Bitcoin is poised for exponential growth, so the opportunity costs of not being involved to the highest personal degree possible are incalculable.
Yet merchants, investment peddlers, and other hoarders have been able to convince countless bitcoiners to part with their future riches, despite the obvious downsides given you have a long enough time horizon to see the coming post-fiat world. They’ll tell you spending is vital, that Bitcoin 2.0 will be even better if only you give them some of your Bitcoin 0.9, or that your bitcoins are worth only $475 a piece. They’ll tell you this with a straight face, the wringing of their hands unseen across the Internet.
Bitcoin is exciting. Looking at a static wallet file and balance is not. Instead of holding and forgetting, many bitcoiners choose to “put that money to use,” and endless crypto-peddlers are ready to snatch your bitcoins up. They’ll offer you mining contracts, present their plans for a hedge fund, or entice you into investing in a Bitcoin company. Today, the most popular investment vehicle for bitcoiners are Bitcoin 2.0 schemes, ranging from Mastercoin to Ethereum.
Long term investors should use Bitcoin as their unit of account and every single investment should be compared to the expected returns of Bitcoin.
If hyperbitcoinization occurs, Bitcoin holders will see their purchasing power increase by orders of magnitude. Bitcoiners should think twice before throwing away even a couple millibits towards a project “just to see where it goes.” A running joke in the community is how expensive the two pizzas Laszlo bought were. We joke about a million dollar pizza, and hyperbitcoinization has not even occurred yet. I praise Laszlo for his entrepreneurial use of a new technology, but I do not wish for myself or others to be a Laszlo.
My friends and I joke about starving due to the intense deflation, but I can’t say I don’t look back and wish I had skipped a couple lunches in the crappy dorm cafeteria to buy $10 bitcoins when I had the chance. Hyperbitcoinization will not be a force to trifle with. Even a marginal bitcoin holding right now will constitute a very significant majority of a bitcoiner’s portfolio. Once it happens, there is no going back. One day, your Bitcoin balance will likely never see the decimal point move to the right again. – Michael Goldstein
What Makes Bitcoin More Popular with the General Public?
About a year and a half ago, I convinced my 65-year-old immigrant mother-in-law to invest some money in bitcoin. It wasn’t very much money, and she asked a few questions, but overall, she trusted me so she bought some. To be honest, I don’t think she understood too much about it, but nevertheless followed my advice. About 7 months later without any prompting from me, she came back to me on her own to invest some more money in bitcoin.
What happened that was so compelling that she had to invest some more money? What story had she read that spurred interest in something she could barely understand 7 months earlier? It was this article. If you’re too lazy to follow the link, it’s the story of a Swedish man who in 2009 invested less than $50 in bitcoin and then forgot about it. Then he heard about bitcoin again in 2013 and promptly sold a bunch of it for a significant enough sum to buy a condo. The story was printed in newspapers around the world and she heard about it, not in an English-language newspaper, but one in her native language.
See, that caught her attention. And she soon realized the bitcoin in that story was the same bitcoin that she bought 7 months earlier. The fact that it took some thinking for her to make that connection should tell you how far from her mind bitcoin was at that point.
As early adopters of bitcoin (and if you’re reading this, you qualify), we have a tendency to think about all the fancy technical details and how they’re going to be the silver bullet to increasing bitcoin adoption and price. But I wonder if stories like the above are the real drivers of interest. See, that article came out in October of 2013, right at the beginning of the enormous 10x climb to $1200. It was a viral story that caught people’s imagination. It was a story that caused people to buy and hold.
My mother-in-law doesn’t care about credit card fraud, fractional reserve banking or the solution to the Byzantine Generals’ Problem. She does care about making a good investment and past returns are a much more compelling argument to her than any number of new merchants taking bitcoin, VC investments or industries that bitcoin can make obsolete – Jimmy Song
We Need More Buy-side Pressures to Support and Boost Bitcoin’s Price and Build its Monetary Base
When I’ve written about this subject recently, it’s almost always been in the context of trying to identify where the new “killer app” for bitcoin will be on the consumer side. I lauded Circle’s new wallet. I wrote about how Coinbase was well-positioned to offer “bitcoin rewards” programs. And I even took Vinny and his company Gyft as a sponsor because I loved that they actually offered consumers a tangible benefit in exchange for using bitcoin. But now, I’m starting to realize that I’ve gotten it all wrong.
What we really need to do is stop getting ahead of ourselves, and start selling bitcoin the investment to our friends and family and colleagues again. We already know that large chunks of institutional capital could be sitting on the sidelines waiting for the BitLicense or the Winklevoss ETF. But to be honest, retail investor interest has also abated, and that has nothing to do with retail acceptance or bitcoin 2.0 applications. Instead, it’s all about waning enthusiasm for the currency — bitcoin’s original killer app.
How do we spark excitement again? A bitcoin ride with Uber? A DISH subscription? Alpaca socks
No. What we really need to do is get back to tapping people’s fears (“the dollar’s value is being destroyed, and bitcoin is a modern day inflation hedge”) and encouraging their greed (“imagine if you could have invested in email, dude”). Some cynics might cry foul and claim that this approach is tantamount to propping up a ponzi scheme, but a more truthful explanation would be that we’re trying to spark the next virtuous cycle of hype and growth.
I got into bitcoin because of a speculative bet on the currency, not because of a love affair with the underlying technology (that came later). I wanted to make a lot of money on the next big thing, as did a number of my friends. But I’ve lost sight of that when it comes to talking to potential converts, especially as I fall farther down the bitcoin rabbit hole. I find myself dismissing bitcoin the currency too quickly and instead focusing on the 2.0 potential of the block chain – two-bit-idiot
Scammers will Always be Looking for Ways to Screw Someone Out of Their Bitcoins
The only way this will be solved is if trusted networks can be built. As has been said before, Bitcoin is great, but it won’t fix our monkey brains. While Bitcoin offers a money with no trusted third party, it can only do so because the ledger is self-referential. The humans actually using it must always be in a mindset of caveat emptor when using Bitcoin. Through payment protocols, webs-of-trust, smart contracts, GPG contracts, and voting pools, users can mitigate the risk of engaging in various forms of commerce – Michael Goldstein
Bitcoin Bull Market Won’t Start Until the ASIC Capex Spending Bubble Bursts
Miners selling coins to cover opex is a factor, but miners selling for capex is driving bitcoin price – Pierre Rochard
US Stocks Are Now Well Over 20 Times Earnings
The Dow has traded at more than 20 times earnings six times in the last 114 years: at the start of the 20th century, in the late 1920s, in the mid-1930s (because earnings were so low), in the 1960s, in the 1990s, and twice in the new millennium. Each time, save the last, a bear market followed that brought stock prices back to more reasonable valuations.
The Dow has traded below 10 times earnings only three times over the same period: between about 1915 and 1925, after the crash of 1929 off and on until 1945, and between about 1977 and 1984. (The dates are approximate, because P/E ratios are slippery.)
Each time was a buying opportunity. Stocks rose substantially subsequently.
Our “Simple Trading System” (STS) couldn’t be simpler.
P/E > 20 = Sell
P/E < 10 = Buy
When stocks are above 20 times earnings, you are out. When they fall below 10 times earnings, you buy again. Otherwise, you do nothing.
Your rate of return would have been far in excess of buy and hold. But the real beauty of the STS is that you don’t have to be too exact about it. The system is meant to help you get the big moves right; the details almost don’t matter.
US stock prices are well over 20 times earnings when earnings have been properly normalized…or “smoothed”… as Shiller would do it (P/E > 20) – Bill Bonner
COMPANIES / PROJECTS
OpenBazaar vs. Alibaba
OpenBazaar is an open source, peer-to-peer marketplace. Instead of buyers and sellers going through a centralized platform, like Alibaba, OpenBazaar allows for direct, person-to-person commerce. Trust, security, and dispute resolution are all handled by the users of the system. Since there are no middlemen, there are no fees. Since there are no gatekeepers, there is no censorship.
Alibaba Group Holding Ltd. revealed its plans for what could be the world’s biggest initial public offering. The Chinese e-commerce behemoth’s potential $24 billion sale would value the company at around $155 billion. Although Alibaba has diversified into payment processing, a shopping search engine, and cloud computing services, the vast majority of its revenue comes from charging fees to the users of its marketplace platform.
If Alibaba is, at its core, a trusted third-party that facilitates commerce between two distributed participants, then what use is it when the participants can provide all the added benefits of having a trusted third-party between themselves?
This is the promise of OpenBazaar.
If I were running a company that did a quarter-trillion dollars worth of transactions and my whole business revolved around being the middleman to every one of those, I would definitely be concerned about the development of OpenBazaar – Valerian Bennett
OpenBazaar vs Uber
Uber has been banned in Berlin and is facing a shutdown in Germany. Authorities say they are acting in the interest of consumer protection and public safety. Opponents of the ban would suggest that the state is acting as a protectionist agent paid directly by incumbent taxi services.
Fast-forward to a future where using OpenBazaar is no more difficult than using WordPress. Since everything is open source, independent developers have added real-time location data while others have ported the platform to mobile. The company that was “Uber” is now a trusted curator of drivers and a dispute resolution center. Outside of setting up sting operations to bust drivers one-by-one, the system is effectively unstoppable. The best the state could do is instill enough fear in the public so the will to use such a system would be overwhelmed by the uncertainty of price a user would ultimately pay. “Is it worth getting a $1000 fine just so I could get a $10 car ride?”
What’s the role of the regulator when there is no “thing” to regulate? How do you enforce taxation in a truly peer-to-peer economy? When the purpose of government overtly shifts from the goal of serving its citizens to that of serving as the enforcer of corporate interests, will the system still have the authority to stand?
Simply put, a fully functioning OpenBazaar renders many elements of our current societal structure irrelevant – Valerian Bennett
London Police Coerce Domain Name Registrars
City of London Police have increased the pressure on domain name registrars who do business with file-sharing sites. With a “notice of criminality” the police hopes to pressure the companies into taking action, or else – Ernesto
The Fed haters have been saying for years that inflation is going to surge, the dollar is going to be worth as much as toilet paper. They have been completely wrong – Joe Weisenthal
I still think that the Fed can’t get out of jail. That all this talk about raising interest rates and ending QE is all talk, and that’s what is propping up the dollar. Once the Fed has to admit that there is no recovery, and it’s got to go back to the drawing board with even more QE than it’s ever done before, then I think we’re going to see the fallout in the Forex markets – Peter Schiff
In May 2010 you said “there will be an economic collapse far more spectacular than what we’ve already seen, the bond market will collapse, the value of the dollar will plunge, interest rates will rise, there will be runaway inflation and unemployment”. At what point do you say maybe I got it wrong?
If the Fed is able to shrink its balance sheet and actually sell off all the mortgages and all the bonds and bring interest rates back up to something normal, if they can raise interest rates back to 5 or 6 %, if they can sell trillions of dollars worth of treasuries and not collapse the stock market, not collapse the bond market, not bankrupt the US government and all the banks, if they can pull off that miracle, then I’ll admit that I was wrong. But as long interest rates are at 0%, as long as their balance sheet is expanding, I’m not wrong.
We’re supposedly 5 or 6 years into this recovery and interest rates are still at 0%. Why hasn’t the Fed already raised rates? I say it’s because they can’t – Peter Schiff
Mars is Not the Only Fruit in our Solar System
At this very moment we have robotic wheels on Martian regolith and sharp eyes in orbit. More Mars missions are lining up: NASA’s MAVEN should be entering orbit as you read this, as should India’s Mangalyaan craft. And plans are afoot for the InSight seismological probe, Europe’s ExoMars, a Mars 2020 rover, a sample return, as well as the ever-present speculations for sending a human contingent.
But Mars is not the only fruit. The icy moons Enceladus and Europa both exhibit hallmarks of subsurface liquid water. In the case of Europa, a dark ocean with twice the volume of all Earth’s surface oceans conceivably exists in contact with a rocky core—with potential for a deep hydrothermal oasis. Recently discovered geyser-like eruptions into space from both offer hope of a sampling mission to look for signs of life – Caleb Scharf
Jupiter’s Moon Europa
The more they look at other worlds in the Solar System, the more scientists discover that Earth isn’t as special as we earthlings like to think. Our planet has active volcanoes—but so does Jupiter’s moon Io. We have geysers—and so does Saturn’s moon Enceladus. We have lakes, rivers and rain, and so does Titan, another moon of Saturn’s.
Now a paper in the journal Nature Geoscience argues that one more geological feature thought to be unique to Earth may not be after all. Using images from the Galileo spacecraft, planetary scientists think they’ve found evidence of plate tectonics on Jupiter’s ice-covered moon Europa—a world that’s already on astrobiologists’ radar because the ocean that lies beneath the moon’s thick rind of ice could conceivably host life of some sort – Michael D. Lemonick
To Do List:
1) I’d like to see a Mars sample return
2) I’d like to land on the surface of Europa – the most likely place in the solar system for life
3) I’d like to float a boat on the methane lakes of Titan
Graphene, first isolated in the lab 10 years ago, is 200 times stronger than steel and 70 times more conductive than silicon, properties so remarkable it may revolutionize fields from health care to aerospace.
Graphene may also replace silicon to make smaller, faster and more energy-efficient microchips to power electronic devices of the future. IBM in January announced it had produced an integrated circuit made of graphene that can transmit texts.
Determining whether the new material damages human organs is the first step toward Kostas Kostarelos’s more ambitious goal: using graphene to build tiny drones that deliver medicine internally, reminiscent of “Fantastic Voyage,” the 1966 science-fiction thriller set inside the human body.
“We’re trying to design vehicles that you can inject in the bloodstream or eyeball or spinal cord or in the brain, to try and get to a particular diseased cell population, so you don’t create collateral damage,”
“If you design this self-propelling vehicle, and you get in front of a cell you want to transfer therapeutic materials into it, how would you do it?” Kostarelos said. “Can graphene slide through a cell’s plasma membrane? The answer is yes.” – Oliver Staley
We expect graphene to become in the 21st century what steel and metal were in the 20th. We can already see its potential in a number of scientific domains. It’s not hype – Thomas Skordas
The Era of Artificial Hearts Has Begun
Artificial Knees. Total hip replacements. Cataract surgery. Hearing aids. Dentures. We are a society bent on improving human health through substitution and augmentation of our body parts. But one of the most important goals of transhumanist medicine—possessing a perfectly healthy heart—has so far remained elusive. This week, we came a step closer when for the second time ever, a French company implanted a permanent artificial heart in a patient.
Heart disease is the number one killer in America: It claims nearly 800,000 lives every year, making it the cause of roughly one in three deaths. But radical new medical technology may soon change that: Expect the possibility of trading in your biological heart for a better, artificial one in about a decade’s time – Zoltan Istvan
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