In the last week, I have read hundreds of explanations for why Bitcoin did not reach $100,000 after the approval of several ETFs by the SEC. In general, there is a high degree of paranoia predicting the end of Bitcoin at the hands of large and powerful financial institutions that are going to buy all the existing Bitcoins and end up taking it to zero, destroying it forever, even if they have to invest fortunes to do so because the ultimate goal of these institutions is to destroy Bitcoin rather than serve their customers. (BTW, I'm not going to sell my Bitcoin, what about you?).
When I asked one of the doomsayers if he thought the price of Bitcoin was going to remain constant as the big traders started buying everything, and if it was worth investing all the money that had to be invested at the new prices, he replied yes. Remarkable level of ignorance when it comes to business.
What catches my attention is that they can think about this dystopian future for Bitcoin, and don't think about why this didn't happen with gold. Aren't large financial operators like BlackRock or Vanguard able, according to paranoid criteria, to buy all the existing gold, and also to buy the main mining companies that process it every day?
Someone answered me that gold did not have a mintage limit, like Bitcoin does. This is totally false. The gold reserves are absolutely known, and also is known all the gold that will never be able to be extracted. We always talk about planet Earth, obviously. (If Musk takes us to Mars, then we'll see).
But what catches my attention the most is that this paranoid current thinks that until now, the price of Bitcoin was not manipulated. It is very naive to think that the price of Bitcoin was the result of the free play of supply and demand by retailers.
Who do you think the so-called “whales” are? Do you think that, for example, BlackRock, Vanguard, J.P. Morgan had not bought Bitcoin several years ago? Do you think they started buying now that the SEC authorized ETFs?
In general, all posts I have read about the price of Bitcoin end with the following conclusion: “it can go up, but it can also go down, and it can also stay at current values.” Very notable conclusion. Others, more cautious, say that we should not trust what happened before, because history may not repeat itself. After showing indicators such as RSI, Bollinger bands, MACD, the Golden Cross, Fibonacci retracements, and the clouds of I don't know what Japanese, the conclusion would seem a bit risky. When at the beginning of the 20th century they asked J.P. Morgan himself how the markets were going to behave, the guy answered “they are going to fluctuate.”
So much graph and so much indicator, to say that it can go down or up, or not.
Those who expected Bitcoin to reach $100,000 after the approval of ETFs are the ones who are in the cryptosphere to get rich. They are the ones who still believe in the narrative of the American dream. They are the ones who think about Bitcoin with a Wall Street mentality.
Bitcoin is a very different thing. If you want to use it to get rich, that's your problem. The philosophy of Bitcoin has nothing to do with wealth, it is just the opposite. Those who are crying because they expected a price of $100,000 the next day are deeply ignorant of how Bitcoin works.
Those of us who understand the fundamentals of Bitcoin as a P2P payment method know that BTC is intact, because the important thing is not the price or who has it, but how it is issued.
When I say this, they immediately go for my jugular and tell me that mining is in the hands of a few pools. That's not true either. If there is something that allows decentralization, it is the fact that any neighbor's son can mine his/her own money. This is the heart of the revolution. The concept of decentralization and blockchain technology eliminates the need for a centralized entity to issue IOUs in the form of banknotes for people to freely transact with each other.
No one in their right mind could think that a person could freely issue dollar bills in his/her house and that he/she could freely use them for trading. But precisely, decentralization, the Bitcoin protocol and the PoW consensus of hundreds of thousands of interconnected computers, allows that. Each person can issue their own Bitcoin and use them to trade freely.
There is the heart of Bitcoin. Not on Wall Street. On Wall Street, the worshipers of the American dream will continue playing roulette. Meanwhile, in Gotham City, people are going to parallel trade Bitcoin. Nobody who understands the philosophy of Bitcoin is thinking about getting rich, but about having time to live peacefully, without inflation. It is very likely that fiat issued by central banks will never disappear. It is very likely that the issuance of debt by States will continue to work for large operations. No one who understands Bitcoin is thinking about big operations, but rather a small peer-to-peer economy, without permissions, without borders and without inflation. Governments will be able to continue financing wars with fiat money. Ordinary people are going to operate with zeros and ones.
Now, when I was very young they told me that skill is better than strength.
The truth is that I feel bad when developers are underestimated. The paranoid thinks that the developers will just watch and do nothing if they see that something could alter the philosophy of the Bitcoin protocol. They already did it once and, what seemed like a nerdy prank, ended up being validated last week through the authorization of ETFs by the highest monetary authority of the most powerful country in the world.
The developers are on the prowl, they are not asleep. And the whales are lurking too, but to finance them in case they discover a new way to make money to replace the Jurassic structures that served in previous centuries.
Let me briefly describe a well-known problem in Game Theory, which is often known as the Tom and Jerry problem. The underlying interpretation of this problem is that it would seem that the cat is not so much a cat, and that the mouse has many possibilities.
The concept of this game specifically uses the idea of strategy reduction by virtue of some of them being equal.
In a floor plan like the one shown in Figure 1, the squares indicate blocks in a street network. A cat and a mouse simultaneously penetrate through points 1 and 9, making three blocks in a row, both at the same speed. They cannot go back the way they came or stop. If they reach the same corner at the same time, the cat eats the mouse. Otherwise, the mouse survive.
Figure 1
Is there an optimal strategy for each?
What is the probability that the mouse survives?
Remember that the possible sections are up to three blocks. We will denote with the number 1 if Tom eats Jerry, and with the number 0 if Jerry survives. Then the payment matrix in Figure 2 can be proposed.
Figure 2
The matrix obtained does not have a minimax point. Furthermore, it can be reduced, because:
- J1's (Tom) strategy 4 dominates 2, 3, 5, 6, and 7
- Strategy 8 of J1 (Tom) dominates strategy 1
In this way, J2 (Jerry) can observe in the reduced matrix formed by strategies 4 and 8 of J1 (Tom), that:
- Strategy 1 or 5 of J2 (Jerry) dominates all the rest.
Then the reduced matrix shown in Figure 3 is obtained:
Figure 3
According to this last matrix, Tom should travel through sections 1254 and 1452 of Figure 1 to hunt Jerry, and Jerry should travel through sections 9632 and 9874 in Figure 1 to not be hunted. Jerry's probability of surviving is ?, which is the value of the game. Tom must try to return to the starting point, and Jerry must get as far away from it as possible.
But most importantly, Jerry's chance of survival is ?! It's a big probability, don't you think?
If the cat were invincible, there would be no beginner chess players, as there are, who would beat Grandmasters.
Now, let's apply this game to some current Bitcoin battles, with the current state of the art of the technology.
There are many battles. There are two in particular that I am following closely. The first has to do with the so-called MEV. The other has to do with home mining, that is, small-scale mining, versus large pools.
In a PoW consensus algorithm, miners are responsible for confirming transactions that accumulate in a Mempool. Maximum Extractable Value (MEV), formerly known as Mining Extractable Value, refers to the strategy of including, omitting, or reordering transactions when creating a new block. The goal of MEV is to obtain the maximum possible profits.
MEV is associated with the Ethereum network due to its significant decentralized finance (DeFi) ecosystem. The more complex the transactions involved in a block, the more opportunities block producers will have to make additional profits (extract a maximum value) by deciding to include, omit, or reorder certain transactions. For example, selecting certain transactions over others and ordering them in a particular way can provide additional profits due to arbitrage opportunities generated or on-chain settlement. Arbitrage, front-running, and liquidation offer opportunities to miners.
With minor exceptions, MEV is very rare in Bitcoin. A general rule of thumb is that the greater the complexity of a transaction, the more opportunities miners have to create MEV by exploiting the inefficiencies caused by increased complexity. Bitcoin operations are very simple since they consist of payments made by one party to another. But the probability of doing more complex operations with Bitcoin appears possible with Taproot or Layer 2, which are developing faster and faster. The amount of MEV may grow a lot shortly on Bitcoin, enabling a new incentive for miners who secure the network.
MEV as a whole is often a zero-sum game where any profit for the miner comes at the expense of a user on the network.
This is the case of Tom and Jerry.
The Tom and Jerry dilemma will put a lot of challenges in the future development of this modality. Sometimes Tom can become Jerry, given the circumstances and the restrictions posed by the different modalities of DeFi. MEV is important today on Ethereum precisely because of the opportunities that exist in DeFi with lending and settlements. Will that come to Bitcoin?
1) Small scale mining
Here the Tom and Jerry dilemma is crucial because there is an exaggerated tendency to think that only the large pools are the owners of all the gold on the planet.
But solutions and use cases appear every day to show how small-scale Bitcoin mining is reorganizing the world map of energy production, especially in rural areas most forgotten by the establishment and Davos.
Precisely in the areas with the greatest deficiencies in terms of what Western societies consider “success”, for the first time in the history of humanity people realize that they can harness the potential energy of natural resources to produce their own money. This turning point may be as important in human history as the beginning of spoken language or the discovery of fire.
Let's remember that Bitcoin means an exchange of energy and that the mouse has a ? chance of winning if it follows an appropriate strategy. Fighting for the validation of a transaction, for the generation of a block, or the reorganization of transactions in a Mempool, can be one of the most fascinating races shortly for lovers of programming and technology.
For the first time in history, we are in a position to produce our own money valued by a huge number of peers that can help us organize the future of an economy parallel to the political economy based on the issuance of fiat money.
As an example, FutureBit has just launched a powerful solo Bitcoin mining rig. The Apollo II device works as a home or desktop miner and also a Bitcoin full node.
The device integrates different functions and is plug-and-play since it does not require great configuration efforts. The manufacturing company focuses on providing equipment for those people who prefer to maintain their operations at home and individually, without depending on mining pools.
The Apollo II is a Bitcoin mining device that comes in three different presentations. The standard model has a 5nm ASIC (application-specific integrated circuit) chip and offers 10 TH/s of computing power, with a consumption of 200 to 400 watts. The efficiency of this device is 28 W/TH.
The device integrates ApolloOS mining software and only requires a connection through a USB port. The standard version is compatible with older Apollo versions, full nodes, a Windows or Linux computer, or even a Raspberry Pi. The introductory price is USD 800. The Apollo II Full Node model integrates a Bitcoin full node and the miner in a single device. This version has a Linux operating system (Ubuntu 22). Lastly, FutureBit offers the Apollo II Founders Edition model, which has all the features of the Full Node. Apollo II compares very well to the current generation of Bitcoin mining ASICs on the market.
What else do you need to understand that you are on the right path? Would firms like FutureBit invest in these types of projects if they were immersed in the paranoia that Bitcoin was going to remain in the hands of a single operator?
We live in a "reality" designed by the Davos elite and transmitted internationally through their lackeys, the mass media, of which they are owners. Thus we were educated in the "reality" that says that the "successful" individual is the one who accumulates wealth and more wealth. The icon is a Caucasian, blue-eyed male, photographed in a spectacular house by the sea, with several Lamborghinis parked, and a 600-foot yacht on the mooring. (Very often, the private jet is not included in the photograph). Millions of people around the planet bought that image, and live on average about 80 times the same year, looking for that "success" that never comes, because the only ones who can access that kind of "success" are the magnates of Davos and their descendants.
Instead of worrying about the price of Bitcoin on Wall Street, it seems to me that those of us who are on the side of decentralization and who see that the future of humanity lies there should be working on other issues.
Instead of being paranoid about the giant monster that comes to steal from us and take everything we own, thinking only about the commercial aspect of technology, we should think about what each of us who believe in decentralization is doing to secure the PoW network all the time. Jerry can beat Tom if there is a battle outside the minds of the paranoid.
I see in the very short term a world in which each person can make their own money, not to speculate on becoming a millionaire on Wall Street, but to trade freely with their peers on a day-to-day basis. That’s Jerry-type thinking.
For the first time in human history, each of the inhabitants of the planet can access on reasonable terms to make their own money and to trade it freely with their peers, without borders, permissions, intermediaries, and censorship.
Fiat money is not going to disappear. Two economies are going to coexist, one very large, which we can call the Davos economy, and the other based on the money made by each one to trade P2P.
You are not going to get rich with Bitcoin. At least in terms of economic "success." Instead, you are going to get rich by being yourself.
We are the chosen ones in the timeline to live for the first time this unique experience.
Thank you for reading! Decentralize yourselves as much as you can, and much more! Work for yourselves, not for others. When you work for someone else, they pay you what YOUR POSITION is worth, when you work for yourself, they pay you what YOU are worth. No one achieves financial independence by working as an employee. Live long and prosper!
Never forget:
As usual, none of the things written in this post are financial advice and are not intended to replace personal research. My sole intention in writing this post is informative. Several of the things discussed here could be wrong, so in no way can this post be construed as financial advice, and in no way should it replace your research.
If you have any questions or comments, please feel free to leave them down below
You can also contact me at [email protected]
https://twitter.com/SirGerardThe1st
LinkedIn https://www.linkedin.com/in/gerardosaporosi/
Follow my blog Anarchy: the Final Solution:https://gerardosaporosi.substack.com/
Mensaje para hispanoparlantes. Pueden seguir mi podcast MACROESTRATEGIA en Fountain.
?Sabian que en Fountain pueden ganar sats solo por escuchar episodios de sus podcasts preferidos? No se pierdan esta oportunidad de juntar sats para usar en la Litghning Network.
Pueden bajar la aplicacion Fountain para IOS o Android y hacer una cuenta con mi referral link:
https://fountain.fm/sirgerardthe1st?code=7ea0b680d3
Cuando la hayan hecho, podran empezar a acumular sats solo por escuchar sus podcasts y sus episodios favoritos.
