Retinal fundus, I discovered, is the interior lining of the eyeball. Anyway, the artificial intelligence used in this research predicted the sex of the owner of the eyeball with 87% accuracy. The most surprising thing is the researchers do not know how the machine is doing it.

The rate of change of technology is surpassing our ability to understand it. We can probably all agree that the rate of improvement in computers far exceeds the rate of improvement in our own cognitive abilities.

So what? Well it seems apposite, having read about this AI, to point out that many people have concerns with software operating as money. They perhaps do not trust it or do not understand how it can perform that function. Yet, if you tell them it can predict human sex from a retina scan, with very high accuracy, they accept it.

Software is actually brilliant at performing the function of money. As bitcoin has proved for over a decade now, consistently producing blocks of transactions every 10 minutes and behaving in an entirely predictable way is exactly what money should do.

Yet, most people do not yet trust it. When asked who they trust with money, the answer most commonly given is “the government, isn’t it their job?”.

It is not their job. They made it their job because it was profitable to do so but bitcoin will make them redundant, just like AI is going to do to lots of other institutions and jobs.

Only last year the same Janet was telling us just exactly how transitory inflation would be. Now we are being reassured the US will remain the world’s reserve currency. As we’ve said before, when it needs to be said, it’s game over.

There is a very clear contest to build a central bank digital currency that suits international trade. You would have to say on that score that China is miles ahead since they have been working on it now for at least three years and it’s already being tested in the wild. India too, is a long way ahead of the US on digital payments. They are rapidly approaching Chinese levels of adoption and that makes rolling out a CDBC much easier.

The competition will be very real and obviously each country’s digital asset will have different features making it more or less compelling for users. Should something radical happen like China and India combine to use some hybrid currency representing both their underlying assets it would accelerate the race very dramatically. It’s actually a quick way to end US dominance but each country would tie itself to the fortunes of the other, making it less likely.

It’s not long since that talk about global assets and new digital currencies was laughed out of the room. Indeed, one of Bloomberg’s own editors led the charge exactly a decade ago.

In 2012 it was ridiculous. Not anymore.

We are into interesting times now as far as Bitcoin’s year over year price comparisons go. As of today (18th March), bitcoin is down 30% on its prior year position.

I find moments like this attractive. It’s not to say that prices cannot fall further, it’s just that they have historically represented better times to get involved.

More than that though, the longer we move sideways the more pressure builds. Time helps us because we are quickly approaching the halfway point in bitcoin’s halving cycle. In May we will start the downhill run to the 2024 halving. Many believe these supply events are already priced in since they are known in advance. I find it hard to agree with that given how few people know what a halving is and less still when they occur.

If I had to guess we will get some more sideways movement for some months to come but pressure is building everywhere. The worst thing for the US would be approving an ETF after 2024 when the supply of bitcoin halves again, lessening the ability to accommodate demand. So you would think that will have to happen at some point in the next two years. Demand pressure will grow a lot, supply pressure will grow a lot and the rest will take care of itself.

Bitcoin can hang around in a range for a while as the chart shows. The “range” though is an order of magnitude each time.

Let the pressure build. This is one asset where time works for us.

In a fast follow up to their decade-long policy errors on energy, the European Parliament flirted this week on a ban on proof-of-work mechanisms in crypto-assets. Some elements of The Markets in Crypto-Assets Directive, or MiCA, were put to a vote on Monday including the following provision:

“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.” 

This could have excluded bitcoin from trading in Europe, or more specifically, it would have excluded Europeans from using bitcoin. It was a real victory for the industry who put in a tremendous effort to educate MPs and implore them to not effectively ban Europe from one of the fastest growing industries in the world. The economics of this industry are starting to carry weight both in the US and Europe.

The final proposal read like this

“high carbon footprint of crypto-currencies, particularly of the mechanisms used to validate transactions, MEPs ask the Commission to present MEPs with a legislative proposal to include in the EU taxonomy (a classification system) for sustainable activities any crypto-asset mining activities that contribute substantially to climate change, by 1 January 2025.”

It was odd that the industry was being singled out specifically for its technology. In essence the EU was suggesting that using a specific calculation type to achieve a consensus mechanism might be banned. Now cryptocurrency mining will be included “as an industry” and be given targets to reduce its climate emissions like every other industry.

The power consumption of the BTC network is the equivalent of fridges in the US. The difference is bitcoin is powered by 50% renewable energy, while fridges are not. It has one of the highest renewable footprints of any industry so it should leapfrog any hurdle the EU chooses to put in front of it.

This is a text bIf we look at one of the biggest industries in Europe by comparison, fashion, we see some rather startling statistics. These are taken from a Vogue magazine article in 2021.

A huge industry, an even bigger polluter and an exploiter of slave labour (mostly women) world wide, but no energy tax for them.

It’s not an accident though that bitcoin is under attack for its consensus mechanism. In Europe, the ECB knows it will crush them, and it will.