Today we'll take a look at something very fascinating named Capitalist Exploits. What is Capitalist Exploits? Who is it for and might it be something for you? These are some of the main questions this quick review will assist you answer! Product: Capitalist Exploits Website: www.capitalistexploits.at Owner: Chris MacIntosh Price: Free membership Who is it for: Investors from all backgrounds Overall rating: 4.9 out of 5 stars (4.9 / 5) What is Capitalist Exploits? Capitalist Exploits is, in short, a popular e-newsletter that has a subscriber base of over 20,000 investors, hedge funds, professional cash managers, and many other clever investors worldwide. It presents you with insider tips and additionally international buying and selling “signals and calls” that you might choose to use yourself to maximize incomes potential, and more importantly reduce your risks of loss. The carrier is all info, there is no software that will exchange for you or anything like that. You are going to have to open your very own brokerage account to perform trades that are counseled to you. Capitalist Exploits Reddit - Details The service is incredibly praised by revered and very successful buyers and has also been featured in Business Insider, Market Watch, etc: It is a special service amongst the many “similar” services out there, however, Capitalist Exploits separates themselves from their friends with their “investing service constructed for this moment in history” approach. Simply put, their carrier is providing a answer to the need for seeing thru the “unstable” times we are in, with political and financial destruction between nations, and to know what strikes need to be achieved in order to not get misplaced in the financial storm… Visit Capitalist Eploits website here Who is the owner? For these of you who do not know, Chris is about as legit an investor as you can get. Here’s his story in 6 bullets:
Came from a humble history in South Africa
Paid his way through a regulation degree in London by means of working his way up an investment financial institution & trading Started a real property business on the facet which quickly surpassed his revenue from the bank and gave him extra capital with which to trade (he was once 21 at this time!)
Settled in New Zealand, built up any other real property business that he bought just prior to the 2007/8 crash, at a 64x return on investment
Started a task capital fund, invested $35m into early-stage companies from round the world
Sold that, and started a fund, and opened up the lookup he was doing to readers of his weblog – this is the Insider subscription.*
He is one of these rare cash managers that are entrepreneurial, he’s one of the sharpest guys you’ll ever meet, and he has one hell of an impressive network. The actual deal. Not some manufactured guru, the likes of which litter the internet everywhere. How does it work? In short, the Capitalist Exploits internet site is a meeting area for investors, below is an precise excerpt from the About page on the website: "So on this website online you will find some of the techniques used by myself and these of my close colleagues, many of whom are family names in the investment business, and nevertheless others who keep a an awful lot lower profile. These are techniques which have led to my own admittedly excellent and often stunning (for me) successes. In addition I cover some of the classes learned from collective failures, in the hope that I don’t repeat them and you by no means trial them. As you can tell by way of now, I’m first and foremost an investor. My faith is that it is more necessary than ever to keep our eyes open to possibilities all over the world in order to succeed in the difficult economic and political surroundings we live in. My funding agenda is very simple: to find a domestic for my capital to earn the best feasible return." Products and Services offered? First of all, there is a lot of free info for participants to take part in, and the membership is free. SIGN UP FOR THE FREE NEWSLETTER HERE However, if you favor to go deep and potentially be very profitable then there are 2 predominant services presented to you. Insider and Resource Insider, which is a service for extra sophisticated traders who want the great deals that exist in the mining and metals space. The free fabric consists of things like: Consistent evaluation of asymmetric possibilities to help you navigate the very distorted markets of today Different hyperlinks to related buying and selling services (recommended brokers, readings and how to create offshore entities, etc. And greater supporting and academic material. Join for free - you can upgrade any time. The INSIDER material consists of matters like: Trade Alerts (Get email and/or SMS indicators on “Hot trades” that the pros are doing so you can do the same Existing Portfolio (A listing of all “buy-rated” alerts and data on when the service is closing the trades). Investor Forum (Connect with like-minded in the insider chat room the place more than 450 individuals are active. Newsletter (One time per week you will get a review of the precise trades and opportunities the insiders are searching at, there is also some bonus pointers shared to you here. Live Q&A – Live webinar with Chris where you get the threat to ask your questions live Video Insights Database (Get access to over 300 movies that answer questions on investing. Educational Resources (A vast selection of beneficial reports and step-by-step courses on different alternate topics from A-Z (Includes Bitcoin trading). Access to Guru (The identify says it all, this is your customer provider function that approves you to get access to Chris and others in the staff. The membership charge is $1,575 per year as lengthy as you want to continue to be a member. The RESOURCE Insider material consists of matters like: Service targeted for permitted investors with at least a internet worth of one million dollars. Access to the most thrilling private deals in mining and energy gold, uranium, you name it! Here you will get all kinds of commodities and resource possibilities delivered to you. Private Placement Deals (You will be provided with at least 10 personal placement investment choices per year, each deal will have a minimal investment vary between $2,000-$10,000). Insider Ideas (Get access to a lot of economic and technical research, bonus stock picks, special content in popular and site go to reports. Networking Opportunities (Make connections with like-minded, and when you are part of a neighborhood of people like you, authorised investors with comparable goals then you acquired a new network that is accurate for all involved). Access to the service specialists (As with the Insider membership you got direct get entry to to both Chris and Jamie Keech, the two provider gurus. They promise that members will see fantastic benefits from them each and connect with their networks as well. The membership charge is $3,499 per year for as lengthy as you want to remain a member. 30 Day FULL Money Back Guarantee. Yes, that is right, you are backed by a full, no questions requested guarantee. So, if you for some reason would now not be happy with your membership and carrier you get you will get your full investment again with no questions asked. That is how confident Chris is that you will recognize the service. This is, of course, a big plus (at least in my book) and some thing that I respect a lot, as many comparable services do now not offer this kind of guarantees. It really says a lot about the great if you ask me, as the owner (Chris) is very confident, and stands at the back of his own product to a hundred percent. Is Capitalist Exploits a Scam? So, is Capitalist Exploits a Scam? No, of direction not, it is not a scam. It has a actual physical proprietor that doesn´t hide, but as an alternative stands behind his product to a one hundred percent and that is almost constantly what separates a scam provider from a real and legit one. Capitalist Exploits is not only a legit service, however it also looks like a very good one. This leads us to what their customers have to say about them: Reviews, ratings, and complaints on Capitalist Exploits It is always sensible (and recommended) to look at what the most ordinary and trusted evaluate and rating websites have to say about something you are involved in, to get a better ordinary picture of the excellent of the particular service. Sign up for the free newsletter: CLICK HERE.
I will tell you exactly what is going on here, this is critical information to understand if you are going to make money in this space. How prices work, and what moves them - and it's not money invested/withdrawn.
/edit: Hi /all. While I have your attention, I want to take 5 seconds of your time and bring some exposure to something that is threatening our existence as the human race. If you aren't interested, please skip down to the main article. I'm talking about finding a way to live sustainably on this planet, regenerative agriculture, where we get our food from, and how we can make sure that our kids and grandkids have something left once we leave. Please consider reading up on Permaculture, sustainable living, Forest gardening, Backyard Chickens, etc. Consider following what I did and do it for yourself. This all used to be a useless lawn. Bored for a night? Go watch "Sustainable" on Netflix. Look into people like Geoff Lawton, Mark Shepard, Sepp Holzer, these people are going to save us. Want to make a small change yourself? Grow a tomato plant on your balcony in a pot. Reduce transport of the tomatoes you eat, and make ~$50 per plant in saved money. Want to do something bigger? Plant a fruit tree in your backyard. Maybe two. Maybe a raspberry bush. You are now part of saving the human race. If everyone reading this planted a fruit tree, or even some wild flowers, we could save the bees. While you are at it, planting a fruit tree has been shown to be one of the best investments on the planet. There's pretty much no investment on the planet that is more financially lucrative (while still being nearly bullet-proof safe) than planting a fruit tree. You can get a tree at an end of sale auction for literally 5-10 bucks, and that tree will produce THOUSANDS of dollars of fruit for you in it's lifetime. Go spend $200 bucks at an end of season sale, plant 10-20 trees (if you have room), and that $200 will be worth tens of thousands of dollars of saved money. Do it right, set it up right and it's almost no work because you offload the work to nature - as it has done for the last few billion years. Go learn how, let me show you how. If you do it right, it's zero work after you have planted and wood-chipped, and all you do is pull dollars off a tree. Original post starts below. I apologize for the shilling of Permaculture, but I think loss of topsoil will impact us all if we don't reverse it soon. We need soil, we need bees, we need food. We need to stop buying December Bananas in Canada. We need to start supporting local permaculture sustainable farms. We need to do this or we may not make it, and our grandkids stand no chance. I also expended the "now what happens" section, to explain how these pullbacks are a good thing, make crypto more stable, and why we keep seeing larger ceilings after every pullback... this stuff is really important for you to make money on this thing, if that's your goal.... I've made a similar post in a few spots, and this is something that is absolutely critical for people to understand... what impacts price, and what is going on lately. Price has only a very minor correlation with money invested, and a major correlation with opinion. ... and Humans are an emotional bunch. So what drives price of any commodity, crypto, gold, pizzas, whatever? The money invested in it, right? Kind of, but not really. What if I told you that you could theoretically raise bitcoin from $15k to $20k by spending $1, and lower it from $25k to $1k by spending the same $1? Crazy right? AN EXAMPLE This is going to start out slow, I want to make sure I get everyone on the same page before I pick things up and lift the curtain. Stick with me here.... This is an example to help illustrate why prices aren't driven by money invested, but rather consensus and opinion. Lets imagine the following exists (we will use bitcoin as an example, but this is how everything on the planet works) Lets say Bitcoin is currently priced at $10k (the last sale). From $11k to $99k, every $1k there is someone with a sell order of 1 full bitcoin. From $9k to $1 dollar, every $1k on the way down there is someone with a buy order of 1 full bitcoin. So, right now if you wanted to buy bitcoin you have several options... meet the lowest seller's price of $11k, or, put your own buy order up, above the highest buyer's bid order (overcut them). If you decide to just place an order, the price doesn't change. If you decide the buy the $11k bitcoin, now bitcoins value is $11k, with a new lowest sell offer of $12k, and a highest buy bid of $10k. Someone else comes in an overcuts the buy bid and puts 1 BTC for sale for $11k. No trades are made until someone matches a buy/sell. Okay, that's kindergarten stuff, most people here understand that. So how much money drove the price up in this situation? $11k, and BTC price raised 11/10, 1.10, or 10% from the last sale. Now the entire marketcap of BTC raised 10% (last sale multiplied by circulating supply). So it takes $11k to drive a 10% increase, right? Not at all. Lets look at what happens when news is released. News comes out that Warren Buffet thinks bitcoin is a scam, a bubble, and he wouldn't touch it with a 10 foot pole because he only invests in things he understands and he doesn't understand crypto. People panic everywhere, and believe "this guy is smart, I'm overvaluing this thing". Suddenly people don't want to buy this scam anymore, and the buy orders for $11k, $10, and $9k are taken down. At the same time, the people wanting to sell start to panic and just want out. The guy at $32k (who just had that offer up "just incase it moons") drops down to $11k sell order. The guy at $12k, who was the lowest, now undercuts him to $10k. The other buyers see the sellers undercutting and think that if these people want out, why am I buying in. The $8k guy pulls his offer, and so do the $7k, $6k and $5k guys. The highest offer is now $4k. The sellers panic further and the $14k guy undercuts the $10k guy and puts up a $9k sell. The $15k, 17k and 11k guys all see this flurry of panic and now a storm undercutting is triggered, to $8k, $7k, and $6k. The $8k order pulls his again and goes down to $5k. The price on the buy and sell orders has moved around a ton, but no sales have actually happened yet. Technically, BTC is still "worth" $11k, and the market cap reflects that. All this horseshit has happened, and it only happened in 10 seconds, but the price hasn't moved yet. The $27k guy wakes up and checks his phone. He had a $27k offer just incase the price moved also, and he also only has a tiny infinitesimal fraction of a BTC. Well, he decides "he's out" and fills $1 worth of the part of the $4k guys buy offer. The latest price information is now updated, and BTC fell from $11k to $4k price per BTC with the movement of a single dollar. This is exaggerated example, but this is what moves price. Not money in vs money out. The ONLY THING that moves price is perception. OPINION FLOW AND NOT MONEY FLOW Now the above example only happens if everyone simultaneously believe the same thing... this the asset they are holding is a steaming turd. What happens in reality is there's no black and white, it's shades of gray. It's flow in vs flow out. But again, not flow MONEY, but rather OPINIONS. If 66% of the holders of something all of a sudden unanimously decide that their asset is overvalued, then they panic sell. Even if 33% of the people decide they are going to buy up as much as these panic sellers sell, if the panic is strong enough, and they are slitting eachother's throat to sell, then the buyers just happily sit and let them do that, and time their buys in. Very little money has to actually change hands in order for this price to crash, all that matters is the FLOW OF OPINION has to be swift and violent, and in majority. The sellers will leapfrog eachother on the way down, faster than the buyers scoop up their sales, and the net result is a crashed price. Note, this happens both ways... fear, uncertainty and doubt (FUD) as well as overhyped FOMO (Fear of missing out). So now what happens? Time goes by and all holders opinions of their asset hasn't changed. They still think it's worth $11k and they got great deals scooping up what these sellers were selling. The weak hands have left the market and have been replaced with holders. Overall, now a higher percentage of holders believe in the product they are holding and are unwilling to sell for the panic prices of the last week. Panic sellers were also replaced by new money, people who have wanted in for a while and are now in on their perceived ground floor. Also, people who bought BTC at $1 ten years ago and have been looking for an exit to cash profits have now been replaced by either long term holders, or by these new people who are thrilled to have finally entered, and they are looking to hold long. So what happens on pullbacks? The number of people waiting to jump off the ship has decreased. The new ground floor is established. Are we done? Who knows, this could go on for another year, but what matters is that people who want off are getting off and people that want on are getting on. People who have panic sold and never believed in this in the firstplace... people who have wanted out for 10 years... they have been replaced by people who are now getting in on THEIR GROUND FLOOR, and are going to be holding long. The market is suddenly increasingly more stable today than it was yesterday, even though prices are down. This is a good thing. This is why crypto keeps bouncing back from pullbacks and reaches new higher ceilings and floors each time. Old money who wanted out, and new panic holders, they are gone. They are replaced with adopters, holders, believers in this technology. These people aren't selling anytime soon, because they believe that this thing is going to revolutionize the world. Every crash brings more of these people in, and removes more panic sellers out. Moving forward Now news releases start coming out about how stock ETFs are being created, NASDAQ index funds, bank support, government support. Companies are using this tech, and companies who use blockchain for transportation are putting non-blockchain companies out of business. The people on the outside looking-in feel they are missing out. They now start coming in and buying. They start overpricing eachother on their buy orders, and eventually it gets close enough to a sell order that someone decides they are just going to meet the sell price. The sale goes through. Sellers (HODLERs) see this action, and they start pulling sell orders off the table almost as fast as they fill. Sure some trades go through, and incoming money is driving the price up as market orders are filled. But what's also happening is people are seeing this flurry of volume, and sellers are pulling sell orders and placing them higher. Junk coins and pump and dump scam coins are dying by the millions. In their ashes, good solid technology projects whose coins have fundamental economic reasons for growth, these are rising. Corporate partnerships continue forming. The real world continues to create actual use cases. Companies start storing more and more corporate information on blockchain. Public companies use blockchain to store scientific research (See Canadian Research Council announcements), and blockchain acts as a Library of Alexandria. People can travel out of country without any monetary exchange, using their chosen cryptocurrency to buy the things they need abroad. The world is slowly actually USING this technology. Money is coming in, but more importantly, OPINION IS CHANGING. Literally nothing could have happened in terms of fundamentals, partnerships, etc... this can all be driven entirely emotional, so long as it's wide-spread and strong. Infact, the market could THEORETICALLY rebound in this way from $4000/BTC to $1 MILLION PER BITCOIN by the sale of ONE PENNY. $4000 sound low? Does that number make you uncomfortable? We may go that low. We may not. If we do, I'm not panicking and selling, I'm buying more. SO WHAT HAS HAPPENED IN THE LAST FEW MONTHS? and where are we going? A lot of new money has come in from Nov-Jan, and they don't really know what they are investing in. Sure some of them have done great research and are smart investors but most people aren't and isntead they are buying Symbols and Names and trading on speculation. They are treating their favorite coins like a sports team, and will follow them irrationally off a cliff. These new people came in and invested in cryptocurrency because their OPINION was heavily influenced in Nov, Dec, Jan, from media. They saw this money making machine called crypto. They were willing to pay huge, ride the wave up, keep buying, etc. They were "ground floor adopters" and were going to get rich. They outnumber the old money by A LOT. Their OPINION MATTERS. It matters the most. To keep this in perspective, they are also a VAST MINORITY of "new money" that will enter the game in the next decade. This cycle will continue over and over and over. Their opinion rose nearly unbounded and price rose accordingly. Market cap rose from 10B to 750B, and it could have been VERY LITTLE actual money that did this. How much did it need to be though? Literally ONE PENNY, theoretically. All that matters in moving price is MOMENTUM OF OPINION. I believe it has been estimated that as low as 6B USD was responsible for the bull rush. These people then started hearing "Bubble", "Scam", Fake news about governments banning. They don't understand how technology wins, always. Crypto is beyond government control. If they could have stopped Bitcoin they would have done it already. WHO IS DRIVING ALL THIS? Most investment opportunities go first to "accredited investors". You need to have multimillions in order to get in on the ground floor for most stock IPOs, and we're seeing that start to happen with coin ICOs. Bitcoin was a joke for the first few years, while lunatics picked it up. At this point, it was really too late to get in "early", and who would have wanted to anyways, it was all still a joke. So Wallstreet, banks, governments have generally watched on the sidelines as average Joes who were crazy enough to be early adopters and toss $100 on fake internet money slowly became millionaires. Not only that, but the idea of blockchain started to become understood. The power and value in it became understood. Not only as a way to track "monetary value" but for many other applications as well. Platforms were created, business uses brainstormed, products started being made. This thing started taking off, and wasn't a joke anymore. But regardless, big money wasn't in on the ground floor. They have stakeholders opinions to think of, and what do they say to investors when they lose all their money on magic internet points? But they have woken up now. This thing has "popped" many times now and keeps recovering. This thing won't die. could they have been wrong all along? If they want in, how do they get in? They are no dummies, they have been controlling the world their whole lives? Look at the media experiment that Trump is doing? He is testing just how we work... you can do literally anything and we remember it for like 30 seconds, until the next news story comes out. We change opinions very easily. We are swayed very easily. We are their puppets. Media controls the world. They know their way in. They have ONE WEAPON against cryptocurrency. YOUR OPINION OF IT. And they know it. Media. That's why FUD is so powerful and needs to be respected. It's why we need to read more than titles on news articles. We need to question what we read, whether it's good news or bad news. We need to think about "what are the motives of the person saying this to me". Does the government have a conflict of interest when they state that crypto is gambling? Do they have skin in the game? What about wall street? Does WEISS ratings possibly have incentive to come out with poor ratings? Do banks have incentive to lock accounts in order to "protect" customers from "unsafe investments" when their entire business model revolves around holding as much of your money as possible and making money off it? Do you think banks have any super secret hidden interest in preventing you from storing your money elsewhere? I'm not sure, maybe you can critically think about that. Just understand that this goes both ways. When crypto is booming and Fox news is showing people how to buy $4 ripple on prime time, you may want to start putting in some stop loss orders. When the suicide hotline is stickied at the top of /cryptocurrency and everyone is panic selling, you may want to start picking up some firesale deals. So, the question is this... Is crypto undervalued or overvalued at it's price today? Where is the price going long term? I'm not talking about it's use case, I'm talking about in the court of public opinion, where is THAT going? Because THAT is what is going to drive price in the future. Without a crystal ball, this is of course impossible to know. Do your own research and form your own opinion. It could very well be that the technology having a use-case will in and of itself drive opinion, and thus price. But make sure you understand that it's not the technology itself, it's not the value of the business itself, it's not the use case itself that will drive price, it is the publics OPINION of that thing which drives price. They are intertwined, but they are NOT the same thing. TLDR: VERY VERY little money has to move around in order to swing prices drastically, up or down. Money in and out doesn't drive price, OPINION does. How do you let the news you read impact your opinion?How are you being played (on both sides, shilling and FUD). Something is only worth what people think it's worth. Often that's based on reality, value, business, money, but often it's entirely emotional. Structure your portfolio in a balance, intelligent way, using risk methodology.. Invest money you are willing to lose. Support legitimate technology and teams who are actively driving their product to completion, coding, and marketing. Stop trying to make money overnight in pump and dump scams, or pyramid schemes. Every day, take one coin, do a deep dive on it, learn it inside and out. Look into their team and their past. Do that every day for a year, and you just learned 365 coins inside and out. Ask yourself the following key questions: Have those members consistently jumped ship on previous projects? Is that where you want to invest in? Is their team capable of executing on their vision? Are they trying to solve world hunger, and their team is a few 16 year olds in a garage? How active is their github? Are they adding chunks of code regularly, or is a ghost town? Are they marketing their product at all? Or is marketing the only thing they are doing? What are the economics of their coin itself? Is it required to be used to gain access to their technology? Are there burns? How premined is it, and what portion do the founders hold? What about their vision? Are they trying to solve a problem that needs to be solved? What are the economics of that problem and how much money does the solution potentially save clients? These are all questions you should be asking when you give your money to someone else. We're a lot more stable than we were - a correction was bound to happen. Too much early money wanted to cash in profits. These people have been replaced by new money who is holding on their own ground floor. The whole industry in general is still in very early stages. Rest assured that anyone reading this is still very much an early adopter. Just make sure you are investing in actual technology, and supporting capable teams, and not buying air. Buy the Googles and Amazons of Crypto, not the pets.com or flooz.com of cryptos. Happy investing everyone. /EDIT: some have asked to donate some crypto. Do me a favour instead, sub to my YouTube channel (link at top) watch my videos how to get started properly, and plant your own trees and establish food sovereignty for your family and your community, and help save the bees, save our topsoil, and sequester carbon to reverse global warming. My goal is to get a gardener back into every home on the planet. THAT is how we heal this world.
Download their software and run it (this used to be "????")
Once you reach 0.002 BTC (about 7-10 days on my GTX 1060 + i7-7700k), you can transfer your earnings to Coinbase for free, and cash out. CB does have fees for conversion to Fiat (cash) and your percentage goes down with higher amounts. So don't cash out just because you can. Cash out when you have enough to buy something. Also a note on taxes. I'm going to keep this simple.
If you cash out regularly, treat it as income on your taxes.
If you hold it and cash out after a year, treat it as a capital gain (generally, a lower tax rate for most)
If you buy something with BTC, this is the same as cashing out, for tax purposes. Treat it as income.
Hi folks. I just want to thank those of you in advance who trudge through this post. It's going to be long. I will try to have a TLDR at the end, so just scroll down for the bolded text if you want Cliff's Notes. Disclaimer: I'm a miner, sort of. I casually mine when I sleep/work, using my existing PC. It doesn't make much. I don't buy hardware for mining. But, I still wanted to post this disclaimer in the interest of fairness. As we all know, cryptocurrency mining has had a devastating impact on the PC gaming ecosystem. The demand for GPUs for mining has lead to scarce availability and sky high prices for relevant hardware. But even hardware that is less desirable for mining relative to their peers (GTX 1050ti, 1080) has been impacted. Why? Because when gamers can't get the 1060 or 1070 that they desire, they gravitate en masse towards something that their finances will allow them to settle for. But for all that we know about mining, there's still a LOT of myth and misinformation out there. And I blame this on the bigger miners themselves. They have a few tactics they're using to discourage competition. Now, why would they do this? Simply put, the more coins are mined, the harder the algorithms get. That means the same hardware mines a lower rate of cryptocurrency over time. If the mining rates were to get too low before new hardware (Volta/Navi) could be released, it would cause a massive depression in the cryptocurrency market. Most hardware would become unprofitable, and used GPUs would flood the market. Miners want to retain profitability on current hardware until the next generation hardware is out. So, what tactics are they engaging in? Silence and manipulation. On the former, the bigger miners don't usually participate and contribute to the community (there are exceptions, and they are greatly appreciated). They're sponges, taking whatever the community provides without returning much to the community. On the latter, they post here, in this very sub occasionally. And they continue to push certain types of myth/misinformation to discourage other users from mining. And why, of all people, would you discourage gamers from mining? It's because of the competition point mentioned above. If a massive number of gamers entered the cryptocurrency mining market, it could trigger a mining apocalypse. There's an estimated 3-4 million current-gen GPUs being used in 24/7 mining operations by dedicated miners. Now, how many current-gen GPUs are used by gamers? I'd bet at least an equal amount. But what about Maxwell and Kepler? Or all those GCN-based GPUs up through Fiji? Bottom line is that when you factor in all available profitable GPUs, gamers drastically outnumber dedicated miners (yes, Kepler and GCN 1.0 are still profitable, barely). And if a large number of those users started casually mining as I am, the following would occur:
difficulty would increase, lower output (profitability) for everyone involved
Coin creation would initially accelerate, and with no massive change to the market cap, that means per-coin value drops
when you factor in slower coin generation for individual miners, coupled with lower coin value, you get...
ROI length increase on GPUs, depressing their values, which would lead to lower prices and higher availability
Oh dear, someone just spilled the beans... So naturally, misinformation needs to be spread. If dedicated miners can keep the uninformed, well, uninformed, they're less likely to join in. And I've seen variations of the following misinformation spread. Here's the common tropes, and my rebuttal.
Mining on your GPU will cause it to die prematurely.
I really wish we had a Blackblaze-equivalent for GPUs used in data centers. NOTHING punishes a GPU like full-time use in a data center. Not mining, not gaming, and not prosumer usage. And these companies pay thousands per GPU. Clearly, they're getting solid ROI for their use. But let's talk about mining specifically. For my GTX 1060, I limit power to 80% (96W). Fan speed is at a constant 40% (that's in the same ballpark as your blower-style GPU in desktop usage). Temperature is a constant 75°C. That's gentle. Gaming hurts it more (start/stop on the fan, varying temps, quick rise at the start and fall at the end, varying loads, etc.). And if GPUs did prematurely die from mining? One miner insisted that I'd never see an ROI on my 1060 (which cost me $240) because it would die before I could earn that amount. Yea, GPUs routinely die before hitting their ROI. That's why miners are buying $200 GPUs today for $500, or $400 GPUs today for $900. Because they don't generate enough to cover their MSRP, let alone their current gouged prices. /s Common sense would dictate that miners are profitable, or they wouldn't mine. Therefore, GPUs are not dying prematurely. So, don't fall for this one. And yes, I've seen those photos of the 20-card Sapphire RMA. Mining data centers have THOUSANDS of cards. Just do an image search for a GPU mining farm. This is well within typical acceptable defect rates.
Power costs are too high for mining to be profitable.
Warning! Danger Will Robinson! Math ahead! Where I live, electricity ranges from 9.5 cents per kilowatt hour (kw/hr), to 10.1 cents per kw/hr. Let's round to 10 cents. Power measured at the wall from my surge protector, while mining, shows just under 200W. (That's includes my tower, monitor, speakers, a dedicated NAS, a router, and PSU inefficiency). That also includes mining on both CPU and GPU. At 200W per hour, that's 5 hours to hit 1kw/hr. That's 5kw/hr per 25 hours, so let's call it 5kw/hr per day. That is $0.50 per day total from that outlet (and most of this stuff would be running anyway). That's not even "over my existing costs," that's just out the door. Bottom line is that electricity is cheap in many areas. The USA national average is currently ~12 cents per kw/hr (RIP Hawaii, at 33 cents). For most of the developed world, power costs are not prohibitive. Don't fall for this. If unsure, check your rates on your bill, and ask someone who can do math if you can't.
Casually mining isn't profitable
There's a big difference between "profit" and "getting rich." I have no expectations of the latter happening from what I'm doing. But "profit" is very much real. It's not power costs that derail profitability. It's all of the hidden fees. Many mining programs take a cut of your output. And then a cut to transfer to a wallet. And then there's a fee to transfer to an exchange. Oh, did you want to then convert to cash? We can...for a fee! The trick is in finding outlets that allow you to minimize fees. I give up 2% of my output, transfer to my wallet for free, can transfer to an exchange for free, and don't plan to cash out every time I meet the minimum threshold (higher fees!). I instead plan to cash out at extended set intervals to minimize those fees. NOTE: I am deliberately not listing the provider(s) that I use, because I don't want to be accused of being associated with them and/or driving business to them. I want this post to be about the big picture. But I will answer questions in the comments, provided the moderation staff here has no objections. Bottom line is that with a mid-range GPU like mine, and without the benefit of CPU mining (it's just not worth it without a modern Core i7, or Ryzen 5/7), my GPU alone could make me ~$60-$75/mo in profit at current rates. Think of how many months/years you go between upgrades. Now, do the math. Needless to say, I'm now regretting not going bigger up front :)
It's too complicated for a casual miner, so don't bother
The old "go big or go home" saying, and it sort of piggy backs off the last one. And there is some truth in this. If you're going to be a big-time miner, you need mining programs (often dedicated to each algorithm and/or currency), multiple wallets, access to multiple exchanges, etc. It's daunting. But for the casual, you don't need that. There are multiple providers who offer you a one-stop-shop. I have one login right now. That login gives me my mining software, which switches between multiple algorithms/coins, gives me a wallet, and lets me transfer to an outside wallet/exchange. My second login will be the exchange (something that lets me convert my currency to local cash) when my balance justifies it. Given the recent Robin Hood announcement, I'm biding my time to see what happens. This space is getting competitive (lower fees). Bottom line, it's easier now than it ever was before. As I told someone else, "Once I finally started, I wanted to kick my own ass for waiting so long."
New GPUs are expensive, but if you just wait, there will be a buttload of cheap, used GPUs for you!
Miners learned from the last crash. There were two types of miners in that crash: those who sold their GPUs at a loss, and those who kept mining and made out like bandits on the upswing. Turns out, cryptocurrency really does mimic the stock market (for now). We're going to look at Bitcoin (BTC) to explain this. No, miners don't mine BTC. But, BTC is commonly what most coins are exchanged for (it makes up roughly one third of the entire cryptocurrency market). And it's the easiest currency to convert to cash. So, when BTC rises or falls in price, the rest of the market goes with it. That includes all of the coins that GPU miners are actually mining. In January 2017, when the current mining push started, BTC was worth roughly $900 per coin. It's now worth roughly (as of this post) $12,000 per coin, down from a December high of over $20,000 per coin. So yea, the market "crashed." It's also more than 12x the value it was a year ago, when miners dove in. You think they're going to bail at 12x the value? Son, I've got news for you. This market needs to truly crash and burn for them to bail (and that's where you come in!). So, there's not going to be a flood of used GPUs from a sudden market crash. Again, they've learned from that mistake. Used GPUs will enter the market when they are no longer profitable for mining, and not before. Dedicated miners have lots of room for expansion. When Volta comes out, they're not selling their Pascal GPUs. They're building new Volta mining rigs alongside the Pascal ones, making money off each of them. Conclusion/TLDR:
Mining is subject to diminishing returns. It gets harder over time on the same hardware.
PC gamers joining the market en masse could trigger an apocalypse in terms of difficulty
Due to this, it benefits pro miners to spread misinformation to discourage gamers from entering the mining game
Casually mining on your existing system is safe, easy, could help you pay for your next upgrade(s), and could also hurt the mining market in general (better availability/pricing on GPUs)
No, there's no flood of used Pascal/Polaris/Vega GPUs around the corner, as those are HIGHLY profitable even in a depressed market
Second Conclusion - Why do I (jaykresge) personally care? Simply put, I'm disgusted by this. I was excited about flipping a few friends from consoles to PC gaming. I'm now seeing a reverse trend. One friend is gaming on an RX 560 waiting for prices to hit sanity. He's running out of patience. Others have bailed. I view our dormant GPUs as the best weapon against cryptocurrency mining. Destroy it from the inside. It's win-win for most of us. Either we earn enough for more upgrades, or we depress pricing. Something's got to give. In other words, y'all f*ckers better start mining, because I want Volta to be reasonably priced when it launches so I can get an EVGA x80 Hybrid to go with a G-Sync monitor. And if this doesn't happen, I'm going to be cranky! Seriously though, thanks for reading. Bear with me as I go over this a few more times for typing/grammar. And I look forward to your comments.
I've written the following article and plan to self-publish it. Before doing so, I welcome your coord, comments and corrections. There are some smart people here and your feedback will make it better. Fire away. Thanks. The Jekyll Island War “One stone crumbles and another takes its place and the temple holds its form for a thousand years. And that’s what the Iron Bank is, a temple. We all live in its shadow and almost none of us know it.”
Three months ago in crypto-time, or three weeks ago in real-time, the Bitcoin Barbarian was humming along. Out for a stroll outside the gate. Pocketing $5000 and new all-time highs. The media was writing stories like, “Central Banks Can’t Ignore the Cryptocurrency Boom," and, "Is it too late to invest in bitcoin?." Then, suddenly-- "--Bitcoin is a fraud!""Bitcoin is a bubble!"Traders are “stupid.”"Adoption... is not going to happen." Wait. What? Where did that come-- “--China *BANS** bitcoin!”* THUMP WHACK! Crypto got mugged. JPMorgan Chase did it. Then, just as crypto sat up to see what smacked it, the Red Dragon karate chopped it again. The “China bans bitcoin!” blow was so fast and hard to the head that we’ve already almost forgotten the “Bitcoin is a fraud!” FUD. But hang on. Time out. Go back. Rewind the news cycle a few weeks. Because that fraud news may have mattered. Because it may not have been news. It may have been an attack. Or a precursor to a bigger one. A thunderclap to a coming storm. How often do we see that much negative, concentrated crypto coverage in 24 hours? JPMorgan Chase CEO Jaime Dimon launched the first strike, then his Global Head of Quantitative and Derivatives Strategy followed through. But it wasn’t just JPMorgan. The mainstream media machine ran and replicated their comments, then piled on with “bubble! Bubble! BUBBLE!” stories from various experts. Negative narrative after negative narrative, in Fortune, Forbes, CNBC, Business Insider... The stories were broad, deep and maliciousness –- Dimon even insulted his own daughter’s intelligence.The comments felt personal and the articles almost seemed… Coordinated. I doubt it, because they appeared reactionary and weren’t nuclear. Something got under Dimon’s skin and he lashed out. But this tilted his hand and raised an interesting question; What happens if Banks DO launch a coordinated campaign against Bitcoin? Would they? Maybe, if they felt threatened. In 1910, six politicians and bankers, including, ironically, sort of, a representative from JPMorgan, held a secret meeting at Jekyll Island, Georgia. It was secret because what they were doing was contentious; changing who controlled money. “The meeting and its purpose were closely guarded secrets, and participants did not admit that the meeting occurred until the 1930s.” They secluded themselves for 10 days and wrote the Federal Reserve Plan, which was largely incorporated into law in 1913 as the Federal Reserve Act. This act created the Fed, Federal Reserve Notes (the standardized dollar), and America’s modern monetary system. Since then, the United States has used this system. In this, the Fed sets monetary policy and produces dollars in variable amounts at various times. Banks create more money through fractional reserve banking, and process transactions between users. It’s a closed, centralized system, because the USG, Fed and Banks control it. In 2009, Satoshi Nakamoto released Bitcoin. Like the Federal Reserve Act, this also created a currency, the bitcoin, but unlike the Federal Reserve Act, computer code sets monetary policy and miners produce bitcoin in fixed amounts at fixed times by processing peer-to-peer user transactions. This is an open, decentralized system, because no central authority controls it at a central point of failure. The central banking system and Bitcoin are two different and inherently conflicting ways of creating, managing and processing money. When Nakamoto mined the genesis block, for example, he/she/they carved a message in it that read, ‘The Times 3 January 2009 Chancellor on brink of second bailout for banks.’ This was The Times of London’s newspaper headline on 3 January 2009. The message timestamped Bitcoin’s inception, and implies that “Banks are bad, Bitcoin is better, and it’s coming after you." When Nakamoto mined the genesis block, he was the only person in the world who used bitcoins, until he made the first bitcoin transaction with Hal Finley on 12 January 2009. Then, a bitcoin was worth zero and its market cap was zero. Today, eight years later, it’s worth $3700 and its market cap is $61 billion. JPMorgan’s market cap is $334 billion. “Before the Fed’s creation, no central banking system in the United States lasted for more than 25 years.” As Bitcoin grows, it competes and conflicts more and more with the central banking system(s), because both systems fight for limited users and value. As is, Bitcoin doesn’t end until it replaces or subsumes the central banking system itself, or is outcompeted and destroyed by it. Nakamoto released a virus, or antibodies killing a virus, depending on your perspective. Cryptocurrency experts frequently say that Bitcoin and the blockchain may be as disruptive as the internet was in the 90s. But it may be more. The internet was more innovative than disruptive, and created more companies than it killed. It was a whole new thing in unexplored space that threatened private, apolitical companies, while Bitcoin replaces a pre-established thing in occupied space that threatens quasi-public, political institutions. The USG didn’t bail out Blockbuster. Blockbuster wasn’t “too big to fail.” They failed. The USG bailed out banks for a $29 trillion dollar problem they created. Bitcoin feeds on the Fed itself. Given this, if Bitcoin keeps growing as conceptualized and coded, and keeps consuming Banks’ market share, they may retaliate. Nothing wants to die in the jungle. But can they? They already have lawyers, lobbyists, marketing and money. They make money. Literally. The Fed creates a dollar from thin air whenever it wants and loans it to JPMorgan and other banks, who are allowed to re-loan it until the bank has created $10 from that $1. After creating $10, the banks pocket interest on it. They then hold most the money they created and loaned (via cash and debts). Where’s all your money that’s not in crypto or hard assets? They have it. Actually, they don’t. If everyone simultaneously withdrew their deposits, the banks couldn’t cover them, because most that money doesn’t exist physically. It’s debits and credits in private accounting ledgers re-loaned over itself several times. In central banking systems, banks don’t even have to have the actual money to have the money, somehow. But they can still charge you real transaction, ATM and overdraft fees on this money, to make more money. They hold your money and charge you to use it. So they make money, re-lend it to you to make more, and charge you to transact it, even though they don’t necessarily have it. JPMorgan said that bitcoin is a “pyramid scheme” -- compared to what, the central banking system? Side by side, which system looks more suspect; Bitcoin or the Banks? Fair question. Dimon also said that bitcoin is “just not a real thing,” but every bitcoin has hard code that exists in a ledger that anyone can check anytime anywhere in the world. Where do those nine fractional reserve dollars exist? If everyone withdrew all their bitcoin from the Bitcoin system, every bitcoin could be printed on paper with qrcodes and accounted for. If everyone withdrew all their dollars from the central banking system, the Banks couldn’t produce them. A strong argument can be made that the central banking system is a fraud, in a bubble, and that bitcoin isn’t appreciating, but the dollar is depreciating. When does Bitcoin get so big that Banks retaliate? $5,000 a coin aggravated Dimon, and China is on the war-path. Ironically, China banning ICOs and cryptocurrency exchanges may delay a coordinated attack, because it relieves pressure on the banks, and Dimon and others can point to crypto’s subsequent crash and smile smug. They’re right. They called it. The State beat Bitcoin, and the Banks have the State. But if Bitcoin recovers (again), it’ll return stronger than ever (again), and take a bigger swipe at the ogre’s lunch. How much fire-power can Banks unleash if they organize and attack? They can hit crypto with PR firms, press releases and an incoming slander storm of anti-bitcoin “news,” and they can redirect their lawyers and lobbyists to seduce Congress to create regulation, and possibly pressure the IRS to enforce it. Take the recent headlines, for example, about North Korea skirting sanctions by stealing and mining bitcoin. This is PR ammo for Banks. Banks can press this story into politicians and leverage it for regulations. Even if the regulations fail the stigma sticks and bitcoin has another bad-news headline; Silk Road, drugs, Mt. Gox, Wannacry, North Korea… Interestingly, the blockchain isn’t burdened with this branding, and may give Banks a graceful out to adopt and profit from crypto instead of attacking it. What can crypto do to defend itself from a possible coordinated attack? Cryptocurrency has the technology and truth, which speak for themselves – when heard through the FUD. Cryptocurrency makes sense. It’s technologically better. It eliminates middlemen and optimizes process, so it’s faster and cheaper. It’s also a better store of value than deflationary money, and more liquid than gold. It eats less and leaves more for everyone else. Once, for example, it took the banking system two months to wire money from my bank in the United States to a bank in Mumbai so I could buy a car. Why can an ATM in Mumbai tell me my bank balance in the United States in seconds, but it takes two months to “wire” money? Because that money passed through several regional and central banks, each of which held it for “three to five working days” for some reason and charged transaction fees. Bitcoin makes the same transaction in minutes, peer-to-peer, for pennies. Banks can’t compete. It’s not even close. The old ogre has the high ground. But sitting atop a hill makes you fat, while climbing it makes you hungry, so the ogre will have to resort to censorship and propaganda. Bitcoin’s code also protects. Because it is decentralized, it doesn’t have significant and synchronized marketers, lawyers and lobbyists like a bank. It struggles to reach consensus and act, and can’t issue press releases or send people to Capitol Hill very well. But, it has a million nodes of light. It’s everywhere and nowhere. Where do Banks attack? Who do they sue, legislate and outspend? If Bitcoin was a centralized company, the market could have already killed it, like Digicash, but it’s not, so the ogre has to fight for the first time in 104 years without some of the weapons he uses to fight with. This decentralized, diffused attack surface is part of Bitcoin’s beauty and Nakamoto’s genius. Banks, however, can still target exchanges, miners and tax dodgers. They can also poison people not yet using crypto, because Bitcoin has a PR problem that may get worse. Numerous people, born into the banking system, think the matrix makes sense, and still think bitcoin is a Ponzi scheme to buy drugs. The other day, for example, I mentioned bitcoin to a well-educated, well-read and highly paid professional colleague. “Bitcoin?” He replied, “I thought that was a scam?" Try it. Ask a few laymen what they think about bitcoin. In sum... Bitcoin isn’t an esoteric sidechain anymore. It’s not (just) techie geeks trading Magic playing cards. It’s an asset class with market share and momentum that threatens big banks, big money and big power. Where did we think this train was going? The Iron Bank is a fat ogre, but it’s got the high-ground and motive and means to fight, so the Jekyll Island War may intensify and the jekylling may be violent -- a war for the creation and control of money itself.
My journey to a quick FIRE path after unproductive 20s
Anyone else planning on FIRE thanks to Bitcoin? Don't worry this post is more than about Bitcoin, it includes all the greats - frugal living, wasted college degree, low paying jobs in my 20s, minimalism, vanlife, not even thinking about saving for retirement until my 30s, lots of debt, lots of ups and downs, and now working on a happy ending and FIRE! Note for the haters: The post is mostly about my story but does involve talking about how I am achieving a very fast FIRE thanks to Bitcoin. I’m sure my post will get a lot of hate since Bitcoin is an emerging asset which means 99% of people don’t yet understand it, and people tend to dislike what they don’t understand. Bottle that hatred up inside you or just move on. This is for people interested in FIRE journeys and doing FIRE fast, not for judging how people get to FIRE based on their own personal bias. My Story: Middle class upbringing, parents paid for college. Got a history degree, didn’t use it for anything, had no idea what I actually wanted to do for a career. Spent most of my 20s working low paying jobs. In my mid-20’s I left my home state and started moving around a bunch, living in 8 states in about 8 years. I was always frugal because I never had good jobs so never had much excess money, a very valuable lesson in money management. I think things would be totally different for me if I came out of college with a career and a good job - I probably would be the typical high spending average American. Because I started moving around once every year or so by my mid-20s, that meant I didn’t have a job a good amount of the time as I would just pick up and move somewhere, take some time to relax at the new place, then slowly start looking for a job, not the smartest thing to do haha! So the most I ever made in a year (pre-tax) before 2016, the year I turned 33, was just $17k! That was when I was like 24/25 and had an $11/hour paying job to start the year and then moved to a $12/hour paying job for more than half the year. Both my highest paying jobs in my 20’s, That was 2008, I then left that job and started my nomad ways as previously mentioned. In 2008 when I moved across country on a whim, that meant I had to get rid of most of my stuff, including my car cuz it sucked. And as I continued moving I desired having to ship less boxes each time. And so I went from being frugal out of necessity from low income, to being a minimalist out of necessity of nomadic choices. It would be another three years until a girlfriend at the time introduced me to the idea of minimalism (and tiny houses, which are cool!) so by the time I discovered that minimalism was a thing I had already been practicing it for a few years. Reading about minimalism would eventually lead me to discover FIRE another few years later. In my late 20’s I decided to go back to school to get into tech, this involved me eventually getting up to $100k in debt, and I had some bumps along the way (mostly thanks to choosing what ended up being a crappy school) but finally about a year and a half after leaving school, and 3 moves later, I got a job at a startup in mid-2015, where I worked for 3 months and promptly left (don’t worry they went out of business two months after I left). I then moved again, spent a few months not working, again was about to grow broke for the Nth time when I got a job at a startup and I’ve been working full time the past almost 3 and a half years ever sense - longest by far I've ever worked in my life. This year the company got acquired so now I work at a big tech company and got a decent payout ($74k after taxes) and my salary was doubled. To show you how little I was thinking about retirement, and I knew nothing about FIRE, at the time I was going back to school to study computer science I remember telling my best friend that since I am so frugal once I start working in tech I figure I will be able to give away/donate around half my money every year to help others. So altruistic right!? Of course I had never thought about saving or investing for retirement and I was planning on just giving all my money away instead of preparing for retirement (at any age)! At some point before I got out of school probably I discovered FIRE and started for the first time thinking about saving for retirement. Just before I got out of school I also learned about Bitcoin in late 2013 from a coworker at an internship I was doing that Fall. After many ups and downs with crypto investing, the biggest mistakes of which was trying to day trade for a long time and in 2015 at the bottom of the market deciding to stop believing in Bitcoin and sell everything that I still had that I didn’t lose to day trading. In the spring of 2017 I saw Bitcoin had returned to its old peak price and promptly started investing it in again, just putting all my spare money into Bitcoin and to a lesser extent Ethereum instead of paying off loans - obviously I was still paying the monthly minimum on my loans. My main problem that year became that I got back into day trading as well and ended up losing a few bitcoin. Nevertheless my portfolio soared to around $270k in December 2017, just before the latest crypto crash happened. So with my roughly $100k in debt I very briefly reached a net worth of around $170k. The final couple mistakes in crypto I made was not realizing a full on crash was coming so I didn’t sell any, but then continued to day trade in 2018 losing a bunch more bitcoin as the price went down. By mid-2018 I had just under $100k in debt, still a good amount of Bitcoin but far far less than the $270k worth that I had a half year earlier. At this point, 11 months ago, I decided to try out van life! Not as some hardcore way to FIRE by sacrificing everything and living a dismal life in order to FIRE quickly, but because I loved the idea of vanlife! I had started watching van life youtube channels around the Fall/Winter of 2017/2018 and it appealed to my nomadic ways. I don’t even know how I came upon the first one, probably by complete accident and I was like woah this seems cool. In June of 2018 I made the decision to do it. The plan was to leave my job with a few thousand dollars saved and be working on some side hustles and scrape by living and traveling in the van full time and hopefully get up to the point where I’m making a living on my own, away from the daily grind of a normal job. Over the next couple of months I sold some of my Bitcoin to pay off my largest loan which had a monthly payment that was just too much of a burden to hold if I was going to quit my job and risk everything by working on my own with minimal savings. I was now down to less than half the Bitcoin I had bought in 2017 with the bear market still in full swing, and I was planning on leaving my job with only $6000 in the bank at some point in the Fall. I bought my van in July, and two weeks later the boss of the startup I worked at said we might get acquired in the Fall. Since that would be financially beneficial to me I decided to stay long enough to see if the acquisition happened. I built out my van and moved into it Sept 30th last year, and been living in it ever since. We got acquired in January this year. Thanks to the money I made for the acquisition I paid off the rest of my debt and invested the rest in Bitcoin, which was unbelievable timing because Bitcoin was at the bottom of the market at the time! Really this fact alone - acquisition while Bitcoin was at the market bottom - put me on a path to very quick FIRE. Also I should mention my parents lent me $20k for schooling, which they took out of whatever trust they have for my inheritance (no idea how much is in there), but late last year they gave my older brother and his wife $16k to help them get a new car when one of theirs suddenly broke down, so they forgave $16k of mine and my other brother’s debt to them to even it out for everyone. They had taken it out of our inheritance anyway so now we all just have $16k less in our inheritance, which I assume is a significant portion of it. Anyway, now I’m making over $100k at the company that bought us out, living in a van, debt free as of January, the past 5 months I’ve put all my spare money from the acquisition and my salary into cryptocurrency, vast majority into Bitcoin. I also for the first time in my life have some money invested in the stock market through my 401k at this new company, but its only a few thousand dollars, just enough to pick up what the company matches. For the next few months I will save up a good amount of money in the bank and do what I had planned to do last Fall - quit my job and travel full time in the van. I’ll be working on side hustles and trying to make money on my own building software, could be freelance, or occasionally taking remote contract jobs, I dunno, gonna see where a life of no 9-5 job and lots of van life travel takes me! Super excited! Not FI yet but will leave my job and work on income streams on my own and travel full time, which is the life I’m looking for right now. I’m sure at some point I’ll settle down (maybe…) but very excited to soon be post-job thanks to the savings I’ll building up in the next few months. Meanwhile now that the Bitcoin bear market ended and the bull market started a month and a half ago, my portfolio is getting is around $230k as of today (I put in about $76k this year I think, and still had probably like $15k left of the 2017 buys after selling stuff and bad trading). So I’m quickly coming up on a quarter million dollars net worth, and I have high confidence before the next bitcoin peak in the next couple of years I’ll have enough to sell, diversify into stocks, use some of the money to buy back into bitcoin on the next bottom in a few years, and have enough in stocks to live off just dividends, taking a 0% withdrawal rate and have completed FIRE. In the meantime starting in a few months I’ll already be living a FIRE-ish lifestyle, no job or boss, still working hard though to try to make my (low) cost of living through side hustles working for myself, and traveling full time. I just turned 36, never invested in stocks before this year, less than $5k in stocks now, ~$240k NW and growing rapidly, went from $100k debt to $0 debt (with $16k of that forgiven, thanks parents!) in a single year last year, slowly working on making money on my own, will quit my job and travel full time in probably less than 4 months, and looking to FIRE in a couple years. That’s my story! Thanks for reading!
Buying in China and selling in USA. The New American Dream | My Story
Hi entrepreneur I've followed this sub for quite a while, I enjoy the (rare) good posts, and I'd like to tell my story and hope you takeaway some useful knowledge. I was a 2009 college graduate, so I didn't even have a chance to join the workforce in any meaningful way. Entrepreneurship is just natural to me and I hope I can sustain it over a lifetime My entrepreneur journey began selling football tickets during college at U of Florida. Imagine an 18-year old white kid standing next to the veteran scalpers and hawking tickets. It was the best experience I could imagine. I think of it as rejection therapy Learning to not be afraid of a 'no' is a very important part of being an entrepreneur. After college, I started buying and selling tickets online using TicketMaster and Stubhub. Selling tickets could be its own thread, it's such an interesting space. There are fortunes being made buying tickets to in-demand events online. It's just rather tedious (imagine entering 50,000 captcha phrases a year) Also, scalping tickets online doesn't provide 'value' to anyone. I read the domain parking thread today and it makes me proud to be making money by delivering value, not withholding it for profit. I grew tired of tickets and decided to visit a friend in China. I stayed for 6 weeks and bought some watches to bring back for gifts. One watch was especially cool and people asked about it everywhere I went. I got back in touch with my friend in China (who was just teaching English at the time) and he traced it back to a supplier. I thought I needed an investopartner so I contacted the only rich guy I knew and he gave me $4,000 to be my 50/50 partner. I ordered 800 watches for $3 each, and paid some guy $3,000 to make me a website. Lesson 1 DON'T SPEND MORE THAN $300 ON YOUR FIRST WEB PRESENCE I scrapped that site in less than a month and built my own on Shopify. If you can operate your facebook page, you can setup a Shopify account, it's stupid easy. I set the price at $65. Lesson 2 PRICE HIGH It gives you so many advantages. Better customers, less returns, room for wholesale/distributors, and a higher perceived value. Anyway, I created a fun brand around this. We did fun photoshoots, ran contests in the community (facebook ads were really cheap back then), and we really gained some customers. In a stroke of good luck, I got in touch with a Groupon rep and they agreed to run a deal for my watches. I was one of the first products to run on Groupon. (Remember, Groupon was mainly for services like spas and meals at the time) This went well initially, and they slated me for a Black Friday national deal. They sold 7,000 of my 'deals' in 3 days. Turns out my supplier back in China was just a trade company, and he couldn't pull off a deal of my size on his 'credit' He almost completely screwed up the whole deal, and it was literally one of the lowest points of my life. In the end, I fulfilled about 70% of the orders successfully, and the other 30% basically told me I ruined their Christmas and got refunds. Funny thing was, Groupon still paid me out the entire amount even though there were almost 2,000 really upset customers (an omen that Groupon did not have their house in order and had their own crash coming) This company was called TIKKR by the way. The site is still up but I'm not really in business anymore. I might try to revive it someday. But I could see the writing on the wall. There were at least 50 companies I knew of that sold the exact same watch, including Walgreens which sold it without a brand name for $4.99. I dropped my price and got what I could out of it, but I needed a new idea. Also I had returns and warranties like mad and it cost me a ton of cash, the watches were just cheap... I honestly don't remember how it came about, but I became aware of bamboo sunglasses being a thing. I was approached by my China friends to start something together. We were hanging out in Chicago that summer (2012 I think) which happened to be Groupon headquarters. I had a friend who worked there, and he got me access to their sales floor so I just kind of hung around and bothered people until I found the girl who sold fashion accessories. Lesson 3 To get that big break, sometimes you just have to hang around until something happens to you. Not sure if that really qualifies as a legit 'lesson' but whatever. I got her to agree to run us on a national scale. She told us to prepare 10,000 units for sale. I don't know how, but we got $180,000 together between 3 partners . The China guys, the Groupon insider, and me. (Actually I do know how, I used my TIKKR money with a big boost from Bank of Mom. Hi mom!) The China guys handled production, I handled branding, marketing, and everything else and the Groupon guy was the Groupon guy. I came up with Woodies (and I even bought Woodies.com for $4,000 from some Canadian dude who was selling hockey stick chairs) The idea came from the old Woodie station wagons where the frame was made from wood. I rented a few cars for the photoshoots I was obsessed with Ashley Sky at the time and I had the crazy idea to hire her for a photoshoot. I contacted her people and to my amazement, she was only like $600 for a day and she had 100k instagram followers! I figured we would make that money back with one post from her. The Groupon sale went live and we sold like 4,000 instead of 10,000. Lesson 4 Be optimistic in general, but be realistic when it comes to forecasts. I can't remember how many times I had a deal setup where I was like, yea I'm going to pay off all my student loans with this deal. It was usually mildly successful, but after all the bills were paid off, I wasn't as far ahead as I thought I would be. It reminds me of the Old Man and the Sea. You land this HUGE deal, but by the time you drag it to shore, a bunch of little things have brought it back to size. Overhead, customer service time, returns/warranties, new orders, customs fees, shipping really add up. So with that 'poor' sales showing, the China guys ran into their own cash-flow problems. Groupon guy and I were forced to buy them out basically. But we had a real business with real customers and we were rolling. We now had $140,000 capital base after paying off the China guys, not enough for a big order, so I noticed Kickstarter was really blowing up, and thought I could bridge our cash-flow with a blockbuster kickstarter campaign. This is where things get pretty interesting. I got it in my head I wanted to hire Kendall Jenner for this campaign. Somehow I tracked down her modeling agency and eventually her direct manager. They quoted me $100,000 for the day. I created a Pinterest board and sent it to her and asked if she would do it for $25,000 plus a bunch of incentives and they said YES! I was completely thrown off and not sure what to do. I ran some projections and thought that I could make up most of that money if we raised a lot of kickstarter money. I hired Ashley Sky, Damaris Aguiar, Kendall Jenner, Aygemang Clay, Lyall Aston photographed it, Sagette Van Embden videoed it, Lina Palacios styled it, Mary Guthrie was hair and makeup. It was a giant production. I couldn't believe it. I flew everyone out to Malibu, CA using Southwest Airlines buddy passes! Imagine Ashley Sky and Damaris Aguiar (so hot) standing at the Southwest ticket counter like wtf is standby? I'm over here sweating bullets hoping we don't get stuck in New Orleans and I look like a fraud. Actually I fought those type of feelings a lot during this period. Lesson 5 Don't ever put yourself down. Entrepreneurship is a crazy, improvisational dance. Sometimes I would look around at my competition and think they had it figured out, they were following a plan, they were 'professionals' and I was just doing my best to pretend. That's BS, we're ALL making it up as we go! Don't put this process on a pedestal, fake it til you make it! Anywho, I rent out a Malibu HQ using Airbnb and rented a van for the day. I still can't help but laughing when I remember this scene: I'm driving a large van with Kendall Jenner, Ashley Sky, Damaris Aguiar, and some bros, in the mountains of Malibu, I'm driving kind of fast around the curves because we're late for the call time I set for us. I'm wearing a captain's hat because that was my thing during that time. and Kendall's manager scolded me for taking the turns too fast. Fun times Here is how the campaign turned out So, I got Kendall to agree to Instagram/tweet/facebook the kickstarter campaign, but what I didn't realize is kickstarter is not mainstream and it just didn't convert. I raised like $30,000 in revenue against a cost of like $70,000. I can't say whether I would do it again given hindsight. It has led to great brand recognition because Kendall has kind of blew up and become a mega celebrity. AND her management let me write that contract so I have rights to those photos forever. One tweet by her got me close to 20,000 email subscribers which has been a stream of income ever since. (Shoutout Mailchimp!) *Monkeyrewards fyi Since then, I've been trying to come up with new designs, build on the brand, and leverage the list that came from Kendall Jenner's gravity to make sales. It's pretty seasonal, coming mostly during the summer and Christmas season. I have some big plans for 2015, but I have to keep them quiet for the time being, maybe there will be a follow-up post this next year All that was a year ago and Woodies has had some good times and some slow times. I got into wood watches which have been really good sellers. I started selling on Amazon *affiliate, which has been a great boost to the bottom line. Keep in mind that during this whole time I barely took a paycheck, and moved back in with mom in Tulsa, OK during a dry spell. I don't spend a lot of money, I have zero savings (except for a few Bitcoins) I actually travel most of the year, I'm in Thailand right now writing this to you. So to summarize, I've been an entrepreneur for a long time, and my success is best characterized by a few BIG wins, and mostly small, gradual losses. In between, my life has been great, I get to travel, work remotely, perform autonomous, creative work, do photoshoots with hot models, and learn a lot about myself and the world around me. I wouldn't trade it back and I'm optimistic about he future Tech that makes all this possible: Shipwire & Amazon FBA (Amazon FBA > Shipwire if you're wondering) All Google Products: Gmail, Google Drive, Google Forms, Analytics Xero for accounting Shopify for e-commerce [Fiverr](Fiverr.com) to boost online reviews Alibaba for finding suppliers. Once you find them, visit them, and invest in a relationship with them Mailchimp for Email marketing (the best thing going in my opinion) Flexport for freight forwarding, definitely changing the game Other takeaways: Wholesale business and international shipping are both great if you like to waste huge amounts of time chasing small amounts of money. Stick to domestic until you're really big-time. Never commit to big upfront costs. Always start small and test Have a solid accounting system and data management system. It'll come in handy when you need it I've got to shout out my friend and one-time employee Joanna (she just started OnceBitten ) I was rarely as productive as when I had someone else keeping me accountable and adding great ideas and hard work to the process. I guess the lesson is if you're going to hire somebody, make sure they're really, really good and pay them well Things I haven't quite solved yet: Customer Service management (I hate answering emails for real) Taxes CRM like Salesforce or something (is this necessary guys?) I could go on, but I think this is enough. If you're still reading this, I'll answer questions if anyone wants to ask about business in China, solo-travel, branding, ecommerce, etc I'm not an expert in many things, but I know a little bit about a lot See you at the Beach! Cory Stout, Owner Woodies A couple shout-outs: My other entrepreneur homies doing big things! RevelryDresses(group orders of sorority dresses) OtisandEleanor(bluetooth speakers from bamboo) OriginalGrain(wood watches, prob better than mine :) ) edit: Just want to say I'm enjoying hearing from you all. I'm doing solo travel right now, so it's nice to connect with other entrepreneurs out there
Late buy-in of Cryto as nonbuyer's remorse, pricing itself out of a recessione, rumblings of approval despite quantum decryption threats, use in crimes, and predictive NLP "Trump's currency is dividing us" says one thing: Get you to the blockchain and open that trapdoor
The title really says it all. Some say I'm butthurt about the late buy-in on crypto. If only I had bought myself a bitcoin when I gave a bitcoin to James Corbett...I'd be RICH. Well yes. That's exactly what they want me to think. You missed the boat on the deepstates own currency--Sucka! And shame. Shame on you for not having a bunch of disposable income to throw into a highly speculative hobby. Too bad you aren't a dot com millionaire who basically recreated twitter and IPO'd at laughably nonsensical overvaluation of 200M that you couldn't throw most of those millions into bitcoin, because that would make you a billionaire at this point. You couldn've been playing giant robots with Bezos in his high tech romper room. Too bad! Plebe. Lumpen plebe. You suck. Right? The latest thing is the twighlight language trying to further divide us with more "love trumps hate" type of languge. The latest shitmeme is from DNC chair Perez: "Trump's CURRENCY is Dividing us". This is a twilight language because it's trying to use black transfer propaganda language abuse to tie "currency" to "Trump", which is trying to make you hate "currency". Ya dig? So that when they offer a new 'currency', you will hate "Trump's Currency' which is the dollar. Screw Trump and all his dollars! Dollars are for Trumpers. Dollars are so 2016. Crypo man. Gotta get me some of that Crypto and get with the progs Sorry, the source is Breitbart, which you should know is kind of limited hangout altright mainstream press.
Crypto skyrocketing under principles hitherto unseen. Is there really THAT much confidence in a thing based on nothing with no protections, that is difficult for most people to even think about deploying in any secure or technical way. I say this being not an expert but competent in crypto.
I ran linux, I set up a couple grand mining rig with 4 gpus. Noisy. Loud. Annoying. It NEVER PAID FOR ITSELF even though projections were made to pay itself and then make money. It never did. I did everything right. I was mining in a mining pool. Now, no one without several millions can mine. There is now a barrier to entry for anyone getting started in mining. I'm talking bitcoin. Maybe other coins you can mine still
Therefore the cost of electricity needed to mine a bitcoin along with the marginal cost of the equipment makes it so you can't mine on any small or even medium scale...what i mean is you are better off buying bitcoin from an exchange
Where is the exchange getting all that bitcoin from?
Those who have bitcoin don't want to get rid of it...it's skyrocketing why would they sell unless they are trading crypto!
People on zerohedge are saying flipping crypto doesn't work, everyone's lost money--maybe they are wrong... Keiser was pushing this
So keep in mind, when Silkroad and Silkroad 2 went down, who confiscated all that bitcoin? Ahem. It was the US GOvernment. I believe at one point they had over 50% of the market, so that means they effectively control bitcoin circulation...therefore...
So where are the exchanges getting their bitcoin from...that much bitcoin to trade every day?
Well from asset forfeitures...It's the government. I believe they are running the exchanges
It fits their pattern. The best way to control a subversive currency is to buy most of it up (sorry there's a Lenin quote in there somewhere)
Someone has made it VERY clear they don't like me saying these things. I mean if I'm wrong, then why...?
We also know because of leaks that they run the drug purity testing houses, and they ran alphabay and they run all the darknet drug sites. LOL
It's all an illusion folks
So here's what happens. They are prepping people to use bitcoin. So when they cay ICO, it doesn't mean as much 'Initial Cryptocoin Offer' as it means "Illuminati Cult Offer"... That temptation of the money from crypto skyrocketting is pressing everyone's avariciousness buttons and only the dumbest among us go for it Because here's what happens. Scenario 1
You move most of your USD to bitcoin, it goes up like a stock. Yay, I have more wealth.
Lots of people do this instead of storing wealth in precious minerals or investing in something real like your own business or yourself or your children or a farm
Lights out! "North Korea Attacked the powergrid with our own retooled cyber tools leaked with vault7" Uh oh
The US Gov now has all your wealth becuase you traded it for useless crypto that doesn't work when lights out
Or they just drop the price to nothing. That's even easier. Oh no..it was a crash!
No one really knows why these things happen...they just do!
Wall st crashes are the best way to pump money out of the people. We know they control the market to some extent, they could be controlling it to a larger extent
You move most of your USD to bitcoin
US GOV or some other hostile intelligence agency releases an AI that manipulates the market to favor itself
US GOV or some other hostile intelligence agency achieves the ability to unzip the blockchain with a quantum attack on the non-quantum proof algorithms of crypto. Ok everyone is exposed and could potentially have all their money siphoned away
You move most of your USD to bitcoin
Gov approves crypto
All those gains you made are retroactively made into capital gains and you didn't pay taxes on them
IRS comes after you, USMS comes and does asset forfeiture of your house and car, visits you at work demanding to see your computer there, shaming you. You lose your job, shamed on facebook, have to change your name and move
Sorry I'm so cynical these days but I've seen how they've pulled every stop in the book to undermine americans irrespective of politics. They are hurting everyone equally in each their own ways. They=deepstate / new world order. Basically this is coming down to Technoneofeudalists versus Populists. Are you on the side of the fascist dominators? Or the side of people, truth and everything we gave ourselves in the constitution? What inspired this post is the idea of honeypots. The honeypot is also the free-sandwich technique. Anything free is going to have strings whether you see them or not With google it was they were telling you 'do no evil' and yet we now know they are a CIA appliance for surveillance, bulk collection of deep mineable data, gaslighting (filter bubbles), and a domestic human zoo management strategy. Now they are attacking journalism by deploying very heavy-handed strategies to limit speech they dont' like politically (ie populist speech--'open source intelligence' primarily) They hate that we deal in facts and that the natural configuration of the truth is as a weapon against tyrants. Because they are the tyrants! Bitcoin, I still believe, will turn out to be a honeypot. They will use it like the stock market (which they control on the back end through fast transactions and ai, in addition to having insider intelligence on gov contracts and war). They will get everyone on bitcoin and then they will open that trapdoor. It's a money funnel..that's what it will be. I do understand that it will destroy money also if they do that. But that's ok. They already have all the gold and all the infrastructure to spin up more shell games...to them money hasn't existed for a while. Their currency is stolen art, stolen guns, stolen minerals, stolen children, stolen women, stolen organs, drugs, embargoed oil sold on the spot market. They dont need money. They've been bartering since time immemorial
The deconstruction of money: Prosperity when wealth ceases to exist
Here's a question to ponder: How do you conjure 300 billion dollar out of thin air? The answer, if you hadn't guessed it yet, is cryptocurrency. People used to laugh at this phenomenon, but they're not laughing anymore. They're feeling the same emotions about this phenomenon that I felt four years ago: They're worried and excited at the same time. Bitcoin is a first, but not just in one domain. It's a first in most of its defining characteristics. We have witnessed the emergence of a means of exchange whose rate of inflation is predictable. Nobody can create more than 21 million Bitcoin, we can merely find ourselves disagreeing about the definition of a Bitcoin, which is starting to happen. Despite its scarcity, Bitcoin has no intrinsic value. We're now beginning to discover that this doesn't matter, something most economists and academics had not anticipated. Just as an artist can earn money by shitting in a can, you can earn money by producing virtual currency. What we don't know yet is how far this phenomenon can grow. As of speaking, it gobbles up 0.1% of the world's electricity. As a means of doing anonymous transactions, it's pretty much useless compared to the alternatives that have succeeded Bitcoin. In the worst case scenario, Bitcoin is like Microsoft or Facebook, in the sense that its network effect and early mover advantage allow it to eliminate all competition. This results in the dystopian scenarios I have frequently discussed before. In a more realistic scenario however, Bitcoin ceases to grow eventually. This makes more sense to me. Consider this: Would you invest in something that has grown in value 100-fold over the past two years? You would probably be wise enough to recognize that other investment options have more growth potential left. If enough people understand this, it becomes a self-fulfilling prophecy. If we assume that people buy Bitcoins to get rich quick, they'll stop buying them when it becomes clear it won't allow them to get rich. As a result, its value will eventually crash. Note the difference between Bitcoin and Windows here. We're not using Windows because we think it has growth potential. We're using Windows because everyone else uses Windows and thus it's easier for us to communicate. You don't genuinely buy Bitcoin because you want to use it. You buy Bitcoin because you expect others will want to buy it from you at a higher price. To put this in simpler terms: If we use something merely because we expect its use will grow in the future, it can't come to dominate the market it's in. To own Bitcoin means to forever have a sword of Damocles hanging over your head. You bought it because you expect its value to rise. At the same time, you are aware that it suffers from existential threats: Government intervention, a superior alternative taking over, a rush for the exit that the network can't process, a 51% attack, an unanticipated protocol flaw, an early adapter who wants to cash out. You're willing to take those risks when you expect its value may rise 100-fold. You're no longer willing to take those risks when you expect its value might double in the next ten years. The innate instability of Bitcoin ensures it will forever remain a niche phenomenon. Here's a question to ponder: Why buy Bitcoin, if you and your friends can invent your own coin that you distribute among yourselves? If I had to choose between entering a country where all the land is owned by a small minority or entering a country where I can still freely stake a claim to my own land, I would choose the latter option. People throughout history have understood this principle, which is why small communities came up with their own currency systems. The general trend throughout history has been that these alternative currency systems were destroyed by those who felt threatened by them. It's a little known fact that whenever local currencies emerge that seem to replace a government issued currency, governments tend to respond by shutting them down. It happened in Germany in 1931, it happened to the Liberty dollars in the United States and it happens in more situations, when the alternative currency becomes a threat. Of course, alternative currencies rarely become a genuine threat to the status quo. The reason is because people can generally create new units out of thin air. Whatever institute issues the alternative currency has no means to prohibit you from doing so. Today, we know that this is no longer a valid issue, due to cryptocurrency. As a result, this controlled issuance allows people to interpret alternative currencies as having a genuine value, based on the expectation that they will be able to find someone to sell it to when they feel the need to. What this means is a fantastic development for those of us who fear the extreme inequality we witness today. The nature of wealth is that it tends to accumulate. Those who are wealthy have the means to become wealthier, whereas those of us without wealth have no such means. Then eventually, when wealth has accumulated to extreme degrees, the elite has found itself in possession of most of the world's fertile land and natural resources. Then, those with their backs against the wall tend to rise up in revolt and exterminate the aristocracy. Today, after the invention of cryptocurrency, revolutions work differently. When we see that the game is rigged against us, that you own everything there is to own, we cease acknowledging your protocol and set up our own. We don't participate in games that we can't win. We're unable to ignore land ownership, if you cling onto the land, you risk ending up beneath the guillotine. We're perfectly able however, to stop pretending that a Bitcoin is something more than a series of ones and zeros in a digital database. This outcome is already unfolding. Why is Bitcoin losing its dominant position in the ecosystem? Because people realize that the game is rigged against them. Most people are simply not dumb enough to spend 10,000 dollar to buy one bitcoin. Smart people look for other opportunities. How does a revolution look? Consider what happened a few weeks ago, when Bitcoin ended up clogged and a competing protocol, Bitcoin Cash, suddenly grew enormously in value. This revolution was prematurely aborted, but the underlying issues have not been addressed. Bitcoin is still bumping up against its transaction capacity, wealth is still monopolized in the hands of a shrinking group, a single Bitcoin still has an intimidatingly high value to all but a small group of wealthy people who have no intention to actually use the currency. As a result, hedge-fund managers and trust fund kids are now buying first class tickets to board the Titanic. Understand the following principle: The unequal distribution of a currency undermines its use value. A currency owned by a small group of wealthy people is subject to dramatic price fluctuations. The stock market suffered a sudden dramatic collapse in 1929, during an era when wealth inequality was at its most extreme. The reason is simple. If the distribution of an asset is extreme in its inequality, it becomes impossible to estimate the fair value of the asset. This is the problem that Bitcoin inevitably suffers. The wealth inequality of Bitcoin increases over time, as hackers are able to steal Bitcoins, while those who find themselves wealthy all of a sudden tend to exit the scheme. As this unequal distribution grows worse, the instability of Bitcoin grows worse too. Economists have long known that wealth inequality and speculative bubbles go hand in hand. We see high prices right now for Bitcoin, but this is merely because nobody wants to exit at the moment. As soon as people want to leave the scheme, they'll find it's simply not possible at current prices. I expect that Bitcoin could see its price drop by 90% or more, over a period of days. People will find themselves unable to leave the scheme during such a period, because the transaction capacity on the network is limited. When Bitcoin falls apart, people will see that the underlying technology has more genuine potential than this particular faulty implementation. As a result, another redistribution of wealth will take place. One important thing to understand is that currencies gain value because of broad use. Broad use is accomplished, by broad distribution. In its early days, everyone could mine bitcoins and everyone could use faucets where they were handed out for free. As a result, a core community emerged. Note that the broad distribution that creates value does not have to contradict the unequal distribution that creates its high price. Value and price are not always well correlated. In regards to Bitcoin however, the more important point is that the currency grew in price by inheriting both characteristics: It's widely distributed, but most of the coins are actually held by a small minority. This small minority thus has a lot of wealth, on paper. They won't be able to actualize their wealth, if they tried to cash out the value of Bitcoin would take a plunge. You will find that Bitcoin's role as a speculative bubble will be replaced by various competing technologies, but its role as a digital currency will be replaced by currencies that are broadly distributed. As an example of how this will work in the future, consider Clams. Clams are a digital currency with an egalitarian and wide distribution. Anyone who owned a range of currencies ended up owning Clams. This has proved to be free money, for people who paid attention. The project was abandoned by its developer, but it demonstrated the way forward for others. There are now various Bitcoin forks, that hand out their coins to entire swathes of the population, while handing out extra coins to its own developers. Those developers do end up profiting off their invention, simply because the wide distribution creates interest in the coin. In contrast to what you might think, these various new currencies don't have to die out. In contrast to offline currencies, digital currencies can be extremely easily exchanged for one another. Merchants are able to accept coins they have never heard of for products they sell, simply because the underlying infrastructure is managed for them by third parties. So, what credible reason do people have to put their trust entirely in Bitcoin? The answer is simple: None. The herd has discovered Bitcoin, but the herd will consume it and bring about its demise, as the protocol can't scale. But what if I'm wrong? What if Bitcoin can scale? Well, the answer to that question is simple: Bitcoin can't scale. A form of Bitcoin that can scale ceases to be Bitcoin. Bitcoin is characterized by 1 MB blocks, which limits transaction capacity to 3 transactions per second, which is a fraction of what credit card companies can handle per second. If Bitcoin increases its block size, a new currency comes into existence, that needs new software and would leave users who fail to update their software at risk of losing their coins. What about off-chain scaling? Off-chain scaling requires settlement on the 1 MB blockchain. As a result, those who plan to develop off-chain scaling methods admit that Bitcoin would need 133 MB blocks, simply to accomplish the goals they have set for it. The system can't function under those conditions. What happens if Bitcoin does somehow develop off-chain scaling and starts to use 133 Mb blocks? The energy needed to mine Bitcoins increases dramatically. As a result, the number of people who can mine Bitcoin goes down, mining Bitcoin will only be an option for people in places with dramatically low energy prices. In addition, governments would be unlikely to accept having 90% of their national electricity use be devoted to mining Bitcoins. A currency that requires solving pointless computer problems to distribute it is a currency that remains forever a niche phenomenon. There will be no consensus around how to change the protocol, it will endlessly fracture until it renders itself obsolete. Important to understand is that cryptocurrencies don't allow you to hold onto extreme wealth. Consider Bitcoin. In its early days, there were plenty of smart people who saw its potential. But if you're a billionaire, how would you use a currency worth less than your own net worth, to increase your own wealth? The answer is that you can't. Small projects grow the most, but small projects can't fit your wealth inside of them. The effect this has is that the extremely unequal global distribution of wealth we witness today will be rectified. The habit that extreme wealth has is that it doesn't survive dramatic changes to the status quo. Until a few years ago, Bitcoin was the domain of basement dwelling NEETs and angry libertarian gun-nuts. But what we can do, anyone can do. If you live in a community that suffers poverty, you can set up your own currency that you use among each other and by virtue of the fact that you use it, it grows in value. What we have done with Bitcoin, has been done by other people too. If you don't think you can win under our rules, you change the rules and play your own game. There are now numerous currencies out there that have given birth to anonymous millionaires, while many more like me have made smaller fortunes. As I have mentioned before, technology is a self-limiting phenomenon. Technology in its most advanced stages consumes its own niche and as a result leaves us off without the technology. With self-driving cars, the car starts to die out. With lab-grown meat, meat dies out. The Internet, destroyed the concept of possession. Why should I buy a car, if it idles 95% of the time? Why should I visit a hotel, if people can rent out their room to me? Why should I own a book, if the information I seek is accessible under my fingertips? Why should I even own anything? In Sillicon Valley, digital nomads live without any genuine possessions, other than a smartphone, a laptop and the clothing they wear. What has remained off-limits so far, is the concept of wealth itself. The idea of wealth has survived the digital transition, even as everything else has been rendered obsolete. This is now coming to an end. We live in an era, where the concept of wealth is being deconstructed. One important principle in this observation is the issue of scarcity. Things have value, because demand for them is higher than their supply. In Estonia, Latvia and Lithuania, houses are practically for sale for free, because the population has declined by a quarter since the fall of the Soviet Union. How can physical space have a price when there is more of it than anyone needs? It can't. It can only have a price when a small elite is allowed to keep it off limits to the rest of us, without making use of it themselves. But now, we face the finalization of the deconstruction of wealth. What does it mean to own anything? How can anything have value, if it is not scarce? Are you still wealthy, if your wealth must remain a secret? If you can't flaunt the fact that you're a millionaire, you can't genuinely be thought of as rich. Cryptomillionaires are men who have wealth they can't genuinely use. Under those conditions, the illusion of power begins to die. We see today that money is a joke. You can print money in your parents' basement and people will treat it as genuine money. The next step is the recognition that wealth is a joke. The society we are entering is one where wealth loses its relevance, until it eventually can't be defined. The very concept itself is ceasing to make sense. It is a nightmare we imposed upon ourselves and now we will no longer believe in it. The history of civilization is the exchange of wealth for fertility. The man accumulates resources, passes those on to his male descendants and the men monopolize young women to disproportionately pass on their own genes to the next generation. This became possible, when the concept of ownership became possible. There exists no inequality, among hunter-gatherers who have no ability to press a claim to resources. In primitive communities where everyone lives near a river dense with fish, some men end up claiming "ownership" over the river and soon enough we witness hereditary castes, monarchs and inherited wealth. In the Kalahari desert, where people depend on animals that run around and Mongongo nuts that can be consumed, there is no property, as there is nothing to claim ownership over. You might claim ownership over a plot of desert, sure, but how will you enforce it? You can't and thus everyone is equal. The concept of wealth had a nice run. It survived from the Neolithic revolution until the digital revolution, when it was rendered obsolete. It transformed young sturdy women with bows in their hands and hair on their legs into airbrushed trophy wives who sell their bodies to the highest bidders. What we know as a human being today is entirely corrupted by thousands of years of civilization, during which a corrupt aristocracy disproportionately passed on its genes and turned life itself into a cynical pursuit of material wealth. Today we are saying farewell to them. Have you ever thought about what we are leaving behind us? In a society where social status is inherited, like in India, you eventually end up with hereditary underclasses who are made to carry around leaking baskets with human excrement on their heads. Alexandra Kollontai became a Marxist after her aristocratic parents prohibited her from marrying a man she met at university, an engineering student of modest means. In the society we are giving birth to, everyone is free to pursue his deepest passions and to make use of his full potential, with no noble birthright standing in between him and his vision. Does this sound absurd to you? Over the top? Ridiculously optimistic? Well consider this: We have already gotten rid of the aristocracy. Western civilization used to be ruled by a hereditary caste that had complete control over society. The mechanization of agriculture in the 19th century and the abolition of the corn laws led to the demise of the aristocracies. The status quo could simply not be maintained. The concept of a republic, a nation not ruled by a king, was once utterly absurd. Books about the future written in the 18th century, like Samuel Madden's "Memoirs of the Twentieth Century", feature tall tales about religious theocracies in Italy and absolute monarchies in France. What none of them anticipated is that the kind of authoritarian systems they were familiar with could not sustain itself under modern conditions. It seemed as absurd to them that people could be ruled by anything other than inbred aristocrats, as it seems to you when I suggest to you that the concept of wealth itself is in the process of being rendered obsolete. Eventually we will develop a form of society, where money and financial transactions themselves are an outdated nuisance, an inefficiency. Consider this: You're traveling by train and find out that you don't have a public transport card. As a result, the automated gates that stay closed unless you check in with a card won't open for you. You're hesitant to jump over them, because a camera records anyone who tries to sneak in. You walk to a machine that allows you to buy a card, then you charge the card with money and check in at the gates before entering the train. Upon entering the train, you notice a man walks around who is tasked with ensuring that everyone bought a card. This is his job, his raison d'être. After the train arrives at its destination, you walk out, forget to check out and hurry back home, here you realize that you forgot to check out and money was automatically deducted from your account. You call the train company, wait ten minutes before someone picks up the phone and ask the lady on the other side of the line to send back the money that was excessively deducted from your card because you failed to check out. Does this sound like an efficient society to you? Consider a simple fact: In most of Western civilization, we house the homeless and provide them medical care because it's cheaper than to have emaciated people wander around in shopping malls who scare off the tourists, steal bicycles and spread tuberculosis. People find themselves wealthier, by sharing some of their wealth with those who are worst off. It's a more efficient manner of running society, that happens to be in everyone's best interest. Economic inequality, is an economic inefficiency. We live in a non-zero sum game. That is, our current situation is unoptimal, the economy as a whole can benefit from having less economic inequality. Now hear another plain fact: Your society punitively taxes your income, because you're not benefiting society by working a lot. If you work a 9 to 5 job, as most of us do, you get up, leave your house, get stuck in traffic, sit for 8 hours, which ensures chronic health problems down the line, then head back home during rush hour again. The reason you end up with a similar amount of money if you worked 32 hours, is because it happens to be in everyone's benefit. If you worked eight hours less every week, long-term unemployment would be prevented, because more people would be able to participate in the labor market. You would be able to pick up your kids from school, rather than sending them to daycare. Unless you're a genius, nobody benefits from you "working hard". That's why you're not earning more money from it. So now you have to ask yourself another question: If society doesn't benefit from your "work", then it's time for you to plan ahead for a future in which it renders your work obsolete. What will you do with your life, when the rat race comes to a stop? What will you do, if the neighbor who watches TV for fourteen hours a day ends up driving the same kind of car as you? If you can't spend your time "getting ahead", then what will you do with your life? That's a question that I want you to ponder. "Life will lose its meaning" You might say. But that's what all weak men believe who can't think outside of the paradigm they were born into. I live in a society where we no longer fight trench wars with neighboring countries or build colonial empires. My life doesn't feel less meaningful as a consequence. I live in a society where I'm not encouraged to go out and fight in defense of some fundamentalist cult. My life does not feel less meaningful. If I won't have to work to sustain myself, I will quite readily find the means to make my life meaningful. If anything, it would become easier for me to have a meaningful life. There's always something that can be done. We don't get to it, because we're forced to earn a living for ourselves. All geniuses begin their career with an excessive amount of free time. How could Darwin come up with the theory of evolution? Because he was free to visit the Galapagos islands. Why do we have seaweed that tastes like bacon in the supermarket here in the Netherlands? Because a guy had it served on his platter while he was on vacation abroad. Steve Jobs spent his twenties sleeping on people's floors, smoking pot, dropping acid and visiting guru's in India. People are not creative when they have hoops held in front of them. Innovation happens when people are left free to fool around. Most people are passionate about something. Even white working class men in early 20th century Western Europe who worked in factories had pigeons they trained and bred for races. When people have free time and more resources than they need to sustain themselves, wonderful things are produced. Those who think we need to be kept busy, have insufficient faith in man's ability to find meaning for himself. If people are nurtered well and treated with kindness, they are able to blossom and begin to improve the world they inhabit. If people turn into television addicted zombies when their chains are removed, it is because they were left injured by society. Dogs used for medical experiments who have their cages opened are hesitant to step out onto the green grass too. I prefer to look at the examples I know, of people who do understand how to deal with this transition. I think back to a woman I knew, who was granted a small fortune because she survived a plane crash unscathed. She travels across Europe in an old Volkswagen van with her boyfriend, I ran into her at a party held by her friends at a squatted countryside manor. She dances in the night and loves without hesitation and her eyes radiate pure joy. It is clear to me that most people are not ready for the transformations that are upon us. They don't want to live at the end of history. They want to head back to what they knew. But at the end of the day, what you are looking at is nothing to be afraid of. It's just green grass.
Bitcoin: Breaking All the Rules: Idiocracy: Sad vs. Happy Ending?: To Be Continued
4 years ago my girlfriend and I were trekking through Costa Rica, listening to a podcast about the silk road and a dark web. It was such a great listen and the content was something right out of a science fiction novel. Hackers, drug and arms dealers, digital rebels. The podcast went on to talk about how they used a digital currency. They talked about how it didn't have a bank, but rather it had kiosks that you could use to purchase these Bitcoins. In my imagination, they put money into an atm and out popped a gold coin that proved they owned that digital currency, silly. Who would have thought this podcast was revealing an asset with the potential to turn rags to riches?! I just wasn't able to wrap my head around what was happening then. In my defense I was pleasantly distracted on an adventure in Costa Rica! I couldn't put the pieces together, the internet and currency were uniting under a blanket of anonymity. Must have been too busy looking for Toucans and Scarlet Macaws. I've never been one to invest, never had the savings. Rough past and not a lot of income. Never smart with money. I was only able to go to Costa Rica because of a tiny inheritance from my grandmother passing away. If only I had spent the rest ($5,000) on those Bitcoin thingies! I went about my life occasionally hearing about Bitcoin and I would always remember that podcast. Had I just opened up Google and followed up more, fuckin hindsight... Years go by and i hear how Bitcoin suffered some big losses here and there but I kept my distance. This brings us to January 2017... Money is extremely tight as always and we've started taking on credit card debt with daily expenses and things are adding up. One day I'm in the men's library (shitter) and I read headlines saying Bitcoin is making a monster run. I decide then and there that I won't let this opportunity pass me by, "it's time to get ahead" says an internal voice. "But, you have no nest egg" says another. I didn't know what FOMO was at the time, but this was the ultimate case. I threw caution to the wind and went in hard towards a dream of financial freedom. It's as if the stars were going to align and I would finally catch a break. I took out a loan for 10k and stocked my digital wallet. Now I just needed to sit back and watch this thing continue to run. Financial freedom, here we come!!! News Flash: South Korea is looking to ban cryptocurrency trading India announces they are going to crack down South Korea not banning cryptocurrency but no longer anonymous trading Bitfinex/Tether subpoena Coins being stolen by the millions US to discuss cryptocurrency regulations China bans citizens from foreign exchanges Binance "hacked" Mt Gox trustee dumping hundreds of thousands of coins on the open market Market manipulation Bitcoin is a bubble I mean talk about a cluster fuck the moment I entered the trade! I feel like I bought tickets to Bitcoin's show and the asshole said peace and dropped the mic. This was one of the worst decisions I've ever made, and I've done a lot of dumb shit in my life. Taking out credit on an investment?! Brilliant! I made the biggest mistake in the book (one I had clearly never read) which is don't put in what you're not willing to lose. I've read a lot of posts from veterans on Reddit who paint the perfect picture of my portrait "The Idiot Rookie and the Bitcoin" it's a masterpiece. I do commend a lot of you guys, I've seen some great advice. Advice that I wish I had read before diving head first into this world. I've always been a tough lesson kind of guy and class is in session. Hopefully I can graduate. All aboard the emotional roller-coaster of cryptocurrency with too much invested! The last 2 months have been an experience like none other. So many ups and downs. Tonight I'm restless, so I type this story for you. This is the story about a dumbass guy who was grasping at straws and still is. His intentions may be good, but who knows how he'll fare. Sure a lot of you say cut your losses, but how do you cut ties with something you've fallen in love with? How do you turn your back on the tech after the fact? Buckle Up It Gets Worse: Last weekend I finally broke the news to my fiance that I had done this behind her back potential increasing our debt if this thing blows up. Let's say things aren't the greatest in the love life. Trust for the first time in 4.5 years of our relationship is in question. So here we are. The price is dropping hard, again. Things are a mess but I still hold on for dear life. Strange thing is that its starting to have no effect on me. Despite the ramifications of a complete crash, you think I would. Maybe I'd be a great investor if I didn't have debt on the line. All I do now is research blockchain day in and day out. I've done so everyday since things went south. Figured I should learn what the hell I heard about in that podcast so many years ago. Should learn about what I overextended myself with a loan for. It really is brilliant. Blockchain is without a doubt a huge piece to our future. All the ups, downs, sad truths to loved ones, fist pumps when I see a price pump and the swear words when they dunno (today I got caught in Ast after I fucked up my stop loss...) I've made countless mistakes and I'm sure I'll make more. I keep pushing myself towards becoming a knowledgeable tradeinvestor in hopes that I'll stop making mistakes when I do both. I'm definitely a HODLer until then, with a coin I'm not passionate about (AST) and a few that I am. It's been over 2 months since entry. My skin is leather now, the stress of the past few months have turned my insides to stone. I'm down 60% and I'm still optimistic (or in denial?). I'm bleeding just like the rest of you, maybe even more with the interest. Will my decision to HODL be the right one? I guess only time will tell. My fiance asked me if I'm willing to accept the loss if a full crash occurs or at least willing to manage the interest until the investment turns positive. I'm 99% sure that I am, now that I know what this technology is all about. Are you? To be continued... edit the reason I share my story is to not add to the sentiment of fear, but rather to give hope to other new investors. Just maybe one person, new to cryptocurrency reads this and says, ok things aren't as bad for me, I'll HODL with this dude. One less person quitting cryptocurrency is a win in my book.
We need to break up the unholy alliance between the Chinese miners and Core / Blockstream.
We signed up for a grand experiment that would be controlled by math and not by men. Now we've had a year where the community is coming apart at the seams and today top dev Mike Hearn is selling his coins and abandoning the project. Are we going to let Bitcoin be killed by 10 miners with cheap electricity & cooling behind the Great Firewall of China and a private company which wants to cripple our code by limiting space on the blockchain and adding double-spends and high fees? I'm really trying seriously here to put my finger on the main problems that are causing this whole Bitcoin thing to spin out of control. I think the two biggest problems are: (1) the concentration of most hashpower behind the Great Firewall of China, (2) allowing Blockstream to hijack Satoshi's codebase, so that they could:
artificially limit space on the blockchain (the 1 MB max blocksize), and
add support for double-spending unconfirmed transactions (RBF)
...both of which are essential for their flagship vaporware product Lightning Network. Analyzing these two problems in more detail: (1) Most hashpower is behind the Great Firewall of China Most hashpower is concentrated in China, behind what is essentially a network partition (or at least a major speed bump) on the global network topology: the Great Firewall of China. So if blocks got really big, the miners outside of China might actually suffer more, not the miners inside China (who have pretty decent bandwidth amongst themselves). (If you've already heard a million times about US jobs being exported to China, you can skip down to the next section - the short section starting with a sentence in bold saying "Wouldn't it be ironic..."). Now for a bit of economic background that most people know but I wanted to just review it here. As we know, countries such as the USA used to have a solid domestic manufacturing base. But then the power elite in the USA discovered that it was easier to fire more-expensive US workers and let underpaid Chinese workers breathing smog produce cheaper (ie, lower-price and often lower-quality) versions of those same goods - and then the Fed could just print up unlimited little pieces of paper (fiat US Dollars) to import all that stuff to the USA. Paying workers decent wages and keeping the air breathable would have been expensive, but the Chinese have evidently shown they're fine with sacrificing those things. So now:
lots of what used to be made in the US is now made in China,
Anyways, most people know about this outsourcing and money-printing situation I've just described, but I mentioned it here as a lead-in to suggest a weird ironic point about mining in China (in bold at the start of the next, short section below). As we also know, the world finally has real money now: Bitcoin. It's "real" because it's not infinitely printable by private central bankers who inject it into the economy as usurious debt, and because, like gold, its value doesn't depend on any "counterparty": you simply hold your value yourself, and verify it yourself - assuming you have enough bandwidth to run a full a/k/a verifying node. So, I'll finally give the weird ironic point I've been building up to: Wouldn't it be ironic if - now that we finally have "real", quality money - we let its "manufacturing" (issuance, mining) be outsourced to China? Because that looks like what we've actually been doing here. Plus, maybe in some un-apparent, heretofore un-considered sense, the Great Firewall of China really might be the ultimate form of "capital control". Forget all those articles you read on ZeroHedge about billions about dollars being smuggled out of China via Macau, with people strapping little bundles of cash to their bodies under their clothes: http://www.zerohedge.com/news/2014-03-15/how-smuggle-money-out-china What if the real massive hemorrhaging of capital which the Chinese authorities are worried about is Bitcoin itself - and what if that's the main reason why they're gonna make sure they keep the Great Firewall of China in place - to keep billions (and maybe someday trillions?) of dollars in Bitcoins inside China? I don't think Satoshi took the Great Firewall of China into account in his planning. I think he just assumed there would be one globally connected internet, with no top-level partitions. So here's some things to think about:
From what I'm told, the Chinese work hard and they're wild about saving money - they have trillions of dollars in T-Bills, and a lot of them are into gold. In the aggregate, the country is swimming in various forms of wealth.
Also: their government has strict capital controls in place to try to prevent people from expatriating vast sums of wealth out of China.
And finally: many Chinese want real money. They know the dollar or the yuan could crash, so they want something which has no counterparty risk (like gold or bitcoin).
So I'd be curious to know who the buyers really are for all the bitcoins currently being "cheaply" manufactured in China. Do bitcoins mined in China stay in China - or do they get sold to the rest of the world? I would guess that most early Bitcoin adopters with large hodlings who got in when it was really cheap were probably Westerners (assuming that early news about Bitcoin was more available in the West). But now, while Bitcoin is "still" in the USD 400s (which could be cheap, if it survives long-term) - I wonder who the main buyers are these days? Is it people like Blythe Masters and other bankers who are sitting on billions of USD - or is it the Chinese who are also sitting on billions of USD as well? (Or: Why not both?) One group I'm pretty sure isn't buying up lots of bitcoins: "average Americans". Why? Because they're too broke. Since Nixon unlinked the USDollar from gold im 1971, Americans have been getting screwed by insidious inflation and all the debt bubbles which formed around all the essentials in life (the housing debt bubble, the student loan debt bubble, the healthcare and pharma debt bubble, and the credit bubble which fuels all the others). Most Americans don't have enough cash to survive for more than a few weeks, and most can't even afford to take sick days or parental leave from work. The only people who have money are the ones near the printing presses: the bankers and their buddies. There's certainly massive volume on several of the Chinese exchanges - although most people over on /BitcoinMarkets claim that it's all "faked" (mainly because there's no fees on those exchanges, so a lot of those trades could be "wash trades"). So, maybe the Chinese themselves are actually buying up a lot of those freshly-mined bitcoins, in China, using the trillions of dollars of T-Bills sloshing around in their system over there? (And remember where those T-Bills ultimately came from: US Dollars which the USA printed up to buy cheap goods produced by Chinese slaves breathing smog.) So - and here's my point again: Wouldn't it be ironic - now that the world finally has real, quality money - if we were actually currently outsourcing all of its production to China - and they (plus a handful of scattered bankers) are the ones who all buying up the first real asset the world has ever known, during its current "mid-priced" phase? (2) Core / Blockstream / Peter Todd / Theymos / max blocksize / RBF / LN Where to begin? I'm sure you all know the story. Just a few reminders about RBF terminology: (a) There are two orthogonal "axes" or "dimensions" to the whole RBF terminology (but some people get this wrong - I have no idea if it's intentionally or accidentally):
"Opt-In" vs "On-By-Default": This means what it says: for each transaction, you either enable RBF, or you don't:
"Opt-In" means the sender has to enable RBF for a particular transaction (ie: it's off-by-default)
"On-By-Default" would mean that RBF is "always on" but the sender could disable it for a particular transaction.
"Full" vs "FSS":
"Full" means the sender can change everything about the transaction: not only the fee but also the amount and the recipient.
"FSS" stands for "First Seen Safe" (by the way, where do the pinheads over at Core even get this retarded non-descriptive terminology anyways: FSS, RBF??). FSS means that the sender can alter only the fee - the amount and the recipient cannot be changed.
So, which combo of the above is Peter Todd / Core currently trying to force on users? Opt-In Full RBF I reviewed the terminology here to pre-emptively shut up the liars who often pop into these threads spreading FUD like "But it's only Opt-In so it's not really Full". That is simply wrong and I'm tired of them conflating those two orthogonal (ie independent) dimensions of the terminology. And oh yeah, another thing: I have heard plenty of rumors that the long-term plan (from the traitors at Core / Blockstream) is to eventually (stealthily) force the worst form of RBF on everyone: On-By-Default Full RBF But that will come later - once the frogs being slowly boiled (us, the victims of Blockstream's hijacking of Satoshi's code) have gradually gotten acclimated to "Opt-In Full RBF". Anyways, now that that's out of the way, let's talk about some other things regarding RBF: Yes we know, we know: Peter is "merely" adding something which any hacker or malicious user could have added anyways (if they modded the code, or if they tried really hard to misuse it). But there's plenty of stuff which anybody do by modding the code. For example - anyone could change the code so that it accepts a different block size. (In fact, BU is mainly about making this easy for users - instead of making double-spending easy for users like RBF does.) So the "convenience barrier" is an important factor helping shape what most users do with the code. If a feature isn't already in the code, most users don't bother modding the C/C++ code and recompiling it and adding it. (Which is one reason why zero-conf has worked pretty well for so long - another reason being that in face-to-face retail, the retailer kinda does KYC already - ie, they literally "know their customer" to a certain degree - so certain social pressures and norms such as reputation do come into play - but Peter Todd doesn't really believe in those things, as we know.) Now, Theymos / Core / Blockstream keep screaming that it would be taboo to mod the code so that it would accept bigger blocks. But when Blockstream wants mod the code so that it allows double-spending unconfirmed transactions - well, in it goes. That's because the real reason they're so gung-ho to get Full RBF added is because LN needs Full RBF in order to be able to work. So... when certain people say "we need to allow confused users to be able to unstuck their transactions", they're lying. The liars at Blockstream don't care about users, and they don't care about miners. They want to rip off users (making them pay massive fees for space on an artificially tiny blockchain) and then in a double-whammy they want to rip off miners as well (stealing fees from those miners, via LN). Attention Bitcoin users and miners: Core / Blockstream don't care about you, and they're willing to lie to you in order to rip you off. As Mike Hearn mentioned in his farewell essay today, Blockstream CTO Gregory Maxwell once "mathematically proved" that Bitcoin could not exist. And Blockstream founder Adam Back missed the boat on being an early adopter of Bitcoin, because when he first heard about it years ago, he also didn't think it would work. And the gullible Chinese miners are running software from these liars at Blockstream who don't believe in Bitcoin who are sabotaging Satoshi's code to decrease user adoption (and price)) and eventually steal miners' fees. If miners continue to blindly follow Core / Blockstream, it's going to hurt the miners themselves.
The Nine Miners of China: "Core is a red herring. Miners have alternative code they can run today that will solve the problem. Choosing not to run it is their fault, and could leave them with warehouses full of expensive heating units and income paid in worthless coins." – tsontar
https://np.reddit.com/btc/comments/3xhejm/the_nine_miners_of_china_core_is_a_red_herring/ And users who are still gullible enough to adopt a decentralized currency and then read about it on centralized censored forums controlled by some dweeb named Theymos are also going along with this. Anyways, that's my rant for today. Summary / Conclusions - plus a possible "nuclear" option (see the bold part below!) The main obstacles which Bitcoin needs to get around now are:
the concentration of hashpower behind the Great Firewall in China
the adoption of Peter Todd's RBF which would provide a GUI telling users they can and should double-spend or reverse transactions which haven't been confirmed on the blockchain yet
allowing Core / Blockstream to artificially limit space on the blockchain - which drives up user fees, clogs the network, and supports their LN vaporware (which would also steal fees from miners)
if you signed up for a decentralized permissionless currency and you're happy to read about it on a centralized censored website owned by Theymos (/bitcoin, bitcointalk.org), then you're doing it wrong.
These things were not what Satoshi envisioned, and I suggest we focus on trying to figure out how to get around them. Solutions which de-emphasize the importance of Chinese miners might be important. If their blind obedience to Core / Blockstream is one of the main factors killing Bitcoin, then why should we protect them? Maybe if we're going to hard-fork, we shouldn't just bump up the max blocksize - maybe we should also invoke the nuclear option and change the PoW algorithm to bump the Chinese miners off the network. Because, the whole story about needing small blocks "so that Luke-Jr with his shitty internet can stay on the network" is another lie being peddled by Blockstream. The real reason was identified by Gavin:
"The physical bottleneck on the network today is not bandwidth to people's homes, it is the Great Firewall of China."
https://np.reddit.com/btc/comments/40kmny/bitpays_adaptive_block_size_limit_is_my_favorite/ So, if the Chinese are willing to throw Bitcoin under the bus for their short-term profits (and Core / Blockstream currently helping them).. then maybe we should be willing to throw the Chinese miners under the bus now for the long-term success of Bitcoin. And, regarding Core / Blockstream, I we're actually making good progress towards routing around their damage - because if coders don't give users the code they want, those coders eventually get left by the wayside - and this is starting to happen now. We already have several repos, (Classic, BU, XT) all of which will add some form of "max blocksize" increase. I wouldn't be surprised if some of those repos might also decide to omit RBF. The new Bitcoin repos can easily cherry-pick features from "Core" which they did and didn't like - and they're going to have to compete to gain users. So "max blocksize" is definitely going to increase. And RBF could be abandoned in the garbage heap of history, another curious bit of vandalism which gave Peter Todd another 15 minutes of fame and drama, and then the rest of the world moved on and got back to business. And finally, regarding Theymos: he's gonna lose his power eventually. He's already lost a lot. Plus he's sloppy and careless and one of his screw-ups will eventually be his undoing. In the meantime, remember that it's easy to route around him on Reddit, by using a multi: https://np.reddit.com/Bitcoin+bitcoinxt+bitcoin_uncensored+btc/
On August 14, 2014, bitcoin price dropped sharply on a bitcoin exchange. Four days later, another flash crash happened again on another bitcoin exchange. Bitcoin price fell under $309 and bounced back to $440 in minutes like a roller-coaster. There are quite a few articles and discussions about these two incidences and obviously a lot of people lost a non-trivial amount of money, while a few "lucky" guys brought home piles of cheap coins. Flash crashes are not something new, even in the cryptocurrency world. For instance, on March 21, litecoin price dived to 1 CNY from 103 CNY in minutes on a Chinese exchange. What it means is virtually ALL users using margin, be it 10% or 2% leverage rate, got busted. Lots of people were forced to liquidate their positions, and many accounts even ended up with negative assets. The exchange in question was also at the brink of insolvency.
Similar things happened to the traditional, mature capital markets, too. For example, on August 16, 2013, Shanghai Stock Exchange Composite Index soared 5% in just 2 minutes. Regulators' investigation of the incidence accused Everbright Securities of market manipulation and possible insider trading. On May 6, 2010, the Dow Jones Industrial Average fell almost one thousand points. More than 90% of the U.S. stocks plummeted. On Dec 8, 2005, a customer asked a Mizuho Securities broker to sell 1 share of J-Com company at JPY 610,000, but stockbroker mistakenly entered a trade to sell 610,000 shares at a price of JPY 1 per share. This typo triggered a free fall of the J-Com company stock price. The list can go on and on, including Morgan Stanley in 2004, Lehman Brothers in 2001. The question is, why flash crashes happen and how to avoid them?
Causes of Flash Crashes
There are a number of reasons but the most popular ones are leverage, price manipulation, and trader mistakes. Often these factors stack on each other to further worsen the situation, very quickly.
Bitcoin flash crashes we mentioned at the beginning were good (or bad) examples of leverage's role played. Any initial price decline, triggered intentionally by a financial predator or unintentionally by a butterfly flapping its wings, quickly entered into a positive feedback loop and crashed the entire market in minutes or seconds. It's like an avalanche or nuclear chain reaction. Once triggered, it grows extremely fast and almost impossible to stop.
For attackers, there are two things that are indispensible: sufficient market information and enough money. With the knowledge of the full market depth (and user margin/short positions). an attacker can easily find out exactly how much money is needed to drag the price to a specific level. Within a millisecond, he can spit out all orders necessary and before anybody else gets a chance to react, the price is already changed wildly. This type of attacks are very lucrative along with margin calls, forced liquidation, and futures positions somewhere else. It's profitable, easy to execute, and hard to resist.
A few incidents in the stock market history turned out to be human or algorithm mistakes. Nevertheless, enormous amount of investors' money vaporized because of these silly errors. It is obviously not acceptable and the exchanges and security firms involved also had to suffer monetary penalties and endless litigations. With modern computers, advanced algorithms, and fiber networks, crashes like these are repeating themselves again and again. There gotta be a better way to monitor and prevent market disasters like this.
Crash Risk Mitigations
Many sharp declines in financial markets were largely attributed to the leverage involved, especially for cryptocurrencies. The entire bitcoin capitalization is still very tiny, the number of bitcoin in circulation is even smaller, and the market is quite illiquid compared to most of other traditional financial assets. Besides, there are dozens of bitcoin exchanges scattered around the world, and the already limited market depth is further diluted. Born merely 5 years ago, bitcoin has yet to develop a robust ecosystem and attract enough sophisticated market players. Most of the bitcoin exchanges do not have enough financial background to run a safe and bullet-proof platform to take good care of customers fund. People have to realize that bitcoin businesses are not just another tech startup. Coding talents and marketing skills are important, but risk management and internal controls are crucial. Any negligence or mistake on the financial side will sink the entire ship with all passengers, either by a storm or an attacker. Mt.Gox was, sadly, a good example. Therefore, it might not be the right time to introduce leverage trading, be it margin/short trading or P2P lending, to the bitcoin world. Don't get me wrong - leverages, futures, options, plain vanilla or exotic, and all varieties of other derivatives and structured products are useful financial instruments, and LakeBTC will introduce them sooner or later. The thing is, market needs to be ready, and more importantly, the exchange itself needs to be ready. Leverage is a weapon of massive destruction, just like CDO (collateralized debt obligation) and CDS (credit default swap) in the '08 financial tsunami. If not used properly, it's a disaster to everybody onboard. There are enough bad examples in the traditional capital markets that are supposed to be mature, liquid, and robust. Even the fixed-income and foreign exchange markets, which are well known for their unlimited liquidity and endless depth, are not immune to crashes. Arming bitcoin exchanges run by a bunch of geeks and technologists with financial WMDs? Not a good idea. It is always easy to copy something from the traditional markets. Running it right with appropriate risk management is what really matters here. It's like a giving a student pilot a high-performance (i.e., over 200 horsepower) or twin-engine airplane to fly, with hundreds of passengers sitting in the back. More horsepower and more engines are always good, as long as you know what you are doing. You have higher rate of climb and can fly thru weather more quickly. There's a reason why high performance endorsement and multi-engine rating exist in aviation. A guy who's good at fixing cars doesn't necessarily mean he's a good pilot automatically. It takes lots of training, experience, and a major change in mindset. When you are ready to handle the machine and weather, a better airplane with more engine power will definitely take you, and your passenger, to a higher altitude safely.
To any exchange, an effective market surveillance program is a critical component that ensures the fairness and smoothness of the marketplace. Unusual activities, abnormal positions, sudden price changes, and suspicious trades should raise alarms to exchange operators and if necessary, preventative actions should be taken quickly to mitigate the risk of price manipulations and human errors. Should a comprehensive market surveillance program be implemented, the flash crashes in Tokyo Stock Exchange and Shanghai Stock Exchange mentioned above could have been avoided. LakeBTC does have a real time market surveillance program to monitor unusual trading activities and suspicious positions. By comparing with bitcoin index prices from other sources, we try to reduce the risk of market manipulations by individual attackers.
Let's say bitcoin is trading at $500 right now, and our orderbook is showing bid/ask orders from $490 - $510. That would be enough for most users, and advanced traders may want to see more market depth, say between $450 and $550. But, who would want to view bid orders at $400 (20% off the current price) or even all the way down to $0.01? Or ask orders at $700 or as high as $1 million per coin? That information is ridiculous and irrelevant to most, if not all, trading strategies. It is not even noise. It is simply something traders ignore. However, the same information could be useful to marker manipulators. They can easily calculate the ammunition required to ambush innocent investors. If the current price is $500, and an attacker needs to bring the price down to a target price, say $309, to trigger a chain reaction of forced liquidation, it'd be a straightforward math to figure out the money needed. As we mentioned earlier, bitcoin market cap is tiny, and the depth is further diluted. It wouldn't take an enormous amount of money to swing the market. Then he can fire out all the orders in the blink of an eye and the price drops instantly to where it's planned to be. To reduce the chance of orderbook attacks, LakeBTC decides to make only the most relevant part of our orderbook open to public. Financial predators wouldn't be able to determine the amount of fund needed for a specific attack, and for most "good" traders, their strategies are not affected at all.
To further mitigate the orderbook attack risk, LakeBTC provides dark pool (or invisible) orders to our users. Basically any user can place dark pool orders for free, as long as the order size is 50 BTC or more. All dark pool orders are not shown in public orderbook, and invisible to everybody, including financial predators. Without accurate and complete market depth information, it'll further reduce the willingness of aforementioned market manipulation activities. As a matter of fact, such dark pool order type is quite mature and popular in traditional equity exchanges worldwide. LakeBTC's version of dark pool is designed to protect the interests of all investors, not the other way around. Unlike some other exchanges, we do not sell this information to anybody so it's fair to all traders. Contrary to many people's intuition, full transparency sometimes implies unfairness and hurt average users in one way or another. Nowadays in Wall Street (plus New Jersey and Chicago), predators, with the assistance of exchanges, can take advantages of other investors by co-lo (co-location) and so-called latency arbitrage. They consume and react to the same public information a few milliseconds earlier than the rest of the world, and by doing that everybody else is robbed without even knowing it. These professional attackers are always equipped with better network, better computers and better algorithms. The public information, such as full orderbook, is not the same to everybody as before. Security, liquidity, and service are three strengths that make LakeBTC stand out of the crowd. We take the safety of users assets and personal information very seriously. Additionally, creating a fair and efficient marketplace is also important to protect investors' interests. We do everything in our power to minimize market manipulations and unfairness. Market surveillance program, carefully designed products, comprehensive risk management, and strict internal controls are all meant to make sure this young and energetic market is fair and safe to every participant. A bitcoin exchange is not just another technology company, but more importantly, also a financial one. There's no denying that SSL encryptions, cold storage, 2-factor authentication, and SMS confirmations are important, but risk management and internal controls are really what matters to financial institutions in the long run. When the black swan comes, people may appreciate all these experience and measures better. https://www.lakebtc.com/p/7064?locale=en
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