Crypto Mining At Nasdaq

Two stocks related to crypto mining exploded on Nasdaq in the recent days. RIOT is worth 5x the price of March and has doubled since July 2020, and MARA had quadrupled since July 2020 (which was followed by a correction).

At the same time there are countless indicators which indicate that we are in an exceptional moment in crypto currency history:

  • We are in the middle of big wave of appreciation of crypto assets, which has a lot to do with mining reward halving of May 2020. Since May 2020 the hash rate has remained flat and has always remained below the levels of May 2020. However if we predict that the bitcoin price will eventually soar, then a lot more bitcoin miners could be made, and put in active service, which was NOT happening so far.
  • In March, falling bitcoin price halved the daily combined income of miners. Then it recovered and it halved again simply on the day of halving. It is has not recovered yet because the price of bitcoin needs to double for it to recover. As a result many miners do not sell their bitcoins hoping for higher prices tomorrow. This is demonstrated here and here. However, it is easy to manipulate such figures but moving bitcoins to temporary accounts belonging to the same person. Overall it seems that 2 millions of bitcoins are put aside waiting for higher prices to come.
  • Volumes of Bitcoins held on exchanges are the lowest since June 2019. This means that prices are likely to be sensitive to the demand and sometimes will go up due to the shortage of bitcoins (locked at other places).
  • The Fed balance sheet has stopped expanding since approx. May 20 and remains stable, see here. For now we have K-shaped rally with a bifurcation. The bifurcation is that some stocks go north, other stay moderate. The US tech stocks are now bigger than the entire stock market in EU+UK+Switzerland.
  • Moreover it gets even more crazy. As bets against the US stock market are at the lowest level since 2004, markets are able to continue crazy bull run with very high valuations. Many fear that the stock market will collapse.
  • Interestingly that the percentage of amateur traders and investors in the stock market has more than doubled since 2019. The Buffet indicator of stock market cap divided by GDP has reached a higher level than before the collapse of the dotcom bubble in 2000.
  • Gold price passed 2000$, and bitcoin claims to compete with gold and has some correlation to Gold as refuge for investors who cannot find anything interesting to buy.
  • Warren Buffet has surprised the planet: apparently he still holds more than 100 G$ in cash as of May 2020 and still today. He did not buy shares in March 2020 like most people did! It is seems like the biggest mistake he ever made (unless the future events prove him right and precisely shares collapse to yet lower levels than in March 2020).

China is Banning TCP/IP

Arguably an open free and neutral Internet network has never existed and it was all a cynical game of telcos, pretending to obey a bunch of public standards and apply international treaties, in order to expand their monopolistic empires abroad and steal business from other telcos. This world of deception, which also has enabled intelligence gathering at an immense scale, is likely to disappear now.

It is harder to imagine but seems inevitable that everything that we know about industry networking and security standards will become obsolete.

China plans to completely stop using TCP/IP, and replace it by a set of Chinese protocols. These protocols are more centralized and somewhat authoritarian, and are also claimed to more secure (which is very easy). More details here.

We should expect that that tomorrow there will be maybe UK/US networking, and European networking and Russian networking etc. The world is likely to split into loosely connected pieces. This is of course good news for network tech specialists and cryptographers.

Tomorrow there will be more national proprietary cryptography, which researchers will take immense pleasure at studying and breaking. There will be more high profile jobs for crypto engineers, where there will be doing more things which surprisingly, will be actually used to protect real-life communications. However this is bad news for the world, and it seems that globalization of technology standards has come to an end and is going into the reverse. We hear about technology bifurcation etc, end of open standards etc.

An Important Event in UK Crypto Policy

No UK is not going to be a puppet of China or Russia. Instead, a deal is being negotiated with Japan. It was already agreed that

  1. The two governments would not force their companies to hand over encryption keys which are used to protect proprietary corporate technology and information.
  2. It was also agreed that data can flow freely between the two countries and that businesses not be required to host data on servers within one country.

Huge Win for Europeans, Americans and Human Rights at Large – Against Facebook and other Data Hungry Internet Giants

Max Schrems, an Austrian lawyer and privacy rights advocate, has been fighting in courts since 2011 against Facebook and other abusive corporations whose business model is stealing our data and our lives and our businesses, against our will and against our interests, and to transform us into slaves and puppets, in a mass-surveillance based stalker economy.

In contrast , and in theory, every citizen in the EU has a right to have their data processed fairly, with their consent, and for well defined legitimate purposes.

In 2018 Financial Times wrote: Max Schrems: the man who took on Facebook – and won! However in 2019, Schrems lost. Then eventually in 2020 Schrems won again against Facebook at the European Court of Justice. This ruling is huge, all companies worldwide will now have to adapt to European Laws and regulations, and it is final and can no longer be overthrown. A big setback for Facebook and other similar companies. Champagne for everybody!

This is not all. Facebook is also in trouble in the US. One thing is that the congress of course made it very clear that this company is a villain, as it did already before in 2018. The problem is that Congress does not do lot about these things and has a narrow focus on competition. Another and better part of it are the lawsuits. Many people hate lawyers but they can hurt Facebook. Facebook is now prosecuted in the US state of Illinois for illegally collecting biometric data of people. In July 2020 now Facebook has made a new offer to voluntarily pay 650 M$ to settle. This admission of guilt seems a lot, however the latest reported annual income of Facebook was 18.6 G$, as of July 2020, with increased profits compared to last year by some 11%. So we are still simply losing the battle against Facebook becoming stronger and more powerful every day. A little bit like cancer a virus taking over the human body aiming at infecting everything and growing out proportion: the Internet Giants now account for more than 20% of the whole of the stock market.

How does it compare to Europe, where France have just voted to tax the Internet Giants at 3%? Nothing is perfect, French taxation is done in a problematic permissive way, effectively closing the eyes on what they do. Taxation is however the best way in my opinion and a huge step, in the fight against monumental tax evasion which companies such as Facebook are champions of. In comparison, one might think that effectively in the US, the company is taxed in some way, through these lawsuits. In fact it is not. Not like a company which engages in illegal activities, and which primarily business model, or what it is really about, well basically enslaving the human kind completely in terms what they should think , what they buy, whom they love or with whom they are friends, or for whom they vote. All the things which are essentially completely illegal in most jurisdictions, but might be legal if you do it under false pretexts. Against big data artificial intelligence and greed and legal organized crime which large companies do, because they have good lawyers and do it well, we simply actually lack sufficient legal protections. One lawyer such as Schrems fighting for rights of billions of people in just one jurisdiction is not enough. The problem in the US is that there is no taxation here. The money in Illinois will not go to the state or the government or not even to charity, but rather in cash paid to Facebook account holders in Illinois (150$-300$ per person compensation is expected). Account holders yes, and I would not call them customers, as they do not pay, they rather have been tricked to click on some boxes which are claimed to make them agree to play by the Facebook subversive set of rules. So it is a little bit like paying for breaking the law. What is good however is that it is a punishment, and sums at stake are large, so Facebook does not get to do what they want.

Overall this Illinois ruling is also a great victory, because there are another 3 Billion people in the world who thought that Facebook was their friend or a useful free service, but it never was. In fact it never was free, and never meant to be friendly. This company is stealing data of millions of people, in order to use them against them, and sell it to others. Effectively the business model is prostitution of lives, selling our lives for profit. There is no consent: the consent is bogus or forced. The terms of the contract are fraudulent by all standards: both human and legal. I think that Facebook should be denied ANY rights to our data, and should be legally compelled to erase 100% of data they have. Even if you go to a notary and agree under oath that you want Facebook to hold all your data and use it for what they wish to do, it will still be clearly ILLEGAL for them to do so in both the EU and the US jurisdictions. In Europe, it is a more a human and customer legal rights question: businesses should only use our data for a limited set of legit purposes. In the US it is more an anti-trust question: other companies would like to collect and own your data, say about the car you want to buy, or about your habits and desires, and Facebook should be denied the right to be effectively also a car dealer, or say a healthcare provider, in addition to 10,000 business activities they also want to run. It is simply a question of tremendous concentration of power in one place hurting the economy at large.

Why it will be hurting the economy? The hidden trade-offs: between businesses which do not even compete against each other or bump against each other, normally. Making sure your bike is of bad quality though hidden sponsorship deals and you need a car to go to work. Of that you are sick and obese to sell you expensive drugs. Or selling all of us junk food, yes to everybody, because this is exactly what maximizes the profits of the food industry worldwide, and denying us the right to eat quality food, and actually even making sure that such food will not even be manufactured and sold anymore. The big moral hazards like life insurers making sure that some people get killed and some live longer, in a variety of indirect but perfectly operationally effective ways of killing people, directly or statistically, for example by hacking self-driving cars, or by corrupting scientists who study serious health hazards.

This is not capitalism, where businesses thrive through specialization and expertise, and are efficient and fit for purpose. This is Soviet style communism or mafia economy, where businesses are strangled and can barely survive, and profits concentrate at few places such as investment banks and Facebook, which do not do anything or not much, or nothing which is not essentially harmful to the human society and the economy, and which are able to control everything, through their monopolistic position, with some censorship and dirty tricks such as businesses losing 10% of their income for strange technical reasons.

A free economy does not need a totalitarian centralized system of gate keepers such as Facebook. We do not want big fat cats playing an active role at the commanding heights of the economy. Humans and their needs, not greedy profit-seeking algorithms should be at the very center of the economical activity. We want real journalism and real medias, not medias what are entirely owned by advertisers. Advertising is of course useful in order for innovations and new technology to be adopted, but otherwise it is harmful and represents just a part of our economy, the part which is frequently about making the human animal do tricks for the big business not the other way round. We do not want corrupted professional abusers dictating billions of people what to think and what to do. I think Facebook should be denied a legal right to be what they want to be. We need a decentralized economy, dominated by specialist businesses which care about what they do, and which in fact do have conflicting ideas, interests and agenda. We need to deny Facebook the center stage, deny them the right to monopolize every area of live. The economy cannot be just based on push strategies with advertising and marketing. We need an economy based on human needs and aspirations, with pull, not only based on push strategies. We need more incentives for businesses to be honest and do their job, and also to be able top profit from what they do. A big problem is the Internet gate keepers tend to siphon all the profits from the economy, enslaving and impoverishing both buyers and the sellers.

On Tiny Size of Prediction Markets

It may seem that small size of current prediction markets makes them prone to manipulation and it is easy to dismiss what these incredible tools indicate.

For example the market seems to indicate that Trump will lose his election.

However think twice. They are still likely to be right. It is not because prediction markets are likely to be manipulated for profit each time stakes are high, that they don’t work. You can argue that these markets have already all possible manipulations priced in.

For example currently one bet on a prediction market “indicates” that bitcoin will hit 50,000 $ before 2021 with a confortable majority.

Well this is actually quite likely. The trick is that it is sufficient for bitcoin to hit 50,000 $ for a very short time, a short time period such that most holders of bitcoin will not be fast enough to sell. Except those who have programmed this to happen automatically, however such sellers, even though sometimes making profit, are exposed to manipulation and will sell at 10,000$. Other smarter market players do not disclose their intentions and produce superior returns and also will own a majority of bitcoins at a moment when it will go up, after most other investors sold their stakes.

The real reason why all possible manipulations are NOT YET priced in inside these prediction games is that they are tiny compared to the total volume of ill intentioned market influencer activity which is a lot larger.

The tiny size of these markets is a reflection of our society and economy where most people consider that there is no hope whatsoever that tools might exist which link our today’s expectations to future outcomes. Our societies are stuck in a bad habit of being cheated and lied to at every step. Being disappointed and resigned is the norm. Prediction markets could change this and this is why they are a highly disruptive invention. They are also potentially dangerous.

ADDED in September 2020: Specialized decentralized prediction markets are bracing for the election. The same type of betting is also now implemented in Bitcoin.

Has Amazon Started Censoring Books?

Amazon is one of the strongest monopolies that have ever existed in the history of capitalism. Now it becomes clear that they are censoring books and suppressing the free speech. This is not an innocent isolated event, as Amazon is about to introduce new health insurance services and of course their intention is to censor selected publications related to health in the future. Will Amazon work for some criminal corporate pharma interests, or will they remain fairly neutral? In fact, there is some hope: Amazon is not currently censoring book by Zieba, a Polish natural therapies activist while the freedom of the press in Poland and many other countries is declining. So I would expect Amazon to change their mind on this one.

Brace Yourself: Bitcoin Is Likely to Go to the Moon Now

All the conditions are reunited for bitcoin price now to explode to new highs levels of say 27,000$. This is my personal prediction at this moment.

Main reasons for being bullish now MORE THAN EVER are:

  1. Global financial crisis: while it is quite difficult to buy and store gold, it is easier to buy and to store bitcoin. Moreover, trading bitcoin with crazy volatility is great fun [do not bet all your retirement money on it].
  2. Block reward halving in May 2020. Nothing happens overnight but a lot happens in the next few months.
  3. New hugely disruptive Taproot programmable money and privacy features
  4. At last, Schnorr signatures upgrade.
    • So Long time overdue, should be there since Satoshi himself. It is a living proof that Satoshi was NOT an ethical academic cryptographer, but his primary pedigree was rather the dark side of the force.  12 years after the Schnorr patent has expired. An absolute shame goes to crypto developers such as Nakamoto, Maxwell, Vuille, Garzik, Buterin, Matonis, Andresen, Wright, to have actively promoted super dodgy ECDSA cryptography for so long, which has never ever been a decent  choice though it always was a defendable one (nobody would get fired for buying into it). Somewhere a mild accident and a monumental scientific crime, opinions vary, of lack of due care, and failure to promote best practice, in a regulated financial system, and still a ticking bomb, where billions of dollars will be lost tomorrow.
  5. Lighting network which however is not devoid of problems.
  6. Maybe more decentralization with Stratum 2, who knows. An illusory complication, and bitcoin is not going to suddenly become more decentralized or more democratic, this is just not happening. The DNA of bitcoin will remain being a game for the super rich.

P.S. I really believe this bold claim, this is why I have bet some bitcoins on it. And people have bet a lot of money against me. It is a real shocker, because opinions vary a lot and the bet has a attracted huge traction.

Updated 1 May 2020: The bet over and closed now. Sorry you missed it.

A Coordinated Bitcoin Selloff

It appears that it was a coordinated action planned many days in advance. Without doubt also related to coronovirus.

We looked at the crypto index CMC200 and CMC200 without bitcoin which are volume weighted average price synthetic indices, now present in the mainstream with Nasdaq, Bloomberg, Reuters, Yahoo etc. Both indices culminated on 14 February 2020. In comparison, Nasdaq and S+P 500 CAC 40 DAX etc have all peaked on 19 Feb 2020.


Can the Internet become Unstoppable?

There is a chance the the Internet will be completely transformed. One wind of change blows from blockchain tech community. Another from Communist China. Essentially all the technology we know, could disappear completely, and could be replaced by something completely different, a different set of protocols and systems.

For decades the so called “Internet” was some sort of virus which has infected the telecom industry and the whole economy, with the creation of electronic commerce. We have been brainwashed to believe in a dream. The dream that there could be some free independent medium of communication out there. Dream of more freedom of expression and more competition in business, benefiting consumers. However, there is no such thing such a free space. It is always going to be owned by someone, it is going to be prostituted to benefit the famous 0.1 %, the tech giants or/and similar centers of power. Or it will be owned by someone coming from China, like bitcoin already is, and as many  businesses  worldwide already are. The invisible hand of the market has a new very visible center of power.

In reality a free independent medium of communication has never yet existed. Let us stop being stupid and naive. In theory it could have been created, for example in the form of peer to peer software radio driven networking, but it simply has not been created yet (or not at scale). In reality we have been told lies. All this was rather or primarily just a game which many governments and national telecom monopolists and Internet businesses and even academics, have been playing for a long time. Game where some naive people work for free, for example be being open source developers, or producing free content for YouTube, or selling their technical capacity at a loss to other companies, more able to make use of it, or giving away for free their research expertise, etc. Or opening all sorts of businesses sectors to unfair competition.

Naive actors work more or less for free, while other become super rich. The telecom markets and the media markets worldwide have been transformed. National telecom companies have been disrupted by fierce international competition. Jobs have been moving to countries which have been able to profit from this situation. Long time ago, it was Finland. This time is over. Competition has destroyed many industries and millions of jobs have been displaced.

Then came new monopolistic vertically integrated omni-scient Internet and media and electronics giants, which are now looking at AI as the logical next step. Now is China making Internet telecoms and 5G their exclusive playground with a new Internet standard proposal. All these things are children of naive and stupid telecom deregulation, based on the illusion that telecom services can be free, that they have no price tag. This is an illusion which appears if you are short-sighted and you consider the cost of was needed yesterday, with the technical means of tomorrow. France, United States, UK Germany alike, have abandoned and neglected their telecom industry, but it did’t go South and bankrupt. It went East and become one of the most profitable sectors of the economy. Finland was just one stop on the way. Glorious country Finland, an example to imitate, but at the end we lost it, or lost it for Europe.

Here is one very timid way how a new and major game change could happen and disrupt the Internet. It is unstoppable decentralized Internet underpinned and disrupted by Ethereum. Or it is the DFINITY unstoppable tampeproof serverless platform. The main idea is that with this sort of system, to take down one service or a web site, an attacker needs to attack the whole network. We are talking about radical decentralized censorship-resistant changes in technology and critical infrastructure, where autonomous apps collaborative systems are running without an apparent owner.  

Such systems can have far reaching consequences for business. For example Ethereum network will be important, but the price of optical fiber networks or other telecommunication services will go down. This could in fact become a tipping point, where the status quo could be changed for many other things, like how electronic commerce works, for example. It could make things such as TLS and packet switched networks and credit cards and even banks totally obsolete. 

At this moment Google can blacklist this Chrome extension and kill this innovation. There will certainly be ways to block DFNITY systems too.

This sort of blacklisting of apps and technical standards, is how Google runs the world.  Google has done this before in all impunity, you go from from “hero to zero” overnight. Or was it an accidentNot only web sites are subject to hostile take-downs. Businesses also. Recently CCN was in the dark, a major crypto currency news outlet, because Google searches stopped showing them. Interestingly, during this period CCN have received several offers to buy and take over their company… Another example: Twitter bans Ripple CEO Schwartz. Few more examples are the troubles of Zynga, Salesforce, Tinder, cited at DFNITY FAQ page. 

We come here what is certainly the worst ACHILLES FEET of most crypto currency businesses. Blacklisting threat. First some sort of creepy suspicion of money laundering, so badly treated or blacklisted by certain banks. Then maybe facilitating sex or drugs-related criminal activity on the Internet. Finally, I forgot, Vitalik is Russian and he met with Putin. So these innovators can and will be blacklisted at any moment. The same type of blacklisting is also applied to Chinese telecom business.

We see a pattern, how incumbents can control censor and bend the innovation, in order to benefit them, with help of naive governments and legislators and regulators. Also with help of largely corrupted mass media, which companies such as Google largely control, well indirectly, through incredibly large advertising budgets.

Possibly Google and other incumbent players will develop some sort sort of clone, or imitation of this technology. In general, you can expect very nice things from Google technology-wise and security-wise. They are not a new Microsoft, they have always done extremely well in my opinion, in particular on security, and gave been a good example for others, not a bad example. However, they are likely to be nasty with just any independent anarchist crypto startups. This is life. Though Google do understand technology, they are likely to distort the reality to fit their narrow-minded business agenda. They are likely to commit serious mistakes motivated by narrow short term business interests.

Recall that France has invented the electronic commerce, literally everything, like buying your train ticket on MiniTel, or enrolling at a university, or sex chat business. But they FORGOT to develop one important invention, the one of email or maybe text messages. Text messages came from Finland, and email was invented by some silly underpaid academics, who did not like paying for their communications, blissfully ignoring the fact that their universities and government have paid a lot for some networked systems to exist. Why the French did not invent text messaging or it remained  marginal? Maybe because it would make their national monopolist telecom champion business lose billions (made from local phone calls, to an answering machine for example). Most telecom CEOs have missed exactly this: like for about a decade they have underestimated by a factor of at least 10x, the amount of income they would themselves make from silly “text messaging”. In business we call this cognitive limitation for the managers (a certain inability of incumbents to understand their own business sector).

Likewise, Google is likely to miss the train here. For sure Google can and will work to influence how Internet and electronic commerce is done, protocols, standards, business etc. But they will miss in many ways in which and how disruptive, more decentralized blockchain-based and crypto-rich and Internet could be. They will fail to grasp the possibilities offered by a new crypto financial industry where money is NO LONGER stored at banks or exchanges but it is stored at electronic wallets.

The incumbents will just look at fewer things which will benefit them. Likewise they do not get it about telecoms and 5G. So many things which are not their business. Google is likely to fall below expectations. Elsewhere, opportunities increase faster. They could actually literally explode, see how Bitcoin got out of leash and out of control since 2009, and could became equal to Google on market cap question tomorrow say in 2021. Likewise 5G is coming massively and Google also thinks, we simply do not care. They think: we do our job and dominate electronic commerce anyway, whatever it is. However they do not get the following thing: incumbents almost always fail or weaken (see Microsoft) when the technology changes. And so really Google does not want any big change, probably. And they are wrong.

For Google Ethereum or DFNITY are small fish. They will first fail to disrupt Internet not only because because Google Facebook and Amazon can afford to ignore them. Also because Google Facebook and Amazon actually ignore a bigger picture. Their mortal sin is that they are not at all trying to disrupt the Internet, because they are happy to be large monopolistic businesses. 

If so there is only one real disruptor left. Remember that China have their own crypto currency projects. Be scared of Chinese clones of the players in our game such as NEO or TRON, where David (Ethereum) is playing his naive stunt against Goliath (Google). These are not just about hiding money of rich Chinese who would like to live in Europe or the US or facilitating private cross-border transactions. We have a crypto belt and road, and we have a digital silk road. These are the real forces which seem unstoppable today. The new Internet protocol proposed by China Huawei has more tracking, is more centralized and allows more censorship. Ethereum is a joke compared to telecom and Internet giants and their games. We are completely unprepared, and people in China are a lot smarter than people in the hypocritical divided West, petrified by the unfolding of a new financial and public health crisis and by an acute depression.

Going back to the dream. We have been brainwashed for decades to believe that Internet is permission free, and tried to build crypto currency to be permission free (and decentralized and democratic). In reality all these are just power games where big business monopolist empires emerge, and most people lose, investors, entrepreneurs or employees alike. Now we are made to believe that Internet is going to become even more decentralized with Ethereum or DFNITY and it is a great thing. It is stupid dream and it is simply not happening. In reality it will become more centralized and even more monopolistic, and yet more centered around an authoritarian China, the ultimate winner of decades old worldwide telecom industry consolidation. Today when the whole planet has its eyes at one short term virus, but have been ignoring another virus, the virus of stupidity and naivety, typical in the West from 1968 and today’s millennials, with their super naive ideas about life. Conspiracy theories also come form here, they are the other side of a coin, the coin of not trying to understand the world in which we live, and being very naive about it, which makes young people prone to manipulation one way or another.

We regret the inability of our power centers to truly embrace new technology in a positive way. Except when pursuing very narrow and almost always toxic business interests. We regret our stupid delusions which come from the fact that we believe too much our own propaganda, about freedom and better life. Christianity promised better life tomorrow. Internet promised better life today, but it is not real, it is like a computer game. On this planet business with AI and authoritarian empires are working hard to enslave people and control our lives and resources of this planet. Good things do not come for free. Nations who are not trying to be strong players in the technology space, are being colonized by other (smarter) nations.

Technology and coronavirus are the real unstoppable forces: they are both “viral”. One however is a slow exponential, the other a super fast exponential like coronavirus infections worldwide. Always fight the fast exponential, and embrace the slow exponential. Both are very strong if not unstoppable, but the second can be our friend tomorrow.

If we want to survive, we need to stop being naive about science and technology: they can disrupt and transform, but not everything which shines is gold. All of telcos Internet bitcoin Ethereum governments and also academics have lied to us a lot every day about the new technology. I guess life will always be like this: the more money and power is at stake, the more naive young people get badly informed, if not brainwashed. Free content and free services and free press and free software and free game are like cancer. They are meant to enslave people, to own them, and they are a junk-grade imitation of a civilized society, where everything is free, but you are an underclass slave, and ‘sponsors’ or ‘owners’ of all this world consider that they own you, and you are expected to work for free also. If you’re not paying, you’re not a customer, you’re the product being sold, and you have little or no legal rights whatsoever, and simply just a victim of a well organised game, where humans are an object of intense manipulation, in many ways including through addiction, leading to a totalitarian economy with mass surveillance and AI at the very center.