Daily Ramble
The force has been disturbed inside our castle. Naia’s slight cough has progressed to full fever, runny nose, and a hack. And we got the delightful news that her close amigo has a case of head lice. Giddy-up! It’s been a solid six months since we had a cold ripple through our household. Just long enough that I’d started to take health for granted. In our family, the cold’s vector enters through Naia, whose disturbed sleep disturbs us, then in our sleepless state, it does its best to get one over on Ana and I. Sneaky sucker. The best part about the entire affair is arguing with Ana over who's getting more sleep and how to juggle our work schedules around a feverish kiddo. It’s a fine day to be alive! I’m caffeinated and ready to Ramble.
I came across two things yesterday that, when put together, gave me pause. The first was this graphic from Dan Held showing the global reserve currency since the 1400s.
I’ve yet to see anything so macro, yet concise, showing the history of the global reserve currency. The global reserve currency is the currency used to settle international trade. What’s most shocking is how clearly a global reserve asset never lasts. Most folks on the planet struggle to imagine the world post-dollar, but if history is an indicator of the future, the dollar will have to buck a 600-year trend if it’s to maintain its dominance. Dan is making the assumption that Bitcoin will be next, and while I 100% back the idea, it’s not a certainty. China is working fiendishly to get the yuan into that slot, and the US is not out of the game yet either with the dollar.
That the dollar is the unchecked king kong for global trade is no longer a certainty. You don’t have to look further than the Financial Times opinion piece from July 3rd to see the US dollar system is beginning to bristle at the attacks.
Whiny headline aside, the author proceeds to splice a hair arguing that the dollar is not fiat, meaning “by decree,” but actually backed by US Treasuries. US Treasuries being debt that the government has sold to the Federal Reserve in exchange for dollars today. You know, sell the next generation’s future to give the present population dollars today. One great big rope-a-dope that works as long as everyone believes the US will make good on its debt, which, as I wrote about on the 2nd, seems like an awfully rough line to tow.
The tall and short of it: keep your head on a swivel. We’re in the midst of monetary change. If you’ve wrapped the value you generate for your work efforts inside the identity of a fiat currency—excuse me, credit currency—start unwrapping it. Staying flexible on how you count your value will be paramount for navigating the incoming volatility.
Cringe-worthy Things on the Interweb
Courtesy of Naia’s desire to see camels this morning.
Bitcoin Price Prediction
Yesterday: $32.8k - $34.7k
Today: $32k - $35.1k
Tomorrow: $30.7k - $36k
The pressure continues for the bulls as the price struggles to stay above $34k once again. Yesterday’s close showed the bulls were in trouble, but they rallied up to $35k before being swatted away by the bears. Stepping back, the price is coiling into a tighter and tighter pattern. That means volatility is incoming. At the moment, a downside break looks more probable, but if you’d asked me two short hours ago, I would have suspected a break to the upside. I say this to point out that getting a break fairly soon is the only certainty I can convey. If we break $36k, then it’s likely we’ll head up. If we break $32k, it is likely we’ll head down. Maybe not all at once, but those are the two lines in the sand that I see dictating price direction right now.
Bitcoin Q & A
Q: What is a nonce in Bitcoin mining?
A: A nonce is a “number used once” that the miner uses to “solve” a block.
Roughly every 10 minutes, a new block is added to the Bitcoin blockchain by the mining community. Each miner puts a set of transactions into a block and then rushes to be the first to “solve” the block. “Solving” the block means finding the cryptographic solution to a puzzle. The miner uses a nonce to test potential solutions. After each test, the nonce is discarded, and a new one is inserted until the miner finds the solution. Once “solved,” the new block is broadcast to the Bitcoin network, and the miner is given the block reward, which is currently 6.25 bitcoin.
Thanks for reading,
Kent
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Thank you, sweet, sickly Naia for wanting to see camels today. But YOUCH!!!
And Kent, your writing just keeps getting better. I should sic Mr Proehl onto your newsletter. He'd be pleased.