over time thus making any attack exponentially less feasible and also adding to the former issue for any attacker with every passing block.
This is obviously quite a complex and nuanced perspective but it provides a very useful framework, to better understand how robust the security model of the network actually is. It’s also worth acknowledging that this is not a new development this month or this year where the network has been upgraded. This has been baked into the system from the very beginning when the genesis block was mined back in January 2009. Pretty incredible.
Furthermore when thinking about the network security through the lens of power projection, dominance and war, you notice the system is intentionally designed in such a way to funnel any attacks into a specific known point where it is strongest to again create an asymmetrical dynamic that means the odds are strongly opposed to anyone with an intention of attacking the network, and it continues to get more difficult over time, while being easier and less difficult to support and secure this attack vector - the chain tip.
Kody Low explained this really well in an incredible twitter thread which i encourage you to check out.
To quote Kody:
OK. So lets say we understand that we would be basically wasting our time, money and resources to try and attack the network - what then is the best way to deal with the situation anyone outside of the network finds themselves in, be it an individual or a nation state?
It’s funny because it basically comes down to the simple and age old adage - “If you can’t beat them, join them.”
Pretty much the simplest most efficient and effective thing anyone can do, is to join the network, support the network to the mutual benefit of all parties, as early as possible, front running the maximum number of people possible, and accumulate as much bitcoin as possible.
Super powerful stuff, and difficult to not simply be in awe of the fact that we’re living through the initial phase shift of what is likely to be one of the most significant transitions among humans and the ways in which power is projected in order to achieve a social consensus.
Wishing you well this Christmas eve, and hope you all have a safe and happy holiday period with friends, families and loved ones.
Thanks so much for listening or reading, and i hope I can create huge value through this platform for you and many others into 2022 and appreciate you being along for the ride.
Appreciate you supporting this work by sharing it around.
All the best, and i’ll chat to you next week.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
It was reported recently that a group of 10 Nations, The World Bank, Bank of International Settlements and the IMF ran what they called a “War game” to simulate a “cyber attack” on the global financial system.
“Israel on Thursday led a 10-country simulation of a major cyberattack on the global financial system in an attempt to increase cooperation that could help to minimise any potential damage to financial markets and banks.”
There is not much information given about what a cyber attack means specifically, other than saying it’s likely caused by “sophisticated” players where by sensitive data is leaked on to the dark web.
Clearly these pseudo-elites are not running this so called war game for fun - they must have some very real concerns that something is likely to happen to the legacy banking system, but beyond a run on the banks, it’s not clear to me exactly what.
Using terms like “dark web” simply adds to my suspicion, as anyone that can use a web browser can access this clearly evil and highly frowned upon section of what was intended to be a completely free and open internet until governments realised the re-distribution of power that was happening as a result of this society altering transformation in communication capabilities, they have undertaken a narrative attack to try and steer their highly obedient subjects in the opposite direction.
Surprise surprise, as a part of the simulation, and so called “solution” to protect the financial system, more liquidity is required to be pumped into the system to patch over the holes.
"The banks are appealing for emergency liquidity assistance in a multitude of currencies to put a halt to the chaos as counter-parties withdraw their funds and limit access to liquidity, leaving the banks in disarray and ruin," the narrator said.
The article goes on to say:
“The participants discussed multilateral policies to respond to the crisis, including a coordinated bank holiday, debt repayment grace periods, SWAP/REPO agreements and coordinated delinking from major currencies.”
As if the crisis of 2008 didn’t make the issues obvious enough, it’s an absolute certainty that while the system continues to operate, albeit in this hamstrung fashion, it will not be the last crisis. And with each crisis the outcomes become more and more catastrophic requiring greater and greater levels of intervention to keep the system from ultimate failure.
Whats really fascinating is despite the impact of 08 and 2020, most still have no idea what is going on here. It would appear that a large majority of the worlds population still do not even realise why bank holidays even exist - which is to prevent citizens being able to access their capital when there is a run on the banks.
A run on the banks is only an issue because banks operate fractional reserves - you can see for yourself what the US Federal reserve contains here - predominantly gold stock and government debt. Even more interesting, the Fed used to track and publish their gold holdings, but as you can see here - this information has not been published since 1949.
If every dollar that they claim to hold is requested, there would be a societal level break down in trust. As former fed chair, Paul Volcker explains here - The only thing currently backing the Global Reserve currency, the US Dollar, is confidence, he says.
“What backs the dollar today is confidence - that we will maintain reasonable stability in its purchasing power over a period of time. Nothing more than that. It’s confidence.. and not just in the federal reserve and in government, in society.. And we’d better maintain that confidence. There are a lot of things going on that raise too many doubts.”
Why do banks choose to do this then? Because this current system, or better described as a monetary experiment, is designed in such a way that never ending growth or credit creation is required for the system to continue to function. Which would seem to be an obviously absurd notion, but is simply the reality. Most likely they just had no better solutions at the time for this system, so this was the path of least resistance.
This seems utterly insane to me.
We have a system completely manipulated by central banks and governments, that is in complete opposition to the rights and best interest of the worlds population. Whereby if everyone actually decides they wanted to stress test this system, and remove their capital, the system would completely collapse.
It is as fragile as a plate in a china store, and the only way it is maintained is by limiting access to your property - something that is rightfully yours - creating more pretend monopoly money, changing of debt repayment agreements and contracts all the while trying to persuade you into believing that it is for your own good, and under the guise of a “public holiday” which is at the expense of businesses. Madness.
If a monetary system is not capable of supporting an individuals property rights, requires never ending manipulation and intervention and requires government to essentially gas light their populations in believing false truths, it is a broken system in need of a replacement. This is clearly the case. However there are many rent seeking pseudo-elites that continue to benefit massively from this broken system at the expense of many many people. Hence they want to keep the game going for as long as possible, and appear to have little regard for the consequences this poses to others.
Bitcoin clearly is this better system. The degree to which it is superior is indisputable. Our current system incentives pseudo-elites to benefit at the expense of the many. To operate in secret in a closed way and where by the rules can change without any knowledge to the public. This is a system that incentives dishonesty and deceit to exist at the absolute base layer of our society.
Compare this with a system that is completely global by design. Open, public and borderless. Where no central authority can change the rules to benefit themselves and in-fact it is in contrary to the incentives to even try, and the path of least resistance is to support the system as this in your best interest economically speaking.
Even if a network actor could afford to try to attack the system, the incentive structure is such that it is economically prohibitive to do so, and you would be wiser to simply deploy your resources to support the system, by adding hash rate, further securing the network, and you would benefit far greater economically by doing so.
While central banks and governments work to plan how they will try to manipulate their monetary systems and the people of their respective countries, an ever growing group consisting of some of the most incredible minds on the planet are working tirelessly to build out an alternate system built upon win/win incentives in a completely open, decentralized, bottom-up manner that anyone can access from anywhere in the world and no centralized group or entity can control.
It should be expected for most parties concerned to continue to follow the incentives of the current system, the path of least resistance, but its only a matter of time until sanity is reinstated and we collectively acknowledge reality and stop trying to cling to the past by embracing this new system that will empower a level of global inclusion and innovation like nothing we have seen before.
Bring it on. I cannot wait.
I anticipate it will continue to be a bumpy road as many will resist change, but as we have seen, the resistance is futile over time and the transition is already well under way.
Hope you have a great day, and look forward to speaking with you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
Strike CEO and Founder, Jack Mallers, recently presented to the IMF regarding Bitcoin, Strike and the implications for cross-border payments. He posted the presentation to his youtube - Linked here.
Firstly, you have gotta love seeing a young individual like Jack absolutely laying down to the IMF in his inimitable style running a hot pink hoodie and a baseball cap giving zero f***s. Phenomenal.
He begins his presentation by re-engineering the title, from:
Strike - Disrupting Cross Border Payments? (with a question mark)
to
Bitcoin - Disrupting Cross Border Payments (no questions mark)
as he highlights:
“Ofcourse, you all gave it that title. Not me. You didn’t consult me at all”
What a savage!
What stands out instantly here; Jack is well across the state of play within the industry of cross border payments. He has a deep knowledge of how these systems work, and how they have evolved. It’s this understanding that provides clarity around the need to update the old system, and at the same time makes the solution so clear.
As he mentions the Swift system, developed in 1973, by banks and for banks, is coming up to 50 years old, and while it still carries 80% of cross border transactional volume, it simply falls well short of being an acceptable standard in todays digitally connected world.
He does an excellent job of highlighting the flaws within the current system:
Speed (too slow)
Limited transparency and dependability
High Cost thus high fees
Lack of interoperability
Limited coverage
Limited accessibility
The bottom line here - Bitcoin solves this and Jack just orange pilled the IMF.
Bitcoin is Open, accessible globally by anyone. Anyone can send and receive and it achieves cash finality of a bearer instrument to anywhere in the world, almost at no cost and virtually instantaneously.
Bitcoin + the Lightning network is so far superior as a monetary system and network, compared with some 50 year old network, which predates the internet, that it makes it almost impossible for me to imagine that anyone could ignore this innovation and in my opinion, it is just a matter of time.
I highly recommend you watch the full clip to the end to hear jacks story about tortilla chips, trail mix and the peanut network as he presents to one of the most powerful monetary institutions on our planet. Absolutely inspirational stuff and I cannot get enough.
The world is changing. Closed systems with rulers cannot compete with an open and global standard where anyone can join without needing any credentials and the network effect that this innovation is and will continue to create. It’s is literally going to be a tsunami.
It gets me so fired up to see powerful young humans rising up in the world and working to make it better for others, regardless of what benefits the existing rent seeking incumbents.
Hope this finds you well, and i look forward to speaking with you tomorrow.
AK
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Afternoon Everyone,
The Turkish Lira has plunged to new lows, and has now lost 57.4% of its value YTD.
I’ve attached a chart showing the devestation.
TRYUSD:
If you zoom out a little further, the Lira is now down 89% since 2013, as shown below. Pretty wild!
Gold has increased by approx 164% since March 2020, as citizens likely look at any way possible to protect their wealth against the collapsing currency.
XAU/TRY:
Meanwhile Bitcoin, the apex predator, has increased a mammoth 2200% during the same period. Powerful. Chart attached.
BTCUSD/TRY
These dynamics are not exclusive to Turkey unfortunately. Lebanon has also joined the highly undesirable club of failing political currencies, while the currency is officially pegged at 1,500 pounds to the dollar, the pound traded on the black market at 27,000 to the dollar - nearly 20 times its value two years ago. Brutal.
Looking at Lebanon’s CPI numbers are simply staggering as the cost of survival, let alone what we call ‘living’ is completely out of control. Take a look for yourself
Food prices up 300%, housing utilities up 215%, transportation costs up almost 1400%
Prior to Turkey and Lebanon we saw Venezuela descend into hyperinflation. Venezuela had experienced very high levels of inflation since the 80’s, but the hyperinflation really set it in the late 2010s.
It’s important to mention the term hyperinflation can mean many things to different people from fast and rising levels of inflation to collapsing local currencies. Regardless of the exact definition, what is important to note is that even at sustained double digits, the numbers are absolutely devastating to your ability to protect your wealth. For example with inflation at 10% for 5yrs, a currency would lose 40% of it’s value. This means if you own real estate for example, the price would need to have increased by 40% to be at parity on a real basis once adjusted for inflation, even if the levels of inflation are not technically “hyper” inflation.
I have a few good friends from Venezuela and I’ve spoken with them about the boots on the ground perspective, but I saw this tweet this morning and it really hammered the point home for me.
That is 465 with 12 zeros
465,000,000,000,000 Trillion. Wow.
I’ve mentioned many times when discussing bitcoin with people, that it’s most likely that the way bitcoin is distributed is first to the people that need it first and last to the people that need it last.
Meaning most people in developed nations will be last to understand not just the value proposition of Bitcoin, but the need for Bitcoin and it won’t be until they are confronted with the brutal reality of a collapsing currency in real time that they will be able to accept the now certain fate and begin to digest the implications for their families and their children.
I think it likely if you asked the average person in Turkey, Lebanon or Venezuela 10yrs ago if they thought their local currency was going to become worthless, they probably would not have believed you. Yet, here we are.
As you can see from the charts above, when it starts to become obvious and the majority of people are wise to what is going on, everyone rushes for the exits at the same time.
For the fiat world, it is simply a matter of time. There has never been a time in my life so far where the writing has so clearly been on the wall. Political monies are being devalued at a record rate. Getting educated around these topics along with planning and sound decision making are some of the best ways to insulate yourself from the madness. Turkey, Lebanon and Venezuela are just a preview of what is to come in my opinion.
Words cannot express my gratitude to satoshi for having provided an exit - and it’s available to anyone with a smart phone and an internet connection. Insanely powerful.
That’s it for today.
Wishing you well, and will chat to you tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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Good Morning Everyone,
Caitlin Long, founder and CEO of Avanti, a US bank focussed toward digital assets, and a major Bitcoin proponent in the US, highlighted something yesterday that I had not given much thought to, and think has largely gone unnoticed for the most part up until now.
In a really powerful twitter thread, which i encourage you to read for yourself, she highlighted the impact of derivatives markets, specifically the impact to supply and demand, through the issuance of “paper bitcoin” and the way in which this distorts price. Paper Bitcoin meaning “bitcoin” that are not part of the 21m fixed supply - rather a contract via an intermediary for a claim on the value of bitcoins current market price (ie futures or options derivatives).
The thread was in relation to why MVRV ratio (market value to realised value) may not be useful in valuing bitcoin, due to the fact that RV is not an accurate number because of the issuance of all the paper bitcoin contracts as she claims many likely run fractional reserves.
I’ve attached the MVRV chart below so you can take a look.
The basic idea here is that due to the injection of an artificial supply via paper or fake bitcoin, people holding the real pristine asset ie: on-chain bitcoin, are having their asset devalued, and not by one factor, but two fold.
Price drops due to fake supply being created and also, and perhaps more critically;
Price drops or is impacted further, due to demand for the real asset dropping as demand is catered for via the artificial supply instead of the scarce bearer asset.
So this phenomenon is not just increased supply, but also decreased demand.
The fact that this impacts Bitcoins price in the short term, is not what is most i found most interesting however.
What really stood out to me was the level of fragility this creates and how much more pristine holding the real asset actually is. The risk of a run on the market where there is insufficient bitcoin held by exchanges to satisfy the claims being made by market participants could lead to a number of failures, or blow ups. The only way to be insulated from this is to hold the true bearer asset.
So basically a number of players are falling into the same traps that in part leads us to this new system. That is re-hypothecation and fractional reserves.
At the end of the day, the market has a way of working these things out, although it can take much longer than you think and often creates a lot of pain in the process as the market educates participants on risk, and risk management.
One of the primary reasons Bitcoin is so powerful is the fact you can securely hold it yourself, without any need to trust an intermediary to store and secure it for you. Unlike when you store money in a bank, or own stocks via an exchange or gold, silver or diamonds in a vault - in these instances you are trusting that when you want to take possession of these commodities, that the 3rd party will oblige.
Bitcoin is a bearer instrument or asset. Fully secured by proof of work, whereby no one can create a counterfeit. It is fully secured via unbreakable SHA256 cryptography and you do not need to seek anyones permission to access it. Forfeiting these properties and essentially handing over ownership of your assets and trusting an institution carries significant risk, and for most people should likely be avoided in my opinion. As to do so dissolves the very qualities that makes Bitcoin so powerful in the first place.
As the saying goes, “Not your keys, not your coins”.
The simplest thing is often the hardest when it comes to investing. Lowering your time preference. Let time do the heavy lifting. Let your winners ride, and allow them to compound over time.
Where there exists opportunities for what seems simple often carries significant hidden risk. Storing your keys offline in a secure way is a process that every bitcoin holder needs to go through for themselves.
My hope is that it’s in a proactive way because they understand the asset, it’s qualities and what’s at stake, as opposed to being reactive and learning the hard way.
Hope everyone has a great start to the week, and I look forward to chatting to you tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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Good Morning Everyone,
An article from the Guardian circulated yesterday titled
“Bitcoin could become ‘worthless’, Bank of England warns”
In classic legacy media fashion, this is the usual clickbait we have come to expect from most corporate media institutions, as their business model is not truth or “news”, their business model and the way they pay their employees is by selling advertising. The more eyeballs, ie clicks, the more the cost of the advertising real estate to their advertising customers.
I wanted to address this, as I know many people that do not understand the technology and the transition that is taking place and have not done to the work to develop conviction, can be easily swayed and influenced by this kind nonsense.
First of all, could bitcoin become “worthless”? Sure. I mean, anything can theoretically become worthless. So this is not saying anything really - hence clickbait.
Is it likely to become worthless may be a better question. What is the probability?
At $48,870 USD right now, i think it’s a pretty comical statement, as it’s almost as close to $100,000USD as it is to zero. However it is certainly not a zero probability. Could the GBP become worthless? Could the USD become worthless? Could any political money become worthless? The answer is yes - and year by year they are.
Below is a chart showing the value of the Pound Vs Bitcoin (GBPUSD/BTCUSD)
Since the inception of Bitcoin, the Pound has lost 99.99% of its value - its purchasing power - vs the worlds most pristine asset, Bitcoin. I’ll let you decide which you believe is of greater risk to hold.
I could show you the same chart for pretty well every political money in existence today. It is by design that all fiat currencies go to zero over time. These are not opinions, these are facts. Without the anchoring of value to the physical world, like a peg to gold for example, where scarcity exists and work or effort is required to obtain it (mine it), or in Bitcoins case energy is used to perform Proof-Of-Work to mine bitcoin, there is nothing to prevent human nature corrupting the system and simply creating more monopoly dollary-doos.
Since the inception of the Federal Reserve in 1913, which by the way is neither Federal, nor has any reserves - the US Dollar has lost over 96% of its purchasing power; its Value.
So if we want to focus on things becoming worthless, i’d suggest focusing your attention on what has happened to political money, where it’s not a maybe. It’s a certainty. And it has already happened right before your very eyes.
I’ve attached a chart showing the erosion to the US Dollar over time and a link to a site that dives a little deeper on the devaluation.
What is happening here is an attack on the citizens of the world and our ability to own property - I do not mean Real Estate, although that can be included - but i mean any property. Your money is your property. And through the rampant and predictable devaluation of your governments political money, the value of it is being syphoned away and preventing you from storing your time, which is your energy, across time and space.
The only way out of this bind is to hold assets. Which is what central banks do when they “print money” - they buy assets - which injects liquidity into markets. So while central banks are accumulating assets, they are artificially inflating the prices of these assets and distorting the pricing signals in the market.
Bitcoin is the only asset immune to the reckless and predatory behaviour of central banks. Once you hold bitcoin, and you take it offline and store your keys in cold storage, it’s virtually the only property on earth that cannot be seized and taken from you. Where the purchasing power will be maintained across time and space.
This is a big deal. It’s hard to fathom how big this shift actually is. Sometimes i try to check myself and my conviction and challenge my views. Every time i do this, i almost always end up coming to the conclusion that i’m actually underestimating how big this shift actually is.
It’s upto you to decide for yourself. That’s how free markets work. Don’t get tricked by the narratives of central banks - the data speaks for itself.
Hope you have a great finish to your week, and I look forward to talking with you on Monday.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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Good Morning Everyone,
It was announced on Friday Whatsapp are running a pilot program in the US and Guatemala to enable payments via Novi Financial, which as it turns out is actually owned by Facebook.
In a December 8th announcement Novi said:
“Starting today, a limited number of people in the US will be able to use Novi to send and receive money right within their WhatsApp chat.”
A couple of things stand out to me here.
First, this is the beginning of facebooks attempt to move to capture market share of global payments. Despite apparently zero fees, as you have hopefully already learned, if there is no cost - you are the product. They received a lot of push back from their Libra announcement a while back, but this has gone along much more quietly, and i would expect is only the beginning and they will aggressively look to expand and develop a lot in this area.
Second, this will introduce a lot of people to a new way to pay and transmit money.
Third, this is a direct attack on traditional banking institutions, and with an estimated 2 billion person user base Whatsapp have a serious edge.
-
Convenience wins. The convenience of paying direct in a messaging app without needing to exit the messaging app and open a banking app removes a lot of friction. Not to mention potentially removing the need for a banking app over time. We are lazy animals, and drive-thrus work for a reason. This fact is not trivial.
-
Chinese company Tencent saw huge success and adoption with this model via Wechat, and it is used as a government surveillance tool - will this be different? I am extremely skeptical.
Lots to think about here..
Ultimately while this transition is inevitable, it further highlights the critical need for a decentralized, open, public, borderless, neutral and censorship resistant form of money. Whether products like Whatsapp look to incorporate bitcoin over time or not is not certain, but I tend to think it is likely. Ultimately in my opinion, it does not matter. If they did, would I want to use them as a 3rd party to my transactions? No. Absolutely not.
Irrespective of the fact while it will offer plenty of convenience and it likely has its place as a layer of the traditional existing centralized system, it is in no way an alternative, or any kind of threat or competition to the king. Bitcoin.
As we have discussed - money is far too powerful a technology for a centralized entity, especially one like facebook, to own that data, to be in the middle of our transactions, and have any kind of surveillance capability over that information or ability to censor our transactions for any reason.
It’s important to understand the game that is being played here and act accordingly. Educate yourself and accumulate Bitcoin - that’s my plan.
Hope you have a great day, and I will chat to you tomorrow.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
We’re living in a strange world right now where the censorship appears to be at an all-time high. We have formerly “mainstream” media or perhaps better labelled corporate media that is proving day after day to be untrustworthy and in many places around the world appears to be operating almost as an extension of government at this point. Certainly a significant divergence from the primary purpose and importance of having a free press or free media.
Whether it be regarding the enormous protests in Melbourne that have been running for more than 6 weeks straight with one of the protests it was estimated there were upward of 400,000 people while corporate media downplayed the numbers by many orders of magnitude or simply just completely ignored it altogether.
We have seen absolutely rampant censorship on tech platforms like youtube where channels have been demonetised or received strikes and/or channel suspensions for many reasons including notably criticising COVID responses or mentioning Ivermectin - which not only won a nobel prize in 2015 but also appears to have had a profound impact on the implications of SARS-COV-2 in both India and Japan following both nations adopting it as part of their recommended treatment.
In the US we’ve seen Jack Dorsey step down as CEO of twitter and within days of Jacks exit some very dubious account suspensions including @trackertrial and @NancyTracker.
One shared updates relating to the case of Ghislane Maxwell - perhaps the highest profile case in US history in relation to a child tracking and pedophilia ring involving a who’s who list of psuedo-elites. The account aiming to inform the public as the corporate media were seemingly silent. The second, an account tracking Nancy Pelosi’s portfolio holdings that simply made already public information about the portfolio holdings of a senior US public official easier to find.
What seems clear is that there is an ongoing attack on information and the truth.
Our ability to transmit information is a fundamental human characteristic, and not a right that we are granted or can have taken away. It is as fundamental to being human as it is to breath. The notion that some overarching power structure can suppress us from transmitting information is preposterous, and ultimately over time, I believe it will be the increasing decentralization of technology that will make it not just difficult to attempt, but self destructive for anyone that tries.
These issues are just a symptom however of a larger problem. A core issue is the formation of centralized power structures, with insufficient mechanisms to check and balance the weilding of this power. The other is the incentives structures that exist within each system or entity.
The topic of centralized vs decentralized is all about what we are optimizing for. It is not a simple binary situation where we want everything decentralized or vice versa. There are myriad examples where a centralized system provides better outcomes - where to decentralize the system would simply slow things down and fail to add value.
Money is without question one such instance where it is not just beneficial, but at this point in history it looks to be essential for the technology of money, that is our ability to transmit information to one another, to actually function and provide net positive outcomes for our global society. What we see in the world right now can largely be viewed as higher order effects of a broken and corrupted monetary system, and an accumulation of power within a small number of centralized entities.
As Lord Acton, a British Historian wrote in his letter in 1887
“Power tends to corrupt and absolute power corrupts absolutely”
The transmission of money is the transmission of information. It is an expression. It is a language. It is speech.
The notion that any 3rd party should have any capacity to censor this human expression is in complete opposition to the vision of a free and open human society.
Thankfully Bitcoin solves for this, and is the ultimate and most pristine abstraction of money to date. The silver lining is that the more censorship there is, the more the free market is motivated to solve the problem and offer up solutions, and the more users are motivated to exit platforms that facilitate such behaviour.
It is this very behaviour that ultimately leads to the entities demise and redistributes this power. Absolute power corrupting absolutely. Somewhat poetic.
While i’m optimistic the issues around censorship improve, decentralized solutions couldn’t come soon enough. It’s only a matter of time. Stay optimistic, ignore the noise. Bitcoin is the mission.
Wishing you all the best, and hope you have a great day.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good Morning Everyone,
The topic of digital scarcity has been discussed at length in relation to Bitcoin. Plan B’s Stock-to-flow model does a good job of quantitatively modelling Bitcoins scarcity. To quote Plan B:
Surely this digital scarcity has value. But how much? In this article I quantify scarcity using stock-to-flow, and use stock-to-flow to model bitcoin’s value.
Approximately 7hrs ago at block height 714,000 the bitcoin network saw the percentage of supply issued, reach 90%. Bitcoin’s Genesis block was mined on January 3, 2009, at 18:15:05 UTC. Some 12 years after the genesis block was mined, only 10% of total supply now remains.
I’ve attached an image that shows the block height alongside the percentage issued below, taken from Clark Moody Bitcoin Dashboard, with a link attached.
You may notice the block height had not actually reached 714k yet in the image above due to a rounding error. As Jameson Lopp explained in a twitter post earlier today.
So without getting stuck in the weeds too much here, what we are witnessing is humans via the mechanism of free markets attempt to determine the value of digital scarcity for the first time in history, in real time. It feels like to me that this is quite something to be witnessing.
What is more, is that i do not think it has really hit home for the vast majority of people how insanely scarce this asset actually is. It is completely inelastic. This concept almost feels alien to us in the developed world in some respects. We have such a level of outrageous convenience in todays world, where it’s almost impossible for most to truly grasp. If we run out of food at home, we can just go to the shop and buy some more. We have a seemingly endless supply of movies and content thanks to platforms like netflix. This goes for most things that you can think of. The list goes on…
But with Bitcoin, not only is it the first, and only digital scarce asset ever, it is completely transparent in its issuance schedule. The entire world and every person on it, can access that information. It is not hidden, secretive, or governed by a central authority or only known to people with a certain level of access, power or influence.
It is completely open, public and programatically deterministic.
It is in the systems very nature to be this way. Completely by design.
So we know only 10% of Bitcoins total supply is left to be mined. We also know roughly how long until this remaining supply comes online. Although it is not until the year 2140 that the last bitcoin block reward will be issued, the vast majority will be mined well ahead of this point.
As you can see below, half the remaining supply (5%) will be issued in the next 4 years, between now and Dec 4th 2025. With 99% issued by 2035. Leaving just 1% of 21,000,000 to be mined over the next 100 or so years.
So in 14 years time, only 1% of all bitcoin will remain to be mined. There can never be any more created. We cannot deploy more resources and go out and find more bitcoin mines, like we can with Gold for example. This is it. And it is certain.
This means that after 2035 while miners battle it out for the final 1%, the only way to acquire bitcoin for the most part is to purchase it from someone else. And a significant % of people hodling bitcoin, aren’t selling. Ever.
To me this screams of a supply shortage like nothing we have ever seen before. The only way to acquire bitcoin will be for the price to continue to rise until it triggers supply from old hands to come on to the market and transact to new hands. That threshold will be different for different people obviously.
All I know is, that despite this information being fully public and transparent, i do not think at $47,000, the majority of individuals or investors have properly digested this reality. It is going to be very interesting to see how it plays out as the market, and the world tries to assign a price tag to the first and only, truly scarce digital asset in real time. It feels like a privilege to have a front row seat to see how this plays out.
As always, wishing you all the best and hope you have a great day.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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Good Morning Everyone,
6 months ago China made what I believe will turn out to have been one of the most significant geopolitical errors of this century by banning Bitcoin Mining. At the time Chinese mining operations were responsible for securing a majority % of global hash power. According to CBECI, at the beginning of 2021 53% of total network hash rate was from China. Down from 72% at the beginning of 2020. China had long occupied significant share of the hash rate due to considerable access to cheap energy in areas like Sichuan and Xinjiang where renewable sources like hydroelectric, solar, and geothermal are common.
In April 2021 China banned all mining operations. These mining businesses were forced to relocate their operations. At the time there was a high level of uncertainty as to how this would play out, which was reflected in the Price as this coincided with bitcoin printing a top at 64k and over the next 3 months retracing to as low as $29,000.
Despite the short term impact to price, this catalyst served as a powerful demonstration of resilience of the bitcoin computing network as some 50% of all mining rigs were taken offline while there was zero noticeable impact to the stability or security of the network. Pretty incredible stress test when you think about it. Tick tock, next block as the saying goes.
The US has been the main beneficiary of this exodus from China as Texas saw an influx of hash power. The US is now responsible for 34% of total hash power as of August 2021. Chinas dominance of the hashing power has long been a head wind and concern amongst the community. Would the CCP try to take control of it and would that impact the security and stability of the network with them previously having well in excess of 51% ? Thankfully, we’ll now never know.
Fast forward to December 2021 and the hash rate is back to the levels prior to this exodus, and has recovered in a V-Bottom style demonstrating the robust nature of this system.
It was in the interest of these miners to find cheap energy, and find it fast.
What other technology incentivises humans to source the cheapest energy on the planet, and also provides them with a way to monetize the energy if it is geographically inconvenient or not cost effective to do so? This is one of the Bitcoin networks super powers.
Pretty wild to see just 6 months later the mining hash rate is back near all time highs. While price currently lags this metric at around $50,200 - almost 30% below that of April.
I cannot predict the future, but i do know that hash rate typically proceeds price. It’s a leading indicator, while price is often a lagging indicator. With the end of 2021 coming to a close it’s anyones guess what happens from here, but i’m betting Q1 of 2022 is likely to be explosive. Regardless of the fact, the resilience and the robust nature of the worlds most sophisticated monetary system has been on full display this year running a clinic in free and open, decentralized systems.
It’s an absolute pleasure to be alive during this time to witness it. This is history in the making. The market is not even close to pricing in the power of this technology in my opinion.
Wishing you all the best, and hope you have a great day.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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Thanks for reading Bitcoin Unlocked! Subscribe for free to receive new posts and support my work.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Good morning everyone,
I want to take a couple of minutes to dive into the why in relation to why Bitcoin, not crypto. Having been following bitcoins development since price was around $300USD, i understand the temptation of shitcoins.. excuse me.. highly esteemed pieces of technology often referred to as alt coins, or crypto currencies.
They seem so much more dynamic and exciting. People use flashy terms like Web 3 and often have a great story to tell as to how this new thing is going to change the world. Whether it be supply chains, collectibles, identification or doggie meme coins that are going to go to a million bazillion, in dollar terms.
When they move in price, they are best thought of as an emotional younger sibling to bitcoin. So when they go up they go up in a more emotional (volatile) way, and likewise when they go down - it’s normally a fairly nasty face melting affair.
People often want to assign a reason why something is going up or down, it’s in our basic nature to do this so as we crave certainty. X is going up today because fill in the blank about some news that is circulating. But the truth is that markets are made of millions and millions of different participants. All we can be sure of is that price is moving because of an imbalance between buyers and sellers. More sellers than buyers, price goes down. More buyers than sellers the inverse is true.
This demonstrates the roll psychology has on driving markets. As it is by influencing your beliefs about the world, that drives you to want to buy or sell something.
In my opinion, many, infact the vast majority of “Crypto” projects prey on this vulnerability of unsophisticated market participants by telling great stories and doing heaps of marketing to hype up xyz crypto shitcoin. This is not to say you cannot make money buying and selling these things, but the reality is that most will not. Compared to this Bitcoin can look a little less exciting to some.
This works when you don’t properly understand Bitcoin and how powerful it actually is, but once you do, your mind just like an operating system is much less vulnerable to these speculative attacks compelling you to purchase the latest dog coin.
Simply put, bitcoin is the most sophisticated monetary network that has ever existed throughout human civilization. From a technical point of view most notably Bitcoin solves the double spend problem, but is really an accumulation of 40+ years of innovation and solving computer science problems. It is the very first ever realization of true digital scarcity. The decentralized architecture of the bitcoin network fundamentally seperates it from all other crypto projects.
Bitcoin has no CEO. Bitcoin pays no marketing team. No one “owns” the network. No single party controls the network. There is no Bitcoin founder to call up when there is a problem. Bitcoin is not raising Venture capital from individuals that may wish to influence how the network operates or the properties it can exhibit, like creating more bitcoin for example beyond the 21m supply cap. Bitcoin can not be subpoenaed to appear in any court or to explain itself to any minister or member of parliament or Congress. There has been no preferential treatment as to who can or cannot mine bitcoin and giving unfair advantages to anyone over any other network participant. It is a truly decentralized and distributed network that anyone can opt-in to at anytime, or exit at any time, and is completely neutral to any such interactions.
Despite this, bitcoin has run basically flawlessly for 13 years. Block after block continues to be mined. Transactions sent and received. The rules of the network continue to be adhered to. The protocol continues to be developed and built upon in a completely free, open and public way. And as more people start to realise the significance of this innovation, the price in USD terms continues to appreciate. As this happens not only is the level of decentralization maintained, it actually increases as more and more participants join the network.
https://bitnodes.io/ is a great site to see the distribution of nodes visually.
It is this true decentralization that fundamentally separates bitcoin from all other “crypto” currencies, and the lack of a centralised point of failure that gives it such wide reaching implications and is a big part of the reason it can serve as the most sophisticated form of money we have ever had. It is a system maintained by tens of thousands of nodes all around the world, that is growing faster than the internet in the 90’s, and there is no off switch.
For the first time you do not need to trust a 3rd party to secure your wealth, and the purchasing power of your wealth can not be scraped away from you as an invisible tax in the form of inflation. We have a vehicle that can truly preserve purchasing power without leaking value, across time.
This change can fundamentally reorganise how we prioritise issues individually and within society from focussing on the short term and being incentivised to take on risk in a search to preserve purchasing power as our money is not able to serve as a store of value across time as governments continue to issue more currency and inflate it away to infinity thus eroding purchasing power over time, to lowering our time preference and prioritising the future, and operating in alignment to the laws of nature whereby resources are not infinite and adopting a more sustainable way of life that does not depend on never ending growth.
The implications of this technology and the change it can usher in are so large, it’s difficult to truly grasp. Most people could not imagine a world where money is not linked to, and controlled by a nation state. But just like the separation of church and state, bitcoin will help us to seperate money and state over time. This in essence means a fundamental redistribution of power and the power dynamics of the world as we know it. From the few to the many.
In my opinion, this is a better future, and one we are moving toward whether the legacy institutions like it or not. Wishing you all the best, and hope you have a great day.
Thanks for reading Bitcoin Unlocked! Subscribe for free to receive new posts and support my work.
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Yo, Let’s do this!
My content here is going to focus primarily on Bitcoin, and the developments in and around Bitcoin to help keep you up to date on what is going on and to offer my honest perspective as opposed to just blindly believing the circulating narratives. Ya know, because sCieNcE..
I believe bitcoin is the most important innovation of our lives. I do not think there is anything more meaningful I can do with my time, that to empower you and as many people as possible with the knowledge to understand money, and thus bitcoin and working to create a more free and open society.
This quote below comes to mind in times like this..
“It is impossible for a man to learn what he thinks he already knows.”
- Epictetus
The talk around CBDCs globally continues to increase with Australia’s treasurer yesterday mentioning in a local media interview that they are going to be working with the RBA to look into the feasibility of a CBDC in Australia, which he says would be a world leading initiative.
CBDC or Central Bank Digital Currency is something that we in the bitcoin community have seen from a long distance away on the horizon looming closer with each passing day. China have made their intentions clear to roll out a CBDC along with many other nations including Singapore, Malaysia and of course the US.
The questions that come to my mind are:
Aren’t most currencies already digital? Why are governments wanting to roll out CBDCs? How does a CBDC differ from what we already have? What are the advantages of using a CBDC? Who benefits? What are the incentives?
First lets cover off what a central bank digital currency is.
A central bank digital currency is a centralized database or ledger containing all account information including account name, holdings, transactions to and from, maintained and controlled directly by a central bank.
Currently a number of seperate banks and/or institutions hold this information and share it with a select and mostly unknown to us, group of institutions. So a CBDC is more of a marketing exercise than anything else as we currently already have a digital currency for the most part. Most estimates I’ve found indicate 90/10 split between digital and physical cash. It likely means the system becomes even more centralized with a central bank holding this information.
So why the ongoing circulating narratives relating to CBDCs? Governments around the world realise their monopoly on money is under threat, and they are undertaking a marketing campaign to attempt to remain relevant. This is only my opinion of course. But it’s important to realise that this is more of a technological update as opposed to any significant type of innovation or architectural change.
The most obvious positive a CBDC could offer is the ability to directly transfer stimulus to individuals as opposed to legacy methods like cheques. This would be handy if governments moved to some kind of a UBI system to combat automation for example. During the pandemic here in Australia, this has already happened with the current system however so from a user experience perspective it’s no noticeable change.
The negative effects seem fairly clear. Increasing financial surveillance, the ongoing erosion of privacy, and an increased ability for financial censorship if you haven’t been behaving, or scanning the QR code before you go to the toilet, or wish to send money to someone ‘we’ do not like.
The best way to view a CBDC is to compare against the critical elements of an open and public protocol like bitcoin. Best popularized by Andreas Antonopolous, the 5 core pillars are: Open, public, borderless, neutral, censorship resistant.
Basically a CBDC has none of these properties. It is closed, private, bordered, potentially combative/weaponised and willing to censor as needed.
Ultimately my view is that bitcoin is inevitable regardless of what any government does at this point. The network effect is too strong, and once you really swallow the orange pill and wash it down with some water to help it dissolve, it is impossible to see the world through the same lens ever again.
CBDCs are just a refreshing on the current broken system.
This offers no significant step change improvement to the current broken fiat monetary system that continues to fuel an ever growing wealth divide between the rich and the poor as a result of the cantillon effect, whereby those closest to the money supply benefit disproportionately.
I choose to opt out of this madness with Bitcoin.
My best advice, is get educated. Understand what is taking place, and how it impacts you and your family. The government are not going to do that, and are not here to save you, or I. We must help each other and save ourselves.
Wishing you all the best, and hope you have a great day.
AK
Thanks for reading Bitcoin Unlocked! Subscribe for free to receive new posts and support this work.
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
Twitter | Youtube | Instagram
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com