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Perishabull

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  1. On 2/3/2018 at 4:37 PM, drbubb said:

    b6Xmtsc.jpg

    Well it's been brutal so far, but this is the cryptocurrency markets.

    i considered selling a further 10% at the turn of the year, but didn't - a very unwise move.  Clearly things were manic at year end and I didn't heed these warnings.  Still my thesis played out during 2017 - cryptocurrency to go mainstream.

    Question now is - whether after the regulatory headwinds die down - will this become an investable asset class for institutional investors?

    I think it will but this will take time.

    I'm very fortunate having got in near the ground floor at the start of 2017.


  2. Lessons from the dot.com bubble;

     

    CNN November 9 2000;

    The $1.7 trillion dot.com lesson

     

    Index of 280 Internet stocks is down $1.7 trillion from its 52-week high 
    by Staff Writer David Kleinbard
      graphic
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    NEW YORK (CNNfn) - Call it the $1.755 trillion dot.com investing lesson.

    It's hard to think of a publicly traded Internet company that is not down at least 75 percent from its 52-week high and that hasn't trimmed its expenses or laid off workers. While industry groups have always drifted in and out of favor on Wall Street, it's rare to see an industry evaporate as quickly and completely as Web stocks did.

    CNNfn.com asked the market data and research firm Birinyi Associates of Westport, Conn., to calculate the market value of the 280 stocks in the Bloomberg US Internet Index at their respective 52-week highs and their current market value. The combined market values of the 280 stocks had fallen to $1.193 trillion currently from $2.948 trillion at their peak, a loss of $1.755 trillion, most of which occurred between March and September of this year.

    The Bloomberg Internet Index contains Web retailers, Internet infrastructure firms, Web advertising companies, Web portals and makers of networking equipment. Some of the largest losses on a dollar-value basis came from networking equipment giant Cisco Systems (CSCO: Research, Estimates), which has lost $210 billion in market value from its peak; the Internet incubators CMGI(CMGI: Research, Estimates) and Internet Capital Group (ICGE: Research, Estimates), which have lost a combined $100 billion from their apex; the Web portal Yahoo! (YHOO: Research, Estimates), which shed $102 billion, and America Online (AOL: Research, Estimates), which is worth $92 billion less than at its highest point.

    Of the 280 stocks in the index, 79 are down 90 percent or more from their 52-week high. Another 72 are down 80-89 percent. Only five are down less than 5 percent.

    graphic"It's not a correction � it's a crash," said Fred Wilson, managing partner at Flatiron, a New York-based venture capital firm dedicated to investing in the digital economy.

    The collapse of the Internet bubble, perhaps one of the largest financial fiascoes in U.S. history, came after a three-year period, starting in January 1997, when investors would buy almost anything even vaguely associated with the Internet, regardless of valuation. Investors ignored huge current losses and were willing to pay 100 times expected earnings in fiscal 2002. They were goaded by bullish reports from sell-side securities analysts� and market forecasts from IT research firms, such as IDC, Gartner and Forrester Research.

    "The venture business is all about excess and then correction," said Steve Bengston, a managing director at PricewaterhouseCoopers in San Jose, Calif., who advises early-stage companies. "It's like disk drives in the 1980s, when venture capitalists funded 50 disk-drive makers when the world needed three."

    "Stocks that skyrocketed north in a fashion never seen before will plummet south in a fashion never seen before either," Bengston added. "A lot of companies that don't have path to profitability or a leading position in their market will be shut down rather than receiving second or third rounds of funding."

    "When there were not very many Internet companies, the supply of Internet companies to the market was small and the appetite for them was large," said Flatiron's Wilson. "Therefore, if you were in the business of creating Internet companies in 1996-98, you had a market that provided massive demand for that."

    When public markets became glutted with new, money-losing Web companies in 1999, that picture changed rapidly. Venture funds are very reluctant to sink more money into struggling privately held Web companies that would be difficult to take public.

    "All of us in the venture capital area are going through a triage, where we have to decide which portfolio companies are so wounded we will never save them," Wilson said. "As horrible as it is to go through that process, it's a cleansing process. To have some branches grow and bear fruit, you have to trim others."�
     
    The boom in Internet IPOs

    Most industry sector booms, such as the biotech bubble of 1991, feature a large volume of IPOs in the hot sector, with the highest quality companies being the first to go public and the quality of offerings degrading as the boom reaches its later stages. The Internet bubble was no exception to that trend. Yahoo!, considered to be one of the highest quality, most blue-chip Internet stocks, went public in April 1996, becoming one of the first to trade in public markets. Amazon.com (AMZN: Research, Estimates), the giant of Web retailing, went public in May 1997 � still early in the cycle.

    According to the New York-based securities data firm Commscan, Web companies raised a total of $1 billion in 34 IPOs in 1997, rising to $2 billion in 45 deals in 1998, and then exploding to $24.1 billion in 292 IPOs in 1999. Investors who bought Web IPOs early in the cycle are still sitting on large gains. The combined market value of the 34 companies that went public that year is 330 percent higher than their offering prices, even after this year's Internet stock plunge, according to Commscan.
     
    Each day more bad news

    The collapse of the dot.com bubble has resulted in bad news about layoffs or losses being issued almost every day. On Nov. 7, for example, Pets.com (IPET: Research, Estimates), an online pet-supply retailer that had spent millions promoting its brand, decided to shut its doors and laid off roughly 255 of its 320 employees.

    graphicOne day later, Internet Capital Group said that it plans to cut its staff by 35 percent and take a fourth-quarter charge of $25 million to $30 million in a move to strengthen its financial position.

    ICG cut back its new investments in the third quarter to $120 million, from $417 million in the previous quarter. The announcement caused ICG's stock to plunge $5.06 to $11.19 Thursday; it's now down 95 percent from its 52-week high of $212.
     
    Few turtles reach the sea

    The high rates of consolidation and failure that Web companies are going through now is typical of many newly emerging industries throughout American economic history. Whenever a new technology comes along that has the potential to dramatically change the competitive landscape, hundreds of companies are formed to try to exploit that opportunity, including many with weak management or poorly thought out business plans. Intense competition ensues, returns on capital fall, and most of the new entrants either merge or go bankrupt.

    The consolidation of the U.S. railroad industry in the 20th century shows this pattern. In 1929, there were 163 "Class I" railroads in the U.S. Today, there are seven Class I railroads remaining, and they carry more than 90 percent of the rail freight in the U.S., according to the Association of American Railroads in Washington, D.C. The Penn Central Railroad was formed from 600 previously independent railroads.

    Merrill Lynch analyst Henry Blodget, one of the leading bulls on Web stocks, warned about a shakeout in the Internet industry in a 330-page report issued last June.

    "As the shakeout continues, we continue to believe that the Internet spoils will go to the few, not the many," Blodget wrote. "As one investor we respect put it, anytime a new industry emerges, many turtles hatch, few make it to the sea."

    There were about 300 public business-to-consumer Web companies trading last June, only five of which were profitable at that time. Blodget believes that in three years, only 15-20 will be profitable.
     
    Failure at Internet speed

    While high rates of consolidation and failure among Web stocks aren't at all surprising, the speed and severity of those failures has caught some investors off guard. Businesses that launched and operated at Internet speed have failed at Internet speed.

    For example, the name-your-own-price Web discounter Priceline.com (PCLN: Research, Estimates) went from $94 per share to less than $4 per share within the space of eight months.� PaineWebber began coverage of Priceline last January with a "buy" rating and a 12-month price target of $95, saying that Priceline "is truly revolutionizing commerce as we know it, providing a way for sellers to dispose of unwanted product while maintaining the integrity of their existing price structures."

    graphicEight months after that research note was issued, Priceline announced plans to close its gasoline and groceries operations, called WebHouse Club, after they burned through most of the $360 million they raised over the past two years. The grocery industry proved to be reluctant to eat the cost of discounts offered by WebHouse, forcing the new venture to subsidize the cost of its customers' groceries. �

    Ironically, Priceline's revenue in the quarter ended Sept. 30 was 18 percent higher than PaineWebber had forecast it would be, and its operating loss was smaller than forecast. What had changed was investors' perceptions about the future growth of the company and the popularity of the name-your-own-price business model.�
     
    The lessons learned

    Web-based retailers and Web sites supported by advertising revenue have proven to be the two most failure-prone types of Internet business, and there are lessons to be learned from each segment.

    Web retailers underestimated how much infrastructure they would have to build and how much logistics work they would need to do to duplicate traditional brick-and-mortar retailers. Companies that were supposed to be "virtual operations" ended up with warehouses and inventories almost as large as those of traditional retailers. Amazon.com (AMZN: Research, Estimates), for example, held about $164 million of inventory and had more than $350 million in property, plant and equipment as of Sept. 30.

    "I don't see how Amazon is really a dot.com," said Anitesh Barua, an assistant professor at the University of Texas at Austin, who has done an extensive study of the Internet economy. "It's really a very traditional operation, and it's not Amazon's fault, since the publishers that supply Amazon can't operate in a virtual mode themselves."

    "Dot.coms aren't good at logistics," Barua added. "How can they be? They have been in business for only three or four years."

    In some cases, Web retailers have found that customer-acquisition costs were much higher than they anticipated. And, to make matters worse, traditional retailers have launched their own Web operations and proven to be formidable competitors.

    "The legacy retailers are really waking up and going after the Net big time, so the competitive landscape has changed for the pure dot.com companies," said PricewaterhouseCoopers' Bengston. "Huge venture funds have been formed to help traditional companies create Web operations."

    Finally, businesses that are narrow margin in the brick-and-mortar world, such as books and consumer electronics, have proven to be narrow margin on the Web too. Amazon had about $638 million in revenue in the quarter ended Sept. 30; after deducting its cost of goods sold, marketing and selling expense, and general and administrative expense, only about $3 million is left over.
     
    Too many sites, too few advertisers

    With the exception of about 15 major Web destinations, Web sites supported by advertising are fighting for their lives and, in many cases, losing. The IT research firm Jupiter Research estimates that $3.5 billion was spent on Web advertising in 1999, rising to $5.3 billion this year and expected to hit $7.3 billion in 2001. While that growth rate is much faster than competing forms of advertising, most of the advertising dollars are going to a few large sites, leaving thousands of smaller sites to starve.

    According to Charles Buchwalter, vice president of media research at AdRelevance, an Internet advertising tracking firm, 80 sites comprise 80 percent of all the hosted advertising on the Web.

    "There is a gradual move away from concentration, but the numbers still are really small," Buchwalter said. "The ebullience that many companies had 12 months ago has been disabused by now. Advertisers have found that branding plays a role and coming up with a business model in this new world is not a slam dunk."
     
    A small part of the Internet economy

    While the plunge of the roughly 300 publicly traded Internet companies has generated a substantial amount of press coverage, those companies and the layoffs they have made represent only a tiny percentage of the overall Internet economy. Most of the Internet economy consists of old-line industrial companies that are using the Web to trim billions of dollars in costs from their operations and better serve customers. It also includes networking equipment companies that have generated billions of dollars in profits selling the routers, hubs and switches needed to direct the exploding amount of traffic over the Internet.

    "There is still a Gold Rush mentality out there, and the companies selling the pickaxes and dynamite are the ones who are consistently successful," said Matt Stamski, a senior analyst at Gomez Advisors in Lincoln, Mass., referring to the networking companies.

    The Internet economy added 650,000 jobs in 1999 as revenues soared to over half a trillion dollars, according to the University of Texas at Austin's Center for Research in Electronic Commerce. The Internet economy now directly supports 2.476 million workers, more than the insurance, communications and public utilities industries

    According to the human resources consulting firm Challenger Gray & Christmas Inc., some 22,267 dot.com job cuts have been announced since December 1999, when the firm began tracking such data. Of the 274 companies tracked from December 1999 through October 2000, 44 of them -- or 16 percent of the total -- have since failed. Still, people fired from dot.coms should have no problem finding another job, said John Challenger, the company's CEO.

    graphic

    "I think companies will spend billions of dollars over the next several years building their e-commerce structures, and these dot.com employees will be leaders in helping them do that," Challenger said.

    "A handful of highly publicized dot.coms are failing," said the University of Texas' Barua. "They never employed that many people to begin with, so the displacement is quite small. Sure, it's unfortunate for the investors who lost money, and the people temporarily being laid off. Their dreams of becoming multi-millionaires overnight just got shattered."

    "There are still an incredible number of opportunities that will get funded related to the Internet � they're just different," said PricewaterhouseCoopers' Bengston. "We're in the second inning of a nine-inning game. The Dells of the Internet business have not even been founded yet."

    Still, risk-averse investors would be well advised to remember the turtles heading for the sea. graphic

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  3. On 12/2/2017 at 4:50 AM, Perishabull said:

     

     

    It is possible we are witnessing and participating in something really different here, since the value of these networks isn't just determined just by supply and demand,but also network growth. Network growth creates network effects which perpetuates further growth. The growth of a network is defined by Metcalfe's law which I've posted about before, back in 2014 when discussing cryptocurrencies.

    Normally you can predict tops in markets by looking at parabolic moves however this is different in the sense that;

     

    • These are brand new asset markets

     

     

    In addition to this dynamic of Metcalfe's law we have an additional dynamic of reflexivity which I've posted about before. (http://www.greenenergyinvestors.com/index.php?showtopic=16736&p=256245)

     

    So this means that when prices run way ahead of value as suggested by Metcalfe's law it may be a sell signal, and when prices are below it may be a buy signal.

    Further reading;

     

    Business Insider;

    Analyst says 94% of bitcoin's price movement over the past 4 years can be explained by one equation

     

    Zerohedge;

    Gold, Bitcoin, And Metcalfe’s Law

    Here are the billionaire Winklevoss brothers explaining how they believe that Bitcoin should be valued according to Metcalfe's law (from 4:10);

     


  4. 5 hours ago, hector said:

    Bitcoin's Achilles heel is it's small block size. It cannot sustain the load of new owners all using it. And if you don't own your private keys then you don't really own bitcoin. This would make it very easy for governments to seize.

    Yeah and centralised exchanges are a weak point.  

    Roger Ver and Craig Wright seem to think bitcoin cash will hit the big time next year.  I didn't sell any of those when I sold down my bitcoin this year.  Who knows, maybe bitcoin cash will eclipse bitcoin one day....

     


  5. 6 hours ago, hector said:

    I think the bulls are squawking too loudly now... the bubble callers have acquiesced

    A downturn is coming during Christmas

    Wouldn't be surprised to see it drop to $3000-4000 sharpish

    It does seem very overheated, yet at the same time I cannot think of a more global accessible asset as bitcoin.  

    Spencer Bogart who is a respected Wall Street bitcoin analyst said in a recent interview that ownership among institutional investors wasn't even at 1%. Retail ownership is at 2%.

    I believe that bitcoin is not correlated with any other asset class therefore a small holding (low single digit %) might actually be quite attractive to these investors. Bubb what do you think?

     

     

    (I'll try and find the interview)

     

    Found it

     

     


  6. 21 hours ago, drbubb said:

    How crazy can it get?

    Borrow against your home, to buy the MOST SPECULATIVE "investment" in history!

    How crazy?

    My god, have you heard of cryptokitties?

    CATS

    Ethereum price and how to buy – what are CryptoKitties and is the cryptocurrency worth as much as Bitcoin?

    https://www.thesun.co.uk/money/5087162/ethereum-price-cryptokitties-cryptocurrency-bitcoin-currency-trading/

     


  7. Greeting all, I am back..... as if waking from a long slumber, I took one look at the long term log chart, rubbed my eyes, and bought heavily.

     

    I arrived late to the party. I bought heavily at 10,000 and 11,000 at the end of December, beginning of this month, when most where nervous at the 'toppy' levels. Already we are pushing 17,000.

     

    Dr Bubb, it seems you have fundamental objections to this bull run?? People interrogate me about the fundamentals, I shrug my head, and state the market is my friend... for now.

     

    PS, I seem unable to post a URL.

    This is really interesting - I would not have the guts to buy at the levels you did but am really interested in what you are seeing in the long term charts;

     

    I've used bitcoinwisdom.com to create the charts below.

     

    Logarithmic Bitcoin - September 2014 to present (Bitstamp)

    JYxe10X.png

     

    An upward double step change in the linear trend.

     

    Linear Bitcoin - September 2014 to present (Bitstamp)

     

    9LQxUHA.png

     

    A significant upward divergence from the trendline. Based on this basic price analysis, fair value relative to long term trend appears to be in the $8K - $11K range.

     

    I still have the license for a brilliant trading platform - Multicharts - so I will need to see if I can get data for Bitcoin and use that to do some proper professional charting and price analysis. When I used to trade futures I developed an algorithmic trading system that used genetic optimization for price analysis - I reckon it might be possible to create an effective bitcoin trading strategy.


  8.  

    I'm expecting payday for my Litecoins.

    Litecoin Approaches $200 in Monster Rally - The Merkle via BTCnews on iOS.

     

    https://themerkle.com/litecoin-approaches-200-in-monster-rally/

     

    Go Hector! I missed Litecoins, was targeting them prior to implementation of segwit but was caught out by the initial rise from $4 to $15, which came earlier than I expected, so I never got in.


  9. Are you not aware of the custom hash function debacle?

     

    Also, I read yesterday that the partnership with Microsoft was a very weak one. Certainly not along the lines of the EntEthAlliance. Just some fake news to pump to.

    I've not heard of that. I bought in as it appeared to be quite revolutionary technology, using a Directed Acyclic Graph rather than Blockchain.

     

    You're probably right - people buying due to hype thinking it's the best new thing out there.


  10. Looks like you're going to be wrong again

     

    Litecoin bidding looks well strong today.

     

    Inevitable, since its going mainstream with Revolut adopting it as one of their currencies along with BTC and ETH.

     

    It really should have a comparable marketcap to those

     

    I can't wait to load my Revolut card with litecoin and spending it in stores

     

     

    It is possible we are witnessing and participating in something really different here, since the value of these networks isn't just determined just by supply and demand,but also network growth. Network growth creates network effects which perpetuates further growth. The growth of a network is defined by Metcalfe's law which I've posted about before, back in 2014 when discussing cryptocurrencies.

     

     

    Metcalfe's law as it applies to Crytpo-currencies;

     

     

    From Wikipedia;

     

    "Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2). First formulated in this form by George Gilder in 1993,[1] and attributed to Robert Metcalfe in regard to Ethernet, Metcalfe's law was originally presented, circa 1980, not in terms of users, but rather of "compatible communicating devices" (for example, fax machines, telephones, etc.)[2] Only more recently with the launch of the Internet did this law carry over to users and networks as its original intent was to describe Ethernet purchases and connections.[3] The law is also very much related to economics and business management, especially with competitive companies looking to merge with one another."

    "Metcalfe's law characterizes many of the network effects of communication technologies and networks such as the Internet, social networking, and the World Wide Web. Former Chairman of the U.S. Federal Communications Commission Reed Hundt said that this law gives the most understanding to the workings of the Internet.[4] Metcalfe's Law is related to the fact that the number of unique connections in a network of a number of nodes (n) can be expressed mathematically as the triangular number n(n − 1)/2, which is proportional to n2 asymptotically (that is, an element of O(n2)).

     

    The law has often been illustrated using the example of fax machines: a single fax machine is useless, but the value of every fax machine increases with the total number of fax machines in the network, because the total number of people with whom each user may send and receive documents increases.[5] Likewise, in social networks, the greater number of users with the service, the more valuable the service becomes to the community."

     

    This means there ought to be a strong correlation in the growth of users of a crypto-currency and it's value over time.

     

     

    My god, if I'd properly thought through the implications of that insight as it applies to cryptocurrency markets, I would have likely been financially independent by now (my goal) since I would have bought a lot more Bitcoin. I did buy in 2014, but not many. Still I haven't sold any crypto since moving to 2 : 1 ratio of crypto to cash in August, and it's not possible for me to lose anything as I already cashed out 3X my original investment. If things keep moving according to Metcalfe's law then we all ought to be enjoying very merry christmasses and prosperous new years to come. I now think that John McAfee's predictions are probably based on Metcalfe's law.

     

    Normally you can predict tops in markets by looking at parabolic moves however this is different in the sense that;

     

    • These are brand new asset markets

     

     

    In addition to this dynamic of Metcalfe's law we have an additional dynamic of reflexivity which I've posted about before. (http://www.greenenergyinvestors.com/index.php?showtopic=16736&p=256245)

     

    So this means that when prices run way ahead of value as suggested by Metcalfe's law it may be a sell signal, and when prices are below it may be a buy signal.

     

     

    Further reading;

     

    Business Insider;

    Analyst says 94% of bitcoin's price movement over the past 4 years can be explained by one equation

     

    Zerohedge;

    Gold, Bitcoin, And Metcalfe’s Law


  11.  

    Bitcoing futures (on the CME) are said to be LAUNCHING in December

    This will be a very interesting dynamic since bitcoin prices are currently defined by unregulated exchanges, if volume gets to a significant level in futures it could end up being Wall Street/institutions setting the price via high volume futures trading. What do you reckon?

     

    Could be risk of significant manipulation of price.


  12.  

    Wow.

    I tried to add to my short - but had a glinch

    I am essentially fully hedged

    John McAfee has upped his 2020 bitcoin forecast from $500K to $1 million. Another sign.

     

    http://www.newsbtc.com/2017/11/29/john-mcafee-ups-2020-prediction-1000000-btc/

     

    How'd you get on with your short? Who are you shorting with?

     

    Earlier this year I sold some crypto leaving me at a 2 : 1 ratio of crypto to cash.

     

    The ratio is now 6 : 1 due to the parabolic rise in the cryptocurrency marketcap.


  13. When Bitcoin got to $5000 it really seemed like a mania, so I would be very surprised if it quickly got back to $5000.

     

    I think it seems more likely that we switch into a bear market. Cryptocurrency has exploded into the mainstream this year, which was the premise behind all my purchases earlier this year, but I reckon it's gone too far so we need to consolidate for a bit. Bitcoin went to $1200 then back down to $100 a few years back. I don't think we will see that style drop again, but I do think we should get down to $2000/$2250 mark at some point.

     

    It's still very early days, Joe public is not in this trade, this is a revolutionary technology wrapped up in a lot of hype and speculation.

     

    I definitely think this could be an interstellar market in coming years once we get more infrastructure in the space, more mainstream adoption etc.

     

     

     

     

    Well I was WRONG to think the market wouldn't quickly get back to $5000. Bitcoin is now a shade off $8000. It really is quite remarkable. The marketcap for cryptocurrencies has gone from $18.3 billion at the start of the year, to $227 billion.

     

    Cryptocurrency marketcap 2017 (from https://coinmarketcap.com/charts/);

     

    943Jxzv.png

     

    Cryptocurrency marketcap 2017 (excluding bitcoin);

     

    l9XZgP9.png

     

    Potential double top?


  14. Interesting article

     

    http://www.naturalnews.com/2017-09-17-john-mcafee-accidentally-revealed-why-bitcoin-is-a-total-fraud-behold-the-logic-of-artificial-work.html?utm_referrer=https%3A%2F%2Fzen.yandex.com

     

    "Natural News) In a recent CNBC interview thats being widely touted by self-deluded Bitcoin promoters as some kind of smack down of JP Morgan CEO Jamie Dimon, Bitcoin advocate John McAfee accidentally admitted why Bitcoin is a total fraud thats doomed to fail.

     

    In answering Jamie Dimons recent declaration that Bitcoin is a fraud, McAfee replied: (see the video at The Daily Sheeple)

     

    "However, sir you called Bitcoin a fraud. Im a Bitcoin miner. We create Bitcoins. It costs over one thousand dollars per coin to create a Bitcoin. What does it cost to create a U.S. dollar? Which one is the fraud? Because [the dollar] costs whatever the paper costs, but it costs me and other miners over a thousand dollars per coin its called proof of work.

     

    Behold the logic of artificial work: How John McAfee just embraced Paul Krugmans ditch digging fable

     

    The problem with John McAfees explanation, of course, is that it admits Bitcoins can only be created through the practice of computational wheel spinning operations where the difficulty and duration of such wheel spinning is artificially made needlessly complex by the Bitcoin algorithm. In a world where Bitcoins used to be created for less than one pennys worth of computational work, a single Bitcoin now requires over US$1,000 worth of artificial work to be achieved. A rational person must ask McAfee, Why did Bitcoins used to cost just a penny to create, and now they cost a thousand dollars? The 100,000 X increase in complexity for generating a Bitcoin, it turns out, is an artificial work algorithm known as computational difficulty in mining.

     

    This admission should be shocking to all Bitcoin holders for the simple reason that if Bitcoin drops below $1,000, mining now becomes unprofitable, rendering a very large part of the entire Bitcoin mining infrastructure instantly obsolete. The only thing keeping Bitcoin mining profitable right now is the bubble pricing of Bitcoin itself, and because all bubbles eventually burst, Bitcoin mining will sooner or later reach a point where its not worth the investment of hardware, electricity and time. (Theres also the 21 million coin limit thats rapidly approaching, by the way, which will spell the end of Bitcoin mining as it is conducted today.)

     

    Furthermore, the artificial work aspect of Bitcoin mining and its artificial computational complexity is the digital equivalent of paying people to dig ditches and fill them in again while claiming the activity boosts economic output. This idea, believe it or not, is the classic economic paradox routinely pushed by left-leaning economic myth-meisters like Paul Krugman. Those of you who follow economic news know that Krugman openly and wholeheartedly believes that government could boost the economy by literally paying millions of people to dig ditches and fill them in again. This artificial work generates real-world abundance, according to economic fools like Krugman. Thats why Zero Hedge rightly posts an article entitled, Why Paul Krugman Should Go Back To 5th Grade.

     

    And yet Paul Krugmans ditch-digging artificial work is actually no different than John McAfees Bitcoin mining artificial work. In both cases, McAfee and Krugman ridiculously claims that work along has intrinsic value, even if little or nothing is actually accomplished in the real world. According to McAfee, computational expenditure automatically equals value, even when the notion is patently absurd to any rational person. If CPU cycles equaled wealth, then no one in the world would ever have to work again because people could just run computers all day and let the CPUs create wealth.

     

    Any belief in such a system is, of course, irrational and absurd. There is no such thing as a perpetual wealth-generating machine unless you own the money supply itself and can hoodwink others into trading their effort for your currency. Thats what the Federal Reserve does, of course, and thats the entire con of the Bitcoin Ponzi scheme: To recruit as many people as possible into the Bitcoin scheme so that they pay you cash in exchange for your CPU cycles.

     

    To produce artificial work, Bitcoin consumes enormous resources

     

    Bitcoins proof of work, in other words, is nothing more than artificial work. Yet what is the real world result of such artificial work? While generating absolutely nothing thats real in the real world remember as Steve Quayle says, If you cant touch it, you dont own it the Bitcoin mining process consumes enormous amounts of electricity, computing hardware and time. Yet in the end, theres nothing to show for all that work except for carbon dioxide emissions and mercury pollution from the Chinese coal plants that power nearly a third of global Bitcoin mining. Bitcoin, in fact, has become one of the key vectors of environmental pollution thats causing hazardous air in Californias cities.

     

    McAfee claims that artificial work is actually proof of work. In reality, its proof of nothing more than the incredible stupidity of the mining infrastructure which is now burning more electricity than a city of one million people just to keep the Bitcoin blockchain from collapsing.

     

    Surely theres some value in the work that we did to create the coin, McAfee stated. But actually, there isnt any real-world value in it at all. Bitcoin is a digital fiat currency backed by nothing, and all the work used to create Bitcoins is actually artificial work thats made artificially complex for no logical reason other than a crude mechanism for artificial scarcity. Yet even that scarcity is a complete failure, since any person can create and launch their own cryptocurrency alongside Bitcoin, instantly creating a massive new supply of crypto coins that flood the marketplace. (And many newer cryptos are vastly superior in design to Bitcoin. For example, Z-cash)

     

    On top of all that, Bitcoin is clearly not a store of value, and recent research by Princeton scientists found that Bitcoin isnt anonymous, either. Bitcoin is also highly subject to government regulation, as the recent market plunges clearly demonstrated, following the announcement of Chinas largest Bitcoin exchanges closing their doors. Liquidations of Bitcoin by Chinese investors are already underway and will continue through September 30th.

     

    One by one, all the promises we were told about Bitcoin have unraveled: It isnt anonymous, transactions arent instant, transactions arent free, Bitcoin isnt a reliable store of value, it isnt immune to government regulations and so on. Yet John McAfee, in his self-deluded cluelessness, points to artificial work and says, essentially, See? Were expending CPU cycles for all this! Doesnt that have value?

     

    Actually, it doesnt, Mr. McAfee. It has no more value than the GPU calculations of a nine-year-old kid playing a first person shooter on a Saturday afternoon. Yeah, his rig is running all sorts of complex calculations, but at the end of the day, theres nothing to show for it other than Cheetos crumbs that fell between the cushions of the couch.

     

    Computation does not automatically equal value

     

    Computation alone does not equal real-world value. John McAfees attempt to conflate the two ideas only shows how deeply he has deluded himself about the future of Bitcoin. And those who falsely believe that computation equals value are only allowing themselves to be fooled by this non-logic for the simple reason that they all own Bitcoin i.e. Bix Weir and others and cant come to grip with reality without admitting they were wrong all along.

     

    The bottom line? Bitcoin is headed for failure, but cryptocurrency is here to stay. The most likely long-term scenario in all this is that well see a cryptocurrency backed by JP Morgan and the government a blockchain with built-in NSA snooping and an identity layer so that all transactions can be tracked by the IRS to enable government confiscation and criminalization as deemed appropriate by the crooks in Washington.

     

    Once this approved blockchain is rolled out, it wont be long before government finds a way to criminalize all unapproved blockchains such as Bitcoin, Ethereum, etc.

     

    And how hard is it for government to criminalize Bitcoin? Not hard at all: Its a simple matter to run a false flag dirty bomb operation the FBI already masterminds and executes terrorist plots every day across America then make sure the bad guys who are recruited into the sting operation are fully funded by Bitcoin.

     

    A few hours later, the fake news New York Times will declare, CHICAGO DIRTY BOMB TERROR PLOT FUNDED BY BITCOIN. And the house of cards falls like dominoes. The entire media will be directed by the CIA to describe Bitcoin as a currency for terrorists, murderers and drug dealers, and Bitcoin will be targeted in exactly the same way the Silk Road was taken down. A few Bitcoin promoters will be imprisoned, the government will claim its fighting terrorism, and the clueless sheeple of society will applaud the news that they are being protected by authorities.

     

    Seeing all this play out is as clear as day. And why is this so obvious? Because we are all living as slaves in a totalitarian society run by fake news, fake terrorism and fake authority.

     

    Will that totalitarian regime allow all their central banks and government currencies to be made obsolete by a libertarian cryptocurrency they dont completely control? Of course not. And anyone who believes Bitcoin will overthrow the globalist money / debt cartels is naive and stupid. Trust me when I say a bunch of geeks arent going to overthrow centuries of globalist money domination that now rules our corrupt world."

    Interesting article but I don't think it's accurate. It may well be that the current price to mine is $1000 but is this not dependant on the miners active at any given time? If there are less miners surely it then becomes less difficult to mine when there are fewer competitive miners? This should mean as price approaches cost, the drop in numbers of miners should reduce the cost floor to mine per coin.

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