Readers always want to know what kind of background the author of an article has. In my case, I’m an early tech enthusiast, I was reading about Bitcoin in july 2010, and invested in it much later. Like so many people with a healthy dose of scepticism, I didn’t invest in it, only mined with a CPU and GPU later on, not knowing what I had.
I got put off by a loser on youtube calling bitcoin a scam in 2010! “All these nerds sitting at their computer generating fake money, it’s bad!”, little did I know this obese piece of crap had not done any research, later,… when I did proper research myself I discovered how good it was, and I had other issues preventing me from buying in (unrelated and no fault of anyone).
These are old stories, no one cares anymore, I know.
Now at the tailend of 2019, I’ve seen a lot. From the pump and dumps, over to Litecoin, Marscoin, NXT, Jelurida (or whatever that pump was called), later into ETH, and even ARK and the many forks of bitcoin (I was a BCH believer for about a week, I admit).
I you like to join in with HEX, follow this link. More on this one below.
The trends in crypto are rapidly changing all the time, and one of the latest few trends have me worried. I’m going to take a stance here that will not be popular, and since I’m coming out of the woodwork as an old-timer anyway, I’m not risking any reputation in the crypto space anyway (I don’t care about catering to followers, likes, or sponsors… we’ve seen where that gets you. I’m looking at you Peter McCormack).
The real OGs, from Bitcoin Uncensored to Roger Ver and his crew and supporters are all disappearing to the background noise. As new trends are set.
I want to offer my insights here, as someone who started following the space very closely since 2010. Take it for what it’s worth (or not,… people don’t listen anyway).
The “holy curve” of Bitcoin
The first thing you get in front of you when a noob learns about bitcoin is the curve with the supply inflation. The curve shows how many bitcoins come into circulation in the distribution phase (until the actual new bitcoins stop being mined somewhere around 2140).
That graph is used as a holy curve almost. A curve that kind of proofs that the rate of new supply being added in fresh bitcoins-to-market, will be lower with every halving, hence the price would go up. The expected return in people’s minds however, will likely go down (in theory up, in reality down).
The same way for an average Joe, an amazon stock at $1500 will likely be having less expected profit for them compared to a $150 stock for that same company, it all depends on the story woven around it. (Theory is not something most people examine).
The same for the “holy curve”.
It’s a nice theory, one that I’ve believed for years myself.
In reality this curve can be split in two parts however. The appreciation phase and the decline phase.
I’ve added the two versions below.
The miners, who over-secure the network (and pollute the environment at the same time, just like banks, gold mines and so many industries) mine the coins by solving the calculations (in short).
They need to dump the price in order to keep their operation going. The main manipulation happens probably from their side.
The advanced miners using industrial-grade tech by now, they’re outflank the normal peer-to-peer miners and with that, the actual working of bitcoin. Let’s not start the Satoshi’s vision debate here, … that’s irrelevant by now.
The proof of work, P2P model was changed over time and that’s how it is, whatever your position is.
You can mine your own bitcoin as an individual still, (kind off) but you’ll by all accounts surely lose money on it as the tech, the pricing, the electricity, maintenance… will all contribute to you losing money over time… unless the price goes up tremendously in dollar ànd you have some btc to actually sell.
In fact mining as an individual has become a dangerous gamble (and I’m not even talking about securing your small-time operation in this case, which is a OPSec nightmare and makes you light up like a Christmas tree on anyone's radar from your ISP, to hackers, and “instances”).
The conclusion here is simple.
Both graphs are correct. My adaptation gives you more information however. It boldly states that the time of the 2020 halving (somewhere around the 14th of May 2020) coincides with the pricing of a bitcoin as an expected fiat return is hitting a sort of invisible ceiling.
The operations (rent, building, maintenance, resources, personel, electricity, legal struff, admin… ) will all stay more or less in line with inflation (let’s say 1,5% yearly to put it mildly).
While the number of bitcoins the operations get, will decline. One feature of bitcoin that’s really awesome is the planned inflation… anyone can see on a chart what the inflation will be in the future. Something that our normal economy doesn’t have :) This also gives us the possibility to plan ahead, look into the future. Scarcity will bring higher prices, in theory. In practice however, scarcity will also bring less short term expectancy of return. (It’s all in the mind).
This information tells us that miners will not only be in trouble, but will be on borrowed time once the halving hits in 2020 (or in reality, right before that).
Yes, the supply will decline, and less bitcoin in circulation will mean price appreciation; but that’s not a given, that’s a theory (mainly promoted by maximalists and their pet-parrots).
It’s the market that will set this price. We know any markets (and certainly an unregulated one like bitcoin!) are manipulated.
What will happen to the price is in the future (I’m not a TD-sequential guru, so I can’t look into the future for you, like some people in the space tend to do while saying “I can’t predict the future… BUT…).
What I do know, is that this invisible ceiling will hit economic reality. The coins that will be minted will be 6.25 instead of the 50, 25 and 12.5 from before.
This halving shall be different than the previous ones. Since the number of bitcoins in the mining rewards will have a more uncertain reward in dollar value, while the operations grew larger (and the costs for legal stuff, personnel and security and so on are not declining by any means).
This was something that didn’t play much role in the previous halvings, as there was plenty for everyone, and the expectancy of return was there.
THIS IS KEY. The expected profit during the boom phase from 3000 to 19000$ was high. No matter if you got 50, 25, or 12.5 BTC as a reward, you could fund your operation nonetheless.
Someone mining in 2010, 2011 or 2014 had it not that much different from a standpoint of this “expected return” as the price could fluctuate greatly in dollar, the actual operation was still small potatoes compared to someone mining in 2020. They could pay, and secure the network. The difficulty will adjust of course if many miners pull the plug, but will there be miners willing to take their place? I doubt it, the invisible ceiling is there, and they all know it.
Before or after the halving, would make no impact of the growth and the living standard of the operator in 2012. The smart ones probably put (a lot) of money on the side for the later phase of this curve. I hope they did. These ones will still be around for longer as they keep funding their game.
The mining will see this ceiling being hit, while the number of rewarded coins dwindles down, their sell-pressure will rise tremendously. This will have a possible effect on the markets, as you’ll need more fresh investors to step in to compensate.
This might happen of course. There might be big investors ready to step in. But I personally don’t see the average Joe buying bitcoin, talking about bitcoin or even knowing about the halving. I don’t expect them to step in to save the miner’s collective decentralised butts. Average Joe is paying with Google Pay, taps any news story site and is behind on financial news by about 1 tot 2 months usually.
The ‘holy curve ‘ as being used, is therefore incomplete.
With the cost of operation and eventual expectation is missing.
Also, when less bitcoin will come into circulation, the expected returns decline for the average user (I know, this shouldn’t play a role in economic terms). In the minds of average people, when they get 50 BTC of 6.25 BTC, the first will make more dollars than the second. Which is wrong. But it’s a factor to take into account here, as the drop in expectations will surely hit the next halving on top of the invisible ceiling. This whole market is built on ‘expectations’. And they are in short supply.
A second observation I want to make is the rise of the thought-leaders, and their tendencies to corner the market in information towards the interested end-users.
I’m dependent on many sources of information, … people from fintech industry companies, online magazines, youtube channels, podcasts and so on.
The last couple of years, we’ve seen many, many youtubers and twitter-crypto people come and go. Some were just students, people with a good voice and look talking about the market (Carter Thomas for example of coinmastery to name one).
Many just threw in the towel, or were involved in nefarious operations (or ended up in the slammer :), others went on to become a sort of rock star of the online bitcoin community or had their status elevated to halfgod in their respective bubble.
The ‘known figures’ have grouped together into small social circles that visit each other’s yachts, go to the same conferences and appear on each other’s shows (I don’t know if they bang each other’s girlfriends like bass players in metal bands, but I’m assuming the worst).
Charlie ‘sell at the top’ Lee, Tone ‘a green nine’ Vays, Jimmy ‘cryptocowboy’ Song, and many many more are the rock stars in that world. And it becomes more and more weird.
I long for the days of Bitcoin Uncensored by the way. Three to four hour podcasts with non-stop barrages of insights.
There’s a new trend however, one that’s rather disturbing.
Since Chris Deros and JunSeth coined the “bitcoin maximalist” term, there were a particularly strange group of characters banding together. People I came to call Scamophiles by now.
They have various views, but mostly unite around a few items they all stand behind:
1- eating steak (I don’t know why that has anything to do with anything, but they see it as a badge of honor to eat large juice pieces of cow meat to prove that they’re living in a free world or something)
2- selling you crappy books or seats at a conference
3- calling everything which isn’t bitcoin a scam, fraud or a shitcoin
The first part, eating meat… I’m not going to comment on. I don’t care if they do or don’t do that, I find it weird that they connect this to their “branding”, next thing we know they all start to talk about playing the accordion all the time.
The second part is not that interesting either, if you want to go to places like Bali or Las Vegas and sip cocktails with people like Kim Dotcom or Jimmy Song, then you just pay the fee and enjoy yourself (I would recommend drinking a lot and eating steak and trying to keep a straight face).
The paradox is, that even at their own steak-eating conferences, the place is allegedly infiltrated by people that try to scam each other.
Two confirmed cases, of which they talked about and dealt with on their own yt channels. It’s honorable that they unmasked them of course. Otherwise they would be totally laughable, even within their own group of scamophiles.
It’s great to see them be so vigilant about scammers, to the point even that they would be keen on ratting out their own friends.
I wonder if they narc on their local bakery as well when their bagel isn’t fresh enough. Or no, they probably think bagels are a total scam and a fraud since it’s not bitcoin and created in centralised bakery and the “coins get burned” or something. It’s comical.
Please people, … I was with you for a long time, I really was. Calling XRP a scam, unmasking onecoin and bitconnect, it’s all great. It’s good that you do this. But please don’t be a scamophile. Not everything that moves is a fraud. Not all in life is about catching scammers.
You’re not the police of the cryptospace (the uniforms would be hideous). Because there is little to police actually. We’re a marginal club of people who found this tech fascinating. And we’re all selling and buying this shit from each other. Some get rekt, others get rich. But we mostly try to hope for adoption, … while we snitch each other out, dox each other and try to get into each other’s twitter feed.
If you look at this in another perspective, their books are scams as well, just like your conferences or your consultancy fees. You sell knowledge that’s not worth having, in a currency that’s purely based on consensus and code, and act like you’re inventing the wheel every week. Build something maybe. Or at least don’t ONLY talk about scammers and how beautiful the market is, while it’s obviously collapsing where you stand.
The fact of the matter is, that you’re getting red hot angry whenever something innovative, experimental or new comes along. It would inflict damage on your status.
And yes, some systems might be pure garbage (like EOS), that’s true, but not everything is a scam.
We’re human, we make mistakes. We all do. I thought, for example, that the ARK coin was a good idea actually, but it turned out to be a dud with little or not real use. So be it. Was I scammed? No. I lost funds on that, yes. Not to the extent that I cry myself to sleep at night while listening to Coldplay.
I did my own research, I believed in the project, and I got bad results.
I’m not crying about it on youtube. I moved on.
I got bitcoin at any price between 12$ and 11000$ and I don’t cry about it going down to 7520$ (at time of writing), I knew it’s volatile. I do money management rather well myself tbh. I thought bitcoin was a scam as well in the very beginning. So I stayed away at first, like so many. I know I did my best and I would have done exactly the same given the same information.
If your personality, image and ‘status’ in the bitcoin space is depending on how many scammers you point out, then it’s a sad state of affairs.
The sad part about this is, that you’ll have a false positive sooner or later.
You’ll brand something a scam, yell at everyone about it (literally), and then you’ll turn out to be the one costing everyone a lot of opportunity. Someone will take a big hit in their reputation (hell, it might be me).
The people that bought Ethereum at 0.15$ were also branded a scam.
Even the “dumb” people that bought XRP and went up 50x or more were branded idiots, morons, losers and scammers by your kind of Scamophiles… while you streamed from a crappy hotel room with a very bad wi-fi connection talking about moving averages and candles so long they would fit right up your bum.
Which brings me to the last episode in this sage: HEX and Richard Heart
Like so many people, I followed Richard Heart since the very beginning of his channel. The self-help videos on youtube, it fascinated me. It’s clearly someone who thinks about problems, and how to solve them. He’s intelligent and is someone who’s not afraid to tell someone the cold hard facts. He’s also coming across as someone who can be rather unpleasant at times, I imagine, on the other hand I would gladly grab a beer with him and talk about how StarWars is shit.
Yes, of course he was branded a big fat obvious scammer from the moment he let himself appear on-screen and was declaring to not be a maximalish-like bitcoin fanboy anymore.
The group that immediately banded together to gangbang him with the “scammer, scammer”-mantra was almost furious.
How dare anyone who was one of “theirs” (bitcoin maximalists) start a project NOT serving bitcoin directly! “Rabble Rabble Rabble”.
It was almost comical to see the reactions. Often without even knowing how the project worked. Some of them at least read the HEX website, others just repeated what they saw on twitter and didn’t bother.
One sad example I think, was Peter -pet parrot- Mc Cormack, who has the podcast ‘what bitcoin did’. He jumped up from his coach he slept on, and went on to Richard’s stream to repeat “you’re a f*cking scammer” over and over again until he ragequit the stream.
He admitted even about not knowing how the HEX project worked or not having done any research apparently.
Because: you don’t research a scam. (in fact, research is a scam as well,… by all probability:)
Well… ok. Strange modus operandi for a podcaster / journalists in my opinion. Not only didn’t you bring any information to the table, the man acted like a 5 year old child that had to shut down his tablet.
I unsubscribed from his podcast,… a cast that lost its appeal anyway for a few months now, as he simply caters to his sponsors and interviews people that fit that narrative. His mask fell off big time, he’s just another scamophile.
A person who’s probably aroused or fund of calling people a scammer by lack of real content (unless putting a microphone under your sponsor’s nose is enough).
When I sent him a tweet about that, he replied with a screenshot of the number of listeners to the cast. Like that has anything to do with the discussion. (I don’t care how many people listen your cast man. You still acted like a complete goof). If the number of downloads is his only metric, then he’s doing well. I actually made some recommendations for that podcast in the very very beginning when he started out. I’m deeply sorry about having supported that “scam”. He turned honest podcast listeners who wanted to know more about bitcoin, into ref-link clickers and scamophiles.
Which is a great business model of course. Most of these streamers and casters want you to believe in bitcoin, put on your blinders (They’ll sell them to you on their online shop, next to their 60 page amazon books an underpaid ghost writer spewed out, and coffee mugs with their logo.
If they would sell a coffee mug with the text “you’re a scam” I would buy it and walk around with it at the UnConfiscatable conference. :)
By the way, the main man Tone Vays, I respect, for his knowledge and insights in economics, I really do view all his videos..,and most of the time he’s right I admit it. When he calls out a scam, he’s right. The problem is, the % of false positives will go from zero to 1 at one day Tone… it will.
He’s ok in my book, at least he has the knowledge and the track record, the credibility. Other than Tone himself, the bad of parrots, irritating personalities and borderline scammers (who all got in around 2014 or later btw) is staggering.
The bitcoin and cryptospace has its problems, but if scamophiles and scammers are the majority, it might be time for something new, fresh and innovative, something with people behind it with marketing experience, insight and a level of facts behind them. I think Richard is such a person. But what would I know. I’m not part of “the crew”, I’m not playing poker. I’m just a dude that loved the bitcoin tech and idea.
I wish Richard and the HEX team all the best. It’s a decent try at programmable money as far as I can tell. Nothing is perfect however. I guess when he really would try to run away with that ETH in that one main address, he could. But he won’t. The same with Satoshi and his massive BTC supply.
The same with XRP. There are so many possible exits cams. Life itself is an exit scam. I like to believe in people and projects. I know that gets you burned sometimes. I take that risk.
I you like to join in with HEX, follow this link and earn 10%.
It’s better than be a steak-eating sourpuss calling everyone a scammer holding his bitcoin tighter than an Italian waiter’s cat.
It’s highly experimental as it’s a brand new thing in a brand new space.
I wouldn’t recommend investing any real money in anything anyway (be it subscriptions to crappy podcasts, seats at a conference, expressionist paintings, condos in Luxembourg, or buying HEX, Litecoin, Gold, ARK, Golem, ETH or bitcoin).
Do your research! But please, do it YOURSELF, … don’t be a McCormack.