Constants
Daily Ramble
Kent’s Corner has firmly wedged itself into my daily routine at this point. Directly after my morning routine that’s too complicated for a pithy one-liner, I sit down to write while my mind is still ungarbled by screens, charts, and other data. Once I’ve put the polishing touches on the Corner, I push send and go on with my day, not checking responses until the following morning. Imagine my surprise and delight when I saw yesterday’s Corner on Xennials was my most read piece to date — by a long shot. Cheers to all those who read, shared, and are coming back for more!
Now, time to ramble… On my morning coastal bike ride, I listened to what I’ve come to believe is the best podcast docuseries on Bitcoin, What is Money? The first nine episodes are an epic discussion between Robert Breedlove and Michael Saylor. Robert is arguably the most articulate, well-spoken evangelist for Bitcoin. Simultaneously, Michael Saylor is single-handedly responsible for driving corporate adoption of Bitcoin and holds more skin in the game than any other individual on the planet.
I’ve only made my way through the first five episodes, but after hearing each one, even after five years of following the philosophical trail of Bitcoin, I learn more. The podcast series starts with a background on money ranging from the first civilizations until today. It builds a mental framework for understanding money through the laws of physics, specifically the transfer of energy across time and space. If you want to get to brass tacks with reality, nothing gets closer than the study of physics.
Economists rarely include the study of energy and matter into their understanding of economics, which is one of the main reasons most have missed the Bitcoin revolution growing under their upturned noses. What they’re truly missing is how the laws of physics are colliding with economics through Bitcoin. In physics, a few constants are used in calculations: the speed of light, gravity, and plank’s constant, to name a few. Bitcoin is forcing a physics constant into the realm of money through its hard-capped supply of 21 million. The gravity, no pun intended, of this force is shaking society by the short hairs and has barely begun to register at large.
Just as the speed of light is 3x10^8 m/s which represents the limit of an object’s speed, 21M bitcoin represents the finite amount of units capable of storing all the world's monetary energy. This limit is hardened through Bitcoin mining that converts physical energy into Bitcoin. While we can add as many zeros as we like after the decimal point, physical constraints of energy prohibit more Bitcoin from being added to the network than 21M. Sure, it is theoretically possible that the speed of light or gravity can change at some point in the future, but we can’t see how through our current understanding of the law of physics. The same is true of Bitcoin’s 21M bitcoin hardened by the laws of physics.
The certainty that constants create in a world of constant change cannot be understated. If the constants of gravity and light’s speed were not constant, most of the devices we’ve engineered and built in our reality would suddenly cease to function properly. Bitcoin is doing the same in economics by providing a bedrock foundation of economic truth backed by the laws of physics for the first time in human history.
You may not understand a bloody thing I wrote, but if you made it this far, congrats on your dedication to trying to get it. You eventually will, and you’ll be blown away when you do.
Favorite Things on the Interwebs Today
The macro mirroring the micro never ceases to amaze me.
Bitcoin Price Prediction
Yesterday: $55.8k-$60k
Today: $58k - $62k
Tomorrow: $55.6k - $65k
Bitcoin’s price did stay about $57k yesterday, keeping the door wide open for a retest of the all-time high at $62k again. The price action is indecisive at the moment, making it difficult to tell if we’re consolidating under resistance or if the bulls are becoming exhausted. The length of time we’ve spent hammering away at $60k suggests to me that if we fail to breach it, that a pull back will be short-lived before buyers swoop in to buy the dip. I anticipate that if we do not see a direct push up through $60k today, then we’ll pull back and break it tomorrow. The only bearish tint to the situation is an uptick in Bitcoin flowing into exchanges. If we do get a pullback breaking below $55k, we will be in this range a bit longer than I am anticipating.
Bitcoin Q & A
Q: Is it possible for a miner to mine all the blocks?
A: No.
The odds of a single miner consistently winning the block race every 10 minutes is exceedingly low. The probabilities are on the order of finding a specific grain of sand dropped randomly on any beach on the planet. This is important because it encourages friendly competition amongst all miners. As soon as any miner “solves” a block and broadcasts it to the network, all other miners switch as quickly as possible to mining the next block. Since each hash provides another lottery ticket to win the next block's competition, the quicker each miner transitions, the more times they can try to win the lottery for the next block.
Thanks for reading,
Kent
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