bitcoin – @habits

Recent startup, tech, AI, crypto learnings: “The surest sign of a midcurved institution is its insistence on an ability to control, predict, and dictate to complex adaptive systems”

19/ I have 0 insight if/when Indian policies change but honestly feel like the fact that the most populous country on earth has banned crypto is not discussed enough
Utterly massive opportunity when/if this changes

With a simple meme, you can make millions of people laugh all over the world. I can tweet a joke that gets 15 million views, and I can do it from my toilet. That’s scale. And as every good entrepreneur knows, wherever there’s scale, there’s a chance to turn a massive profit.
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If there were one rule to unite all memelords, it would be this: capitalize on the current thing.

Mr. Beast —
Anytime we do something that no other creator can do, that seperates us in their mind and makes our videos more special to them. It changes how they see us and it does make them watch more videos and engage more with the brand. You can’t track the “wow factor” but I can describe it. Anything that no other youtuber can do. And it’s important we never lose our wow.
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Let’s say we have 10 minute video about a guy surviving weeks in the woods. Instead of making the first 3 minutes of the video about his first day then progressing from there like a logical filmmaker would. We’d tried to cover multiple days in the first 3 minutes of the video so the viewer is now super invested in the story.
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But in general once you have someone for 6 minutes they are super invested in the story and probably in what I call a “lull”. They are watching the video without even realizing they are watching a video.

There were days back in the early 2000s when you would have no idea what to expect from a Bernanke or Greenspan-led Fed. The FOMC meetings were actually quite riveting because you simply had no idea what to expect. But not the Powell-led Fed. They often explicitly tell you what they will do, but in rare cases when they don’t, they leak it to their favorite Wall Street Journal puppet, Nick Timiraos, who spells it out for you.
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Lest you think I’m being unfair to our ivory-tower friends, here’s the lore of the term “capitalism”: borne from a socialist French intellectual and popularized by Marx. Lol. Yeah. The guys who don’t like the natural system, named the natural system something that’s kinda pejorative.

I want you to help me build a media empire, where we make (formerly) obscure scholars famous, compile the real time history of ASI, and produce the very best intellectual content in the world.

Content, confidence, and context—these are the three dimensions Shreyas Doshi discovered traditional companies use to promote employees. “This is unfortunately the cause of a lot [of] persistent frustration for otherwise-talented people who are GREAT at content, but repeatedly get passed over for promotion to higher levels… it is usually because they are not projecting as much confidence as they ought to for the next level and they are not as attuned to the context of the org & the company.”

Their SwiftNet private key infrastructure and banking messaging standards like ISO20022 are used by 11,000+ banks globally to facilitate the communication of payment instructions between banks

On Mr. Beast as Buzzfeed 2.0
(he can only sell very generic products like chocolate because his audience is so poor and so broad) — and he is in the most competitive part of the ecosystem / general entertainment.

The best ideas come as jokes. Make your thinking as funny as possible.
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Do not address your readers as though they were gathered together in a stadium. When people read your copy, they are alone.

This “secret privatization” of the entire North Korean economy has been incredibly thorough. It’s estimated that around 80 percent of all goods and services in North Korea are provided in secret and in shadow. It’s capitalism as an extremophile species of lichen, colonizing the cracks and crevices of the official society, and keeping the whole system afloat.

“The concern was that 200 phones traveling at 800 kilometers per hour in a plane could rapidly connect to many towers at once, overloading the infrastructure. At least that’s what the FCC thought could happen. So, they banned cell phone use in flight in 1991. But there’s a problem with this theory—a plane is a big metal enclosure, essentially a Faraday cage. So, it should block almost all electromagnetic signals.”

After analyzing value spread throughout his career, AQR Capital cofounder concludes that markets are becoming less informationally efficient. “You’d be forgiven if, like me, your initial whiggish assumption is that markets would get more efficient over time. After all, over the last 20-40 years the ubiquity and speed of available information has continuously grown, and at the same time trading costs have come rapidly down. But like me initially, you’d be mistaking speed for accuracy.”

In the 1950s alone, America built five generations of fighter jets, three generations of manned bombers, two classes of aircraft carriers, submarine-launched ballistic missiles, and nuclear-powered attack submarines.

In 2020/21, very loose monetary conditions + huge money printing combined with two major breakout innovations DeFi & NFTs. People were given stimmies, fiat was massively devalued again, and the prospect of decentralized finance being the genuine future of finance, alongside NFTs being the future of digital property caused enormous retail participation.

“Your highly questionable parenting vision,” responded Nicole, who was a day away from labor. “One, no school or college. Two, separate apartment in childhood. Three, move out at 16. Four, learn to drive all machines as early as possible. Five, leave the family fortune to one child. Six, children have to fly in economy while we are in business.” Luckey also believes strongly in (legally obtained) child labor (permits), that having fewer than 2.1 children would make him a traitor to the nation, and that children as young as 2 are fully capable of walking several miles without a stroller (“History shows it,” he says).
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“At some point, in business and in life and in romance, you have to commit to a path,” said the 31-year-old Luckey. “A lot of my peers in the tech industry do not share this philosophy … They’re always pursuing everything with optionality.

By 2023, the cold war between these tribes had escalated into open conflict as hedge fund billionaires led the charge to oust Ivy League presidents and The New York Times sued OpenAI. Incursions into enemy territory are treated with alarm, like when Google’s AI model Gemini was criticized by Riverians for reflecting distinctively Villagey political attitudes.
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Villagers see themselves as being clearly right on the most important big-picture questions of the day, from climate change to gay and trans rights. So they view the Riverian inclination to poke holes in arguments and “just ask questions’’ as being a waste of time at best, and as potentially empowering a wake of bad-faith actors and bigots.

Bitcoin is worth a trillion bucks and half of Wall Street owns it at this point. All the rest of crypto is worth another trillion. Tether owns more Treasuries than Germany. There’s been more than $20bn of venture capital poured into this space in the last four years. We’re not that early.

The surest sign of a midcurved institution is its insistence on an ability to control, predict, and dictate to complex adaptive systems. You don’t control them, they control you.

Envision interest rates as futures for dollars.
Interest rates = price of money

I trust GPT4 more than I trust our politicians. In the coming years AI models will become so much more capable that their judgment will start being used to mediate disputes – first inside companies but then legally . Lawyers already use it constantly.
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China was The State.
Crypto was The Individual.
It’s the Machine that will overthrow the plutocracy, because the core of the plutocracy – its super bubble was the false insistence it was a machine.

Recent startup, tech, AI, crypto learnings: “Perspective has an expiration date, no matter how hard you try to hold on to it.”

Deng Xiaoping and Robert Moses using the same strategy:
Don’t ask for permission, don’t argue, just do it and if you move fast and execute well they’ll either come to agree or, with things already half built, accept with no other choice.

Smart contract systems have proven product market fit and have dramatically increased in security and safety in recent years. They are now able to secure ~$100 billion on public networks with nation state bad actors attacking them daily. This level of security and programmability beats any existing electronic trading network.

Over a quarter century later, handling outliers is still the Achilles’ Heel of neural networks. (Nowadays people often refer to this as the problem of distribution shift.)
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(This is also why we still use calculators rather than giant, expensive, yet still fallible LLMs, for arithmetic. LLMs often stumble on large multiplication problems because such problems are effectively outliers relative to a training set that can’t sample them all; the symbolic algorithms in calculators are suitably abstract, and never falter. It’s also why still use databases, spreadsheets, and word processors, rather than generative AI for so many tasks that require precision.)

This is bullshitization, a process like financialization or enshittification. A derivative phenomenon that amplifies the underlying bullshit instead of attenuating it.

the Ministry of Finance, working with the central bank, spent 9T Yen, or around $55B USD, in currency interventions between these two moves. Recall that they have around $100B USD in liquid cash and $1T USD in Treasury bonds, both of which could be used theoretically to defend their currency

However, if you’ve ever been a manager, you know that a “good” direct report is able to magically transform your vague idea into a really great outcome. You can say, “find me a stock to invest in,” and a good employee will come back with something dazzling. The less time you have to spend specifying what you are looking for, the more valuable that employee becomes

The Plaza Accord was an unprecedented (now rarely mentioned) weaponization of the dollar by the US to dethrone Japan’s economic leadership – via USD depreciation. This is where the now widely popularized “Carry Trade” was bourn, compounded by a series of mistakes by the BoJ, and how the social contract between the two countries were forever set in stone as America willed: “you fund our debt for life, and we will give you military protection given you still need to repent for the sins of WWII”. The Japanese agreed.

“When you have a disruptive technology, they call it a category killer. Bitcoin is a serial killer – it’s going to go through 40 or 50 different industries” – Dan Morehead

When Nixon closed the gold window, the US had a debt-to-GDP ratio of 35%, West Germany was at 18%, and Japan was 10%.
Today the US is at 135%, the Eurozone’s at 91%, and Japan’s above 260%.

However, because this configuration bug hit very widely distributed software running in kernelspace almost universally across machines used by the workforce of lynchpin institutions throughout society (most relevantly to this column, banks, but also airlines, etc etc), it had a blast radius much, much larger than typical configuration bugs.

Like Americans in general, American Bitcoiners can be found across the political spectrum— but they tend to be moderates. Bitcoin owners tend to be younger and male, but are otherwise diverse. When it comes to race, ethnicity, income, education, and financial literacy, Bitcoin owners look much like the rest of the U.S. population.

“I’ve just become president of PepsiCo, and you couldn’t just stop and listen to my news,” I said, loudly. “You just wanted me to go get the milk!” “Listen to me,” my mother replied. “You may be the president or whatever of PepsiCo, but when you come home, you are a wife and a mother and a daughter. Nobody can take your place. “So you leave that crown in the garage.”

BIS had been created by the world’s leading central banks to administer German reparations payments after World War I, but it soon took on a life of its own, transforming itself into a pillar of the emerging global financial system.

On Putin:
Lyudmila did not know he worked for the KGB. He had told her, too, that he worked for the criminal investigations branch of the Ministry of the Interior. It was a common cover for intelligence agents, and he had even been issued a false identification card.

“In reality, it’s inevitable that overseas AI companies see Japan as a paradise for copyright violation and machine learning since unauthorised learning is continuing no matter how much illustrators are being hurt by generative AI.”

After Alexander proved the effectiveness of the Macedonian phalanx, it spread throughout the Hellenistic world and became the default military formation for centuries.
It only had one weakness…
When Rome invaded Macedon in 214 BC, they exploited the Macedonian army’s inability to maneuver while in formation and devastated their flanks and rear.

As Guidara went through these trying times, his father encouraged him to maintain a journal of his thoughts. Frank said: “Perspective has an expiration date, no matter how hard you try to hold on to it.”

Less than twenty years after the Perry expedition, Japan had upgraded from junks to steam-powered destroyers. In 1894–95, Japan easily trounced the Chinese up and down the East Asian coast in the Sino-Japanese War. In 1904–5, Japan conquered all of Korea while also sinking the entirety of both Russian fleets in the Russo-Japanese War.

That $175.3T lines up with the ~$200T number that Druckenmiller has been using for the all-in liabilities of the US government when you take everything into account.
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More than defense, or social security, or anything else. The number one thing all tax dollars (and printed dollars) now go towards as of 2024 are payments to bondholders.

One of my formative experiences has been building our services constrained by what Apple will let us build on their platforms. Between the way they tax developers, the arbitrary rules they apply, and all the product innovations they block from shipping, it’s clear that Meta and many other companies would be freed up to build much better services for people if we could build the best versions of our products and competitors were not able to constrain what we could build. On a philosophical level, this is a major reason why I believe so strongly in building open ecosystems in AI and AR/VR for the next generation of computing.

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“Italians over the age of 100 are concentrated into the poorest, most remote and shortest-lived provinces, while US supercentenarians are concentrated into populations with incomplete vital registries…”
5/n
“Both patterns are difficult to explain through biology, but are readily explained as economic drivers of pension fraud and reporting error.”

For example, Okinawa has the highest number of centenarians per capita of any Japanese prefecture and remains world-famous for remarkable longevity.”
7/n
”Okinawa also has the highest murder rate per capita, the worst over-65 dependency ratio, the second-lowest median income, and the lowest median lifespan of all 47 Japanese prefectures”

“Surveying the ‘blue zone’ of Ikaria, Chrysohoou et al. observed that the oldest-old have: a below-median wage in over 95-98% of cases, moderate to high alcohol consumption, a 10% illiteracy rate, an average 7.4 years of education, & a 99% rate of smoking in men”
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By the time Vladimir joined, the KGB had grown into a vast bureaucracy that oversaw not only domestic and foreign intelligence matters, but also counterintelligence at home and abroad, military counterintelligence, enforcement of the border and customs, and physical protection of the political leadership and government facilities like the country’s nuclear sites. There were directorates that oversaw communications and cryptography, and that monitored telephone calls. The Sixth Directorate monitored “economic security” by policing speculation, currency exchanges, and other signs of deviant free-market activity. The Fifth Chief Directorate, created in 1969 to “protect” the Constitution, enforced party loyalty and harassed dissidents in all walks of life. The KGB was more than just a security agency; it was a state within the state,

Under Trong’s watch, the Politburo of the Communist Party, the country’s highest decision-making body, boasted an unprecedented large number of members with military and security background. Of its current 14 members, there are 5 with background in the security and police /7
forces and 3 with background in the military. As the Ministry of Public Security was the anti-corruption campaign’s key enforcers, its leader (now President To Lam) has become Trong’s most likely successor.
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Under Trong’s leadership, Vietnam upgraded its ties with South Korea, the United States, Japan, and Australia to /11
“comprehensive strategic partnerships,” while also joining China’s “community with a shared future (a.k.a. “community of common destiny”). This was a great feat in a growingly divided region, as Vietnam now stands out as the only comprehensive strategic partner of all major /12
powers in the Indo-Pacific.

Here’s the last one.

Recent startup, tech, AI, crypto learnings: “The user is never wrong” — Larry Page

Here’s the last one.

The average return on a token that paid for media space on DexScreener was -50% over only a 24 hour period.
Heuristic: If someone is paying cash to make sure I see a token, it’s so they can dump on me if I’m stupid enough to pay attention.

Close to 3/4 of startups work fully remote — in Alliance DAO

Aggregations of opinion polls in the 1960s have shown approval of the moon landing was consistently lower than disapproval. One poll of astronomers showed a majority against the mission. Even President Kennedy’s own head of Science Advisory Committee – Jerome Wiesner – opposed a manned mission, releasing a critical report on the notion.
Popular opposition isn’t something you often hear about regarding the Apollo program. It is conveniently missing from America’s collective memory, in lieu of a tale of collective patriotic triumph. A narrative that pleases Democrats as an example of successful big public programs and Republicans, as a triumph of the capitalist west against the communist east.
47% said it was worth it a decade later, in 1979 and it would take 20 years for amnesia to set it and this number to reach 77% in 1989.

There are just 21 million #bitcoin after all… How scarce that number. There are something like 59 million millionaires in the world (not enough for all of them to hold even 0.36 BTC).

Josh Kopelman: VC is anti network fx. The more you invest the harder to help them

5 levels to AGI according to OpenAI:
1. Chatbots
2. Reasoners
3. Agents
4. Innovators
5. Organizations

Level 3 is when the AI models begin to develop the ability to create content or perform actions without human input, or at least at the general direction of humans. Sam Altman, OpenAI CEO has previously hinted that GPT-5 might be an agent-based AI system.

@feketegy
This is exactly my thought too, think of programming mainframes in FORTRAN or COBOL in the 70s then PCs with ASM and C in the 90s and now LLMs plugs into many languages giving context to code bases where there were none before.

The above figures are clear: There is almost no persistence in CEO performance. The observed number of CEOs in each category is indistinguishable from what we would expect if the process were entirely random

44% of Bitcoin nodes are currently at the chain tip (fully synced with the network), with an additional 48% synced within 5 blocks of the chain tip, resulting in an enormous 92.8% are synced within 5 blocks. Only 7.2% of nodes are more than 5 blocks behind.

While we kept plodding on the “pure dual-core”, Intel, still smarting from the x64 defeat just slapped two 1x cores together, did some smart interconnects, & marketed it as “dual core”. Joke at AMD was that Intel’s marketing budget was > our R&D (true fact). Customers ate it up.
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We did launch a “true” dual core, but nobody cared. By then Intel’s “fake” dual core already had AR/PR love. We then started working on a “true” quad core, but AGAIN, Intel just slapped 2 dual cores together & called it a quad-core. How did we miss that playbook?!

Today ‘summarise this document’ is AI, and you need a cloud LLM that costs $20/month, but tomorrow the OS will do that for free. ‘AI is whatever doesn’t work yet.’

power is becoming the main constraint. US electricity production has barely grown in a decade
– the US could solve this with natural gas. we have abundant supply and could build out capacity fast (my note: i wonder if bitcoin miners can help this?)
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algorithmic secrets are worth 10x+ more compute. we’re leaking these constantly
– model weights will be critical to protect too. stealing these could let others instantly catch up

Looking at the spending behaviour of long-term holders, it can be seen that although the spent volume by these players constitutes only 4%-8% of the total volume, the profits realized from this spending typically account for 30%-40% of cumulative profits realized over bull markets.

Every Wednesday morning, Amazon’s executive team gets together and goes through 400-500 metrics that represents the current state of Amazon’s various businesses. The meeting lasts 60 minutes, except for when it’s the holiday shopping season, in which case they sit together for 90 minutes. Amazon’s leadership meets for the Weekly Business Review every week, without fail, even when the CEO or CFO isn’t present. They’ve been doing this since the early 2000s.
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The Amazon-style WBR is designed to answer three questions:
What did our customers experience last week?
How did our business do last week?
Are we on track to hit targets?

It is easy to trade social capital for financial capital. But while you can cloak yourself in blue-chip designers all you like to impress your fellow financiers, it is extremely hard to trade financial capital for social capital.
You’ve seen this with every washed-up celebrity you know: when the coolest people become rich, even they can’t remain cool.

Larry Page: the user is never wrong

Empower your employees to build their social presence.Tap into those audiences for key company announcements.Build a culture around this so that net new employees can replenish the distribution when people inevitably leave.

Reason Google took so long to build cloud service is because it was lower margin than ads. No internal incentives. Same reason Amazon did it so quickly — higher margin than retail, “your margin is my opportunity”

All this to say that I’ve shifted my thoughts from “crypto and web3 will absorb tradfi” to “crypto and web3 serve as the base layer for AI”
Web3 isn’t our internet… it will belong to the machines

Laffont / Coatue:
$100T in CPU / PC infra investment
Believes all this will be replaced by $100T or more in GPU infra investment — but quantum will be very small part of it

China has commenced operation of the world’s first fourth-generation nuclear reactor, for which China asserts it developed some 90 percent of the technology.
Overall, analysts assess that China likely stands 10 to 15 years ahead of the United States in its ability to deploy fourth-generation nuclear reactors at scale

1) Many international individuals decide to start their company in the US (for example Snowflake was founded by 3 French people but it is an American company) as there are fewer regulations (Europe is very complicated given different states have different laws)
2) Source of Capital: the US has an amazing venture capital environment with investors who can act quickly and are willing to lose capital. In Europe, raising capital is much harder and lengthy

In 5 years, it’ll seem bizarre that we ever allowed anyone to email or text or call us AND the norm was to at least think about replying to them. Being reachable 24/7 by anyone and for anything will have been a blip in time, an absurd anomaly in the long arc of the hyperconnected digital age.

This gave those labels a lot of power over Spotify, but not all the labels, just three of them. Universal, Warner and Sony, the Big Three, control more than 70% of all music recordings, and more than 60% of all music compositions. These three companies are remarkably inbred. Their execs routine hop from one to the other, and they regularly cross-license samples and other rights to each other.

As we pored over the code, we found that, although there were a few human women on the site, more than 11 million interactions logged in the database were between human men and female bots. And the men had to pay for every single message they sent. For most of their millions of users, Ashley Madison affairs were entirely a fantasy built out of threadbare chatbot pick-up lines like “how r u?” or “whats up?”

Value of information is the amount of surprise — information theory

Crypto’s trends from the ICO boom; to NFT summer; to socialFi, to memecoining, show me that people like to do their own research, get some sense of market advantage and then buy in size.
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This past week we had one of the most bullish signals for the crypto industries with the SEC dropping its case against ConsenSys, alongside an imminent launch of the $ETH ETF. Despite this, $ETH has drawn down 12% from local highs, with majority of altcoins down anywhere from 10-50% in the past week when I first expressed this view.
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Crypto-native positioning is more relevant for alts, where liquidity and thinner and % of participant that is crypto-native is higher. For $BTC and $ETH, the consideration is more PvE in nature vs PvP, and my believe are these two are still flag-bearers for the market, especially given the decimation in TOTAL3.

Incredible report on the macro-political implications of Bitcoin, especially wrt US-China relations

Original source here: https://www.btcpolicy.org/articles/great-power-network-competition-bitcoin

It was published in October 2023 but I hadn’t read it until recently.

Sharing my favorite excerpts here, I use // when appending comments

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Network power consists in the ability of a state to exercise surveillance and chokepoint controls
over a global network. For example, signals intelligence collection on global communications, suspicious activity reports on banking transactions, and end-user inspections on semiconductor technology are all forms of surveillance power from which the U.S. derives immense geopolitical advantage.

// reminds me a bit of Balaji’s Sovereign States thesis… digital networks gradually gaining power and autonomy

namely the “frenemy” relationship that previously obtained between financial capital (dominated by the G7), energy/commodities (dominated by OPEC+), and goods production (dominated by China)

// energy/commodities seems more complicated than just OPEC dominance given US shale growth and China & Brazil dominance in certain key categories

The old playbook of economic coercion and network exclusion may work for minor powers, but it certainly isn’t going suffice (and may even backfire) in an era of great power competition. Note that China’s geoeconomic allies across OPEC and Russia (and the expanded BRICS) dominate the oil market, most commodities trade, and are increasingly at the center of global value chains.

Social Security started drawing down trust fund reserves (USTs) for the first time in 2021, with a projected depletion by 2034

// if 2034 is accurate, that’s highly concerning… and also why I told my mom to start taking distributions as soon as she was able

An IMF study found that “an individual in the 75th percentile of wealth distribution who invested $1 in 2004 would have yielded $1.50 by the end of 2015—a return of 50 percent. A person in the top
0.1 percent would have yielded $2.40 on the same invested dollar—a return of 140 percent.”

A leaked analysis by the Office of Naval Intelligence showed that “China is the world’s leading shipbuilder by a large margin”, controlling “~40% of global commercial shipbuilding market” with a
shipbuilding capacity 232 times greater than the U.S.

China and a handful of other nations now own over $12 trillion in U.S. equities, up from $2 trillion in 2010

// certainly any attack on the US would include crashing financial markets, even a 20% drop in stock prices would lead to rising panic and societal discontent… much less 50% or more

equally pernicious is China’s covert recycling of dollar surpluses via offshore money centers to control scarce western assets and influence and corrupt democracies. A synergy between transnational criminal organizations, state intelligence organs, and western middlemen operating in the “gray zone” of global finance have helped route trillions via shell companies into western financial and real estate markets

Recognizing CIPS will never supplant CHIPS and SWIFT, China is looking to “leap-ahead” and capture first-mover advantage and structural network dominance over emerging global fintech and permissioned national blockchain systems

// India seems to be doing this well, and maybe El Salvador…

It is noteworthy that China and Saudi Arabia have increased their strategic partnership, as the
erstwhile U.S. ally has become more geopolitically promiscuous under Mohammed bin Salman. MBS—a millennial autocrat with no taste for democracy but extreme ambitions for domestic development—has
found in Beijing the perfect source of both military support (e.g., ballistic missiles) and construction capabilities to drive his Vision 2030 objectives

China is exporting (and finding strong demand for) a bundled techno-authoritarian “stack”
consisting of dedicated fiber-optic cable networks, cloud hosting, “cybersecurity” services,
5G/Internet of Things digital infrastructure, surveillance equipment, cross-bridged CBDC platforms
(built to integrate with the China’s Digital Currency/Electronic Payment (DC/EP) system of
course), and sophisticated AI monitoring software, alongside onsite training, technical assistance,
and customer support for would be autocrats across the globe.

Thesis: Bitcoin and regulated dollar-based stablecoins may help the U.S. counter adversary efforts to challenge U.S. geoeconomic power while reinforcing liberal value systems around the world.

// liberal value systems in the broad and original sense, I would hope, not the Democratic party “liberalism” we’ve come to see this past decade which disproportionately benefitted specific minority groups at the general expense of most others

Bitcoin and dollar-stablecoin adoption along the frontlines of Cold War 2.0 may serve as a bottom-
up bulwark against China’s geo-monetary network expansion strategy. China has banned Bitcoin in its own country but cannot do the same across the rest of Eurasia, the Middle East, and Africa, many nations of which have relatively permissive cryptocurrency regimes

the United States can take special advantage of the dollar-based stablecoin ecosystem that has emerged to facilitate cryptocurrency trading, especially offshore. The top two largest dollar-pegged stablecoins hold a market cap exceeding $100 billion, and are growing quickly. One can argue that these private stablecoins are winning the fight the U.S. should be fighting against the DC/EP, with market-driven transaction volume in just these two dollar-stablecoins vastly outpacing that of the PBoC’s DC/EP efforts to-date.

// again, users vote with their wallets, and the market wins (in the long-run)

increased demand for these stablecoin issuance (mostly driven by increased demand for Bitcoin, and its rising dollar price) will drive increased demand for U.S. bonds (and other U.S. corporate and municipal debt blessed as “money-good” High Quality Liquid Asset collateral). At a time where foreign demand for our debt is drying up, Bitcoin-driven stablecoin growth can serve as another source of government financing

Note that while the foreign official sector is broadly trying to de-dollarize or diversify their FX
exposure on the margin, the populations in these countries want dollars more than local currencies.
The fact that ~99% of stablecoins are dollar-denominated appears to demonstrate that, absent government forces, the high salability of the dollar will win against other currencies.

// it is interesting and ironic that many states want to move away from the dollar while their citizens clearly want MORE dollars, not less…

Bitcoin is a novel synthetic, and scarce, digital commodity with global fungibility, limited
counterparty risk (zero if self-custodied), large and growing liquidity, and unit scalability to settle any quantity of value. Its monetary properties offer a similar (if not better) scarcity and bearer profile than gold (and other commodities). Its technical properties offer a similar (if not better) transactional and settlement profile than fiat-exchange system rails (e.g., SWIFT, FedWire)

// beautifully said

States will still seek to control and monitor Bitcoin (and related stablecoin) flows as best they can,
which will set up a technical arms-race between protocol development and chain-analysis. Some states may desire the benefits of holding Bitcoin for themselves, but seek to limit domestic, individual engagement.

From a national security perspective, key decision-makers may realize the fact that allowing Bitcoin to monetize alongside (or outpacing gold) would disproportionately benefit the U.S. (whose citizens and firms hold potentially a majority of all Bitcoin, and whose companies and capital markets would grow in tandem). That is, while China and Russia double-down on analog gold, the U.S. can countermove to digital gold.

// this would be a powerful and effective chess move, and maybe Trump / Vance can push us in that direction, but I remain skeptical for now

This is Bitcoin’s cycle. Some thoughts on why

The main character this cycle is clearly Trump; the rest — mostly crypto influencers — are leagues behind Trump in influence and reach, think Ansem (SOL & memecoins) and Pacman (Blast) — no shade to them, it’s just a different ballgame now

With Trump likely to win in November, and with JD Vance as his Veep, it’s clearly positive for crypto regulations; this will be a tailwind for all crypto assets, especially for any coin eligible for an ETF (ETH and maybe SOL), projects attacked by the SEC (Uniswap, Stacks, etc), and yield generating tokens (POS, Defi)

The Presidential election has and seems likely to continue dominating the global news cycle for the rest of 2024, and the only crypto asset likely to get significant attention is Bitcoin; the only other asset with remotely macro-political implications is ETH with its impending ETF launch, but it’s trivial in comparison

Institutional investors now dominate new flows; the only tokens that meet their liquidity and regulatory requirements — for now — are Bitcoin and maybe Ethereum and possibly if I squint Solana

You could make a weak case for AI-related tokens to get some macro-political attention (eg, Worldcoin)

This doesn’t mean pockets of crypto won’t do well, ie, infra L1/2/3/X’s always have a bridge to sell. Likely we’ll see one or more Dogecoin-level memes, and maybe 1-2 consumer apps getting their 15 minutes (like Polymarket).

But this is squarely Bitcoin’s cycle.