Daily Ramble
I had a bit of a moment last night. While on a call, I was being a terrible listener and simultaneously flipping through my Twitter feed. Suddenly, my normal, so-so ability to look at a screen and listen was shut down. Front and center was a recent Kent’s Corner being shared by Robert Breedlove, who is arguably the preeminent voice for Bitcoin these days. To have grabbed his attention is one thing, but to have him quoting me was quite shocking. So, for those new to my adventures in content creation via Robert’s tweet, welcome! Good to have you on my part-Bitcoin, part-ramble journey. …And my apologies to the client on the other end of last night’s call.
I slid on a few waves this morning thinking about inflation while I stared at the horizon, waiting for the next set. It was more of a question mark, wondering how it was all going to play out. It’s not like the US can inflate the money supply by more than 30% and expect the knock-on effects to be avoided. The CPI, the US's official inflation metric, is hovering just over 1%, last I looked. What a joke. I couldn’t even get the Bureau of Labor’s website to load this morning to double-check it. Despite what the official indicators are saying, the numbers on the street aren’t lying:
In 2008, the FED pumped money into the banking sector who plumped up their balance sheets…and loaned out a negligible amount. It’s reasonable to see how this approach would mean relatively low inflation. This go-round, money is being given out directly as cash stimulus across the country. It’s pretty hard to see how that’s not going to drive the costs of goods and services up directly. As much as the FED and the US Treasury have joined into a mutant financial cyborg, the money printing remains largely within the US's geographic borders. Most other areas on the planet aren’t receiving direct payments from their central bankers…yet. Until they do, that’s another reason to suspect that inflation will gallop more quickly in the US than in most other countries.
What’s the point? It’s inconceivable to me that inflation doesn’t gobsmack most US citizens by the end of this year. Historically, when people can’t afford to feed themselves, violence is near. Fear of that scenario could be leading the US to print money liberally, but the printing is separating the orbits of the have’s and the have-nots. On the one hand, the money-printing is causing economic classes to repel each other, and on the other, you’ve got hungry mouths to contend with. If there were a better recipe for a crisis, I don’t know how I’d cook it up, but I’m bloody glad to own Bitcoin right now. The good news is that Americans are famous for doing the right thing after exhausting all other options. And if Peter Thiel is as clever as I think he is, he may have just introduced the way out to the right people…
Favorite Things on the Interwebs Today
We’re not the only monkeys who like playing pong.
Bitcoin Price Prediction
Yesterday: $54.5k - $58k
Today: $56k - $60k
Tomorrow: $54k - $62k
Man, if I don’t feel like a parrot at this point: the consolidation continues. Yesterday we clocked the low at the beginning of the day at $55.7k and climbed slowly but surely to close at $58.2k. The price has stalled and gone sideways since. I suspect we’ll see price bounce between $56.5k and $58k for the remainder of the day. The weekend may bring some volatility as the retail market takes control. It may even see us push for the $60k resistance holding back the inevitable flood of buyers once crossed. Until either $54.5k or $60k is breached, there’s not much to report on, though.
Bitcoin Q & A
Q: The miners control the Bitcoin network, correct?
A: No.
Theoretically, Bitcoin miners could collude to control the network by amassing 51% of the hashrate. Hashrate is the measure of how much hashing is done at any given time to create new blocks. To push “false” information to the network, 51% of the network’s hashrate would be needed. So, theoretically, Bitcoin miners control the network.
In reality, the social layer surrounding Bitcoin is what controls the network. In 2017 there was a Bitcoin Blocksize War over the size of each block. Ultimately, this was resolved, not by the miners, the developers, or the businesses built around Bitcoin, but by the network users, i.e., node operators. When push comes to shove, it’s the 10,000+ nodes that control the network, not any single actor.
Thanks for reading,
Kent
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WooHoo!! It had to happen sooner or later.... getting noticed, that is.