Why this bull run is fundamentally different from 2017

Bitcoin is nearing its prior all-time high (ATH), set in December 2017. It’s entirely plausible that we could regain the heady $20,000 level within the next few weeks or months.

This time, it’s happening without much fanfare, and without the Initial Coin Offering (ICO) phenomenon which intensified the price action (investors bought BTC in order to participate in ICOs, driving the price up).

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If you gauge metrics of retail investor interest in the asset, whether it’s tweets or google searches, Bitcoin is still languishing well below it’s highs. This is causing a fair amount of puzzlement.

Many are wondering what the cause of Bitcoin’s renewed energy is. I figured I would present a few Bitcoin-related charts that are already hitting new all-time highs, in order to clarify the phenomenon a bit. …

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St Andrews Cathedral, St Andrews Scotland (image courtesy of photoeverywhere)

Twelve years ago today, on Halloween 2008, exactly 491 years after Martin Luther nailed his theses to the door of Wittenberg Castle Church, the idea of Bitcoin was born. More accurately, you could say it was baptized. The network itself wouldn’t exist in a truly live and peer-to-peer fashion until the following January. Block 1, the first ‘true’ block, was mined on the ninth, and digital cash pioneer Hal Finney received the first transaction on the tenth of the month.

The idea of digital cash had existed previously, of course, as had cash-like schemes based on computational work. But this specific scheme — capped supply, not dollar-pegged (many of the early digital cash ideas relied on maintaining a dollar peg), running on a peer-to-peer network, based on a shared ledger, with minting through proof-of-work — was new, and so Satoshi had the privilege of naming it. When you create new things, whether they’re fictional characters or nation-states, you get to name them. In some cases, merely discovering things endows you with a nominative right. …

Invented in 1788 by James Watt, the centrifugal governor is a small, clever device that made steam engines viable in an industrial context. Effectively it takes rotational input from a steam engine and applies it to weighted balls. As they spin, the centrifugal force pushes them upwards, moving a lever connected to a valve. As they spin faster, the valve closes. In this manner the governor takes input from a steam engine and mechanically regulates the flow of steam and hence the speed of the engine.

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This innovation made steam engines suitable for industrial processes which required stability and predictable speeds, like mechanical looms. The key idea is that as the system gains in energy, a negative feedback loop develops which caps its growth. For steam engines, this is part of their design and is a very good thing. …

Concerns about Bitcoin’s long-term supply credibility are overblown — but not for the reasons you might think

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There’s a popular view within the non-Bitcoin crypto industry that the more educated Bitcoiners are at best naive, or at worst completely in denial on the topic of Bitcoin’s long-term supply. Put simply, Bitcoin skeptics are fond of claiming that, because in their view it’s unlikely that Bitcoin will muster sufficient fees in the long term to compensate miners, Bitcoin will eventually be forced to add inflation in excess of the rate ordained by Satoshi. According to this argument, it’s therefore misleading to characterise Bitcoin as being genuinely fixed in supply. Naturally, this argument is often intended (whether this is acknowledged or not) to justify the insertion of monetary discretion in other cryptocurrencies. …

What we can learn from distorted maps

As the crypto markets continue their transition from a retail-focused, unrestricted global altcoin casino, to a more constrained and regulated environment, it’s worth zooming out and pondering what long-term allocative outcomes this market is likely to witness. Cryptocurrency purports to allow commerce and capital to flow freely, independent of artificial nation state boundaries. However, when securities are involved, the state tends to intervene.

There is a good reason for this: securities are high-stakes markets governing the allocation of productive capital, and for them to function, the state needs to enforce fairness, disclosure, and information symmetry. In fact, the best example in favor of securities laws I can think of is the anarchy and carnage exhibited in the Initial Coin Offering boom in 2017. If blockchain-lubricated capital markets mature from these early hiccups and some of these equity-like assets become viable, they will surely be indexed to their local jurisdictional rules. To the extent that tokenization and crypto-wrapped securities become investable, I’d venture that the U.S. …

What the EMH does and does not say

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Curbstone brokerage on Broad Street in Manhattan, 1902 (Public domain image from the United States Library of Congress)

As we approach the Bitcoin halving due in May 2020, a heated debate has raged among Bitcoiners about whether the issuance change is being anticipated by the market or not. Those who downplay the purported impact of the issuance change tend to make references to market efficiency. This concept has thus become a source of great rancor and debate. The disagreements are often intractable, as strawman versions of the EMH are presented, and the parties cannot converge on shared definitions. Mutually understood concepts are a prerequisite to a useful debate. …

Bitcoin is everyone’s problem now

Evey: Remember, remember, the Fifth of November, the Gunpowder Treason and Plot. I know of no reason why the Gunpowder Treason should ever be forgot… But what of the man? I know his name was Guy Fawkes and I know, in 1605, he attempted to blow up the Houses of Parliament. But who was he really? What was he like? We are told to remember the idea, not the man, because a man can fail.

He can be caught, he can be killed and forgotten, but 400 years later, an idea can still change the world. I’ve witnessed first hand the power of ideas, I’ve seen people kill in the name of them, and die defending them… but you cannot kiss an idea, cannot touch it, or hold it. …

Disclaimer: I have no current or future interest in a new cryptocurrency launch, either personally or professionally. This piece is intended generally as a thought experiment, and is NOT an endorsement of any specific project. I do not recommend or condone the creation of any new base-layer cryptocurrencies.


The presence of ASICs in Proof of Work systems has always been deeply contentious. At maturity, ASICs enhance the security of the network (by forcing miners to take a long term stake in the success of the protocol), but in the transitional phase, the first hardware manufacturer to build ASICs has a near-monopoly on the minting of new coins. This can lead to the existence of an informal form of seigniorage — minting money at a discount to its market value. Protocols which fork frequently are also exposed to this risk; developers effectively have the ability to determine which PoW function the chain will move to, giving them the ability to monetize their influence over the protocol. This is a potentially very insidious form of corruption, and it impairs the ‘fairness’ quality that PoW is known for. GPU chains also have the undesirable quality of being ‘nicehash-able’ — that is, attackable by renting commodity hardware for a short period of time. …

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Art by Jason Benjamin (@perfecthue)

People should not be afraid of their governments. Governments should be afraid of their people.

– V, V for Vendetta

It’s submission,” Rediger murmured. “The shocking and simple idea, which had never been so forcefully expressed, that the summit of human happiness resides in the most absolute submission.

― Michel Houellebecq, Soumission

Make no mistake, Bitcoiners are revolutionaries

Libertarians had it all wrong. They sought to shrink the State’s influence by participating in the democratic process. This has been and remains a hopeless, Sisyphean task. Like Tolkien’s Ungoliant, the State hungers without limit, and its most engaged constituents duly reward it with votes for more growth, receiving in exchange ever-greater entitlements. Libertarians are, in a word, stuffed. Like the creeping gelatinous menace in The Blob, the State grows regardless of what you throw at it. …

How to evaluate blockchains

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What is the time to finality on major blockchains? How long should I wait before considering a Bitcoin transaction settled? What are the risk factors which might cause me to demand additional confirmations? How do confirmations affect settlement?

Surprisingly, none of these questions have good answers, even in 2019, over 10 years after the first Bitcoin block was mined. …


Nic Carter

Partner, Castle Island Ventures. Cofounder, Coinmetrics.io

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