$50k!!
Daily Ramble
It’s a big day in Bitcoin land — the $50k mark has been breached. That’s up 150% from the previous all-time high at $20k set in December 2017 which was only just re-taken two short months ago. Euphoria is running ramping through the Bitcoin-verse.
To keep my feet on the ground, I was discussing security with a friend. I mentioned in the Ed Bite yesterday that the more valuable the Bitcoin, the more important security becomes. My friend and I were talking through the best practice for a 2 of 3 multi-signature wallet for our families and I wanted to share the model that we landed on for a couple of reasons: it keeps me away from the euphoria, it’s good to have the model publicly stress-tested by others, and it offers some insights that newer folks may not be considering yet for Bitcoin security.
It sounds trivial at first — where should we keep the three different keys, two of which will be necessary to move our Bitcoin? My priority in the design is making sure that we cannot be forced to send Bitcoin to anyone. This is a safety concern — any attacker that can get two of the three keys in the same room can force our Bitcoin to be sent by the threat of violence. The plan for the first key would be to keep it at home. Remember that there is no way for Bitcoin to be sent with a single key. The first key is pretty simple to think through.
The second key is where things get more interesting. We want to have access to it, but we don’t want that access to be easy enough that an attacker can force us to retrieve the second key. The solution: keep it in a safety deposit box in a bank. For redundancy, I will keep one in a local safety deposit box and a backup of the second key in a second safety deposit box further from home. It becomes quite a difficult task for an attacker to force the retrieval of the second key from a bank vault. There are many more interesting targets for a thief to focus on than us, given the difficulty. We don’t need to be the fastest kid in the camp when the bear attacks — just not the slowest.
The third key is where I was lost until talking it through with my friend. We will mail three different friends copies of the third key. The third key is the emergency glass on the fire alarm — it’ll take some serious problems for it to be needed. None of the friends that receive the seed phrase will have the ability to access the funds since they would need at least one of the other keys. There simply is no incentive for friends to do anything but hold on to the information I provide for them. And by giving it to three close friends, there’s a good chance at least one of them will hang on to it, if and when the time comes.
I’m sure that was incredibly dull for most but slightly interesting for a few. If nothing else, it’s saved for my future self to see the obvious flaws in my current thinking. Isn’t your future self always smarter and more capable than you right now — or is that just me?
Favorite Thing on the Interwebs Today
Bitcoin Price Prediction
Yesterday: $45.5k - $50k
Today: $47k - $53k
Tomorrow: $43k - $53k
We already celebrated the $50k mark in the Ramble, but the price action around it looks like it wants more. I am anticipating that $53k will be met with serious resistance — that’s where Bitcoin’s network becomes worth a collective $1T. That’s a battle line that I’m certain a lot of players would want to stop from happening. Why? Because at $1T Bitcoin becomes tradeable by the largest funds in the world that require a market with tremendous depth to be able to enter and exit enormous positions. All that is to say, I see more upside in the days ahead, but I am anticipating a possible pullback to retest as low as $44k. I don’t see strong evidence for this but I’m keeping it there as a bearish possibility. More realistically, I see price continue to trade between $47k-$53k today and tomorrow.
Bitcoin Ed Bite
Q: What is a speculative attack on the US dollar and what does that have to do with Bitcoin?
A: Selling the US dollar with the belief it’s overvalued while purchasing a currency, like Bitcoin, that is perceived to be undervalued. Done in enough volume, it can drive the value of the USD down.
I wanted to focus the Ed Bite on the idea of a speculative attack because Michael Saylor, CEO of MicroStrategy, just announced raising another $600M in capital to purchase bitcoin by selling convertible notes. The $1.4B in bitcoin MicroStrategy has already purchased has increased in value by $2.4B giving their balance sheet more room to raise capital.
Michael Saylor may not be saying this in words, but his actions are a speculative attack on the USD. He’s raising as much money as he can to purchase Bitcoin, driving the price of Bitcoin up, only to then use the increased value of MicroStrategy itself to raise more capital. The higher the price, the more encouraged others are to join the game. And the more USD that flows into Bitcoin, the less valued the USD. It’s wild to see this playing out in real-time!
Thanks for reading,
Kent
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