New branding! Our weekly newsletter is growing quickly. Previously referred to internally as ‘The Weekly’ we felt that name lacked panache, so now it’s MoneyBits.
If you are reading that as MonkeyBits, I assure you that you’re the person with the problem, and not us.
Otherwise it’s business as usual.
The commentary on bitcoin has deteriorated sharply over the last month. There are some pretty high expectations for our talented teenage prodigy, now in its 13th year. Like the Tiger-Mums of Asia, whatever it does, it’s never enough.
Bitcoin: Hey mum, I’m the most successful asset of the last decade.
Mum: You’re currently down 50%
B: Mum, several nation states have adopted me as currency.
M: Yes, but they have the combined GDP of Wagga Wagga. Has the IMF called yet.
B: I have the largest security network that has ever existed since the dawn of humanity.
M: Yes, but you don’t have any guns.
B: I just replaced my cryptographic signature with Schnorr signatures, one of the most significant mathematical inventions of the last 50 years.
M: Practice your violin please.
High expectations are a good thing. Whatever bitcoin does or achieves, people will want more and they should.
What is strange though is the complete lack of basic understanding behind the expectations.
In general, the mainstream conversation about the whole sector is so superficial. Mostly focusing on alt-coin fraud or instant billionaire-hood.
If you want a better lead on what is actually happening under the hood, you can do a lot worse than follow Bitcoin Optech. They send an email each week laying out what bitcoin developers are working on. Generally, they are very subtle improvements with long-term horizons, the sorts of things you would do if you were running a private company. No management enrichment or rights issues here.
The letter issued its 200th edition last week. Scare yourself with the content. Note the reference to Russell O’Connor, one of the major contributors to the Linux protocol which powers most of the internet. Now he works on bitcoin full time. Why?
You might not understand it, but if you do want to get away from the mainstream nonsense written about the sector, this is the place. What’s more, for those of you in business looking for the best developers in the world, many of them contribute to Bitcoin Optech.
At least you will know who they are when they decline your apparently very generous offer of employment.
UK Basic Income
The discussion about UBI comes up less often these days but it hasn’t gone away. It is reality.
The trick is in the branding. Some recent iterations of UBI are ‘The American Rescue Plan’ (USA), the ‘Test and Trace Support Scheme’ (UK) and the ‘JobKeeper Allowance’ (Australia).
One-off payments which were introduced during Covid-19 are now extending to deal with the latest crisis; the cost of living. The British government is giving every household £400 to deal with rising costs, after inflation hit a 40 year high of 9%.
The average energy bill in the UK has risen by about £800 this year, so the government contribution of £400 won’t solve the issue. In total, the £15 billion package is nearly half what the UK spends in a year on defence. It’s massive money on a short-term band-aid.
The payment will be funded by a tax on energy companies. Their profits have risen through increased energy prices but this tax will hardly incentivise them to invest in new projects.
All eyes turn to America now. Will Joe Biden resist a frenzied giveaway before the US midterm elections? It’s harder to get these things approved in the US so I suspect he will try and fail. Across the UK and Europe though, it’s game on.
Once you have given someone £400 to pass Go, how do you ever take it away when the next bill comes around?
1 Year HODL
Few bitcoin stats are at all time highs at the moment, with the possible exception of what is known as the ‘1 Year HODL Wave’. The orange line in the chart shows the percentage of bitcoin held in addresses that have not moved for more than one year. Now at a new all-time high of 65%.
We shouldn’t over-interpret this, but:
- Most of the recent price action is from the very newest participants.
- Bitcoiners with tenure of greater than a year aren’t that concerned about recent price movements. The longer the tenure, the less the concern.
- This metric should rise over time. It has risen from about 25% in bitcoin’s second year.
It says the majority of bitcoins are not for sale, a metric that seems likely to rise.
Following the collapse of Luna, not three weeks ago, the Luna Foundation launched Luna 2.0. It must be said, the prospects for this iteration of the coin are no better than those of its predecessor and seem very much like an attempt to save face.
When Bernie Madoff mis-sold products that cost investors $65 billion he went to jail for 150 years. Now Do Kwon (the man behind Luna and self-styled Master of Stablecoin) has pulled off the same achievement, yet he’s launched Luna 2.0 and wished everyone well.
He recently became a father too and named his daughter, Luna. He should show some good grace, rename her Luna 2.0, and share some of the pain of the debacle he created.
If a politician tells you “we aren’t panicking”, most people immediately reach an alternative conclusion.
When things are going well, the questioner does not ask about panic.
When things are going badly, the questioner asks “what are you doing about it?”
Finally, when things are really badly, they ask “are you panicking?”
Lagarde is not panicking, even though producer prices across Europe are soaring. Germany 31%, France 28% and Italy 29%.
The ECB has evidence they are not panicking too. They have kept interest rates negative against the backdrop of what is record inflation and they continue with QE. They plan to slowly unwind those monetary settings over the next year or so.
The ECB is not panicking though, Christine Lagarde is not panicking. It can mean only one thing.