Here we are. Welcome to the New Year.
I hope you haven’t been paying too much attention to the Crypto Markets. That’s my job. And what a bloody nightmare it’s been!
Two things really stood out over the past two months. One interesting, the other grisly and deplorable. This is my take on it — written in haste without editing or proof-reading. Forgive any errors.
About the time of the last Crypto update I sent out, everyone started emailing… well, everyone.
It was hard to open whatsapp, facebook or your inbox without seeing the following text forwarded from a friend.
Initiative Q is an attempt by ex-PayPal guys to create a new payment system instead of credit cards that were designed in the 1950s.
The system uses its own currency, the Q, and to get people to start using the system once it’s ready they are allocating Qs for free to people that sign up now (the amount drops as more people join — so better to join early).
Signing up is free and they only ask for your name and an email address. There’s nothing to lose but if this payment system becomes a world leading payment method your Qs can be worth a lot.
If you missed getting bitcoin seven years ago, you wouldn’t want to miss this.
A copy-and-paste job that went round the world, and got three million people to hand over their details and social graph data.
This is truly a chain letter for the 21st Century. Urgency, Scarcity and an appeal to FOMO — all in one brief missive. And like most chain letters, you certainly lose nothing by taking part.
Except for the worry that you — and the ten friends you need to invite to get your maximum Q reward — have revealed your social connections, name and primary email address. Who’s to say what an unscrupulous person/organisation would do with that.
Direct mail companies in the 20th Century used to buy and sell what was called “suckers lists”: the names and postal addresses of people who replied enthusiastically to spam letters “You’ve been selected for a special prize — just send us £5 to cover postage and your unique prize will be in the post tomorrow”… you know the sort.
The 21st Century equivalent (aside from the obvious Facebook) is people who attempt to defraud by spoofing people’s whole identities. And of course, just giving an email and a name out is unlikely to do anything.
However, your password and some other details are probably out there in the wild too. If you have a second, go to Wysebridge Bar Review Patent Wysebridge Patent Review Apprecs Apprecs Bar Patent Wysebridge nxwFwq78X4 and enter a personal email address you’ve had for a few years. I’ll wait.
There are a lot of people scamming, ID frauding, building false identities and more. And yes. I’m scaremongering. But also, be careful out there. Especially those of us that have our emails/identities tied to our business/freelance career & livelihood. When was the last time you changed your email, paypal, bank, stripe, website admin, twitter etc passwords? Do you have 2FA turned on for anything that’s mission critical for your work? /scaremongering
My favourite part is the final sentence — if you missed Bitcoin 7 years ago (and if you didn’t you’re unlikely to be doing anything but sunning yourself on your private beach) you wouldn’t want to miss this.
Initiative Q — I’m actually fairly sure has very noble aims. But they are simply a solution to a problem that doesn’t exist.
Q is not a cryptocurrency — but the mention of bitcoin has hoodwinked many into believing it is.
They claim that current systems — both crypto and legacy banking — are bloated or deficient. and then propose creating an entirely new, global, parallel currency out of thin air. This currency would have one, centralised point of failure. The Initiative Q company itself.
Tuesday prevention Fall Scheduled For Event Is Instead of thousands of banks and payment providers around the world constantly innovating, competing and employing literally millions of people in fraud, compliance, security and ops, we would entrust everything to one central, private, unaccountable entity.
This is completely contrary to the ethos of crypto — anonymous, decentralised, self controlled money. Being your own bank. Controlling your own funds, with no third party (either government, bank or payment provider/gateway) to interfere, dictate, steal, tax or otherwise interfere.
Where do we begin.
So in the beginning… just about 10 years ago to the day.
A whitepaper describing “Bitcoin” — peer-to-peer, safe, anonymous and purely electronic money — was published. The author was named “satoshi nakamoto”.
To this day, the identity of Satoshi has remained a mystery. He / she / they never (to our knowledge) interacted with anyone in the real world. Just emails, and forum posts over a period of about a year, before they handed over some passwords and silently disappeared, around 2010. And left Bitcoin to grow without (s)he/them.
Fast forward a few years, and people start realising Bitcoin is pretty cool. But maybe it would be cooler if I could send money to people faster (And thus, Litecoin was created). Or used less energy (Peercoin). Or had a better/funnier name (Dogecoin). Or played more nicely with traditional banks (Ripple). Or was completely anonymous to use on the darkweb (Monero) Or could be used not just as money, but to represent transacting other things (Ethereum).
And that’s how the ‘Alt-coin’ explosion happened.
People went mad for it.
Everything should be a coin!
What about a cryptocurrency for Dentists? They’re always complaining about how inconvenient normal money and credit cards are!
So we ended up with 1,800+ cryptocurrencies. All trying to do something.
But because Bitcoin was the first, and the biggest, and the most valuable, people lusted after it.
Bitcoin is decentralised — the computer code and database that runs the bitcoin network is free and in the public domain. No one owns it. It’s incredibly easy to copy. No one owns the ‘brand’.
You’re as unable to own/claim the concept that makes Bitcoin work as you are to claim Pythagoras’ Theorem as your own exclusive intellectual property.
However, what you could do, is buy the domain Pythagoras dot com, register the @ Pythagoras social media handles and claim that Pythagoras’ Theorem is actually all about circles and not triangles.
And maybe if you shouted loud enough and for long enough, people would start to believe you.
Which is exactly what happened in September of 2017.
Several people (including Roger Ver and Jihan Wu — remember those names for later) who had worked on Bitcoin and helped popularise it, decided that Bitcoin wasn’t quite fit for purpose. It needed to do some different things.
But instead of creating a completely separate crypto currency to do these things, and calling it SuperAwesomeCoin-thats-better-than-bitcoin — they called it Bitcoin Cash. And bought Bitcoin dot com and all the @ Bitcoin social media handles. And used the same logo.
So if you were new to Crypto, you wouldn’t really know which was which.
What is the point of cloning (called “hard forking”) Bitcoin?
Because it creates new coins out of thin air.
If I owned one Bitcoin on 30th July 2017, then on 1st August (the day the hard fork occurred) I would not only own one Bitcoin… but one Bitcoin Cash as well.
At the time of the hard fork, Bitcoin was worth approx $2,700, with 16 million Bitcoin in circulation.
Bitcoin Cash began trading on 1st August at $240 — a completely arbitrary number, which simply reflected the price people were willing to pay for it.
This figure was initially inflated/propped up by fake demand from Bitcoin Cash’s creators, until it became a self-fulfilling prophecy. Bitcoin Cash was available to buy for $240 — hence it must be worth $240, went the casual observer’s logic.
Which meant that when these people created Bitcoin Cash, with essentially a click of a mouse, they created 16 million coins of Bitcoin Cash at the same time.
Which meant they created $3.5billion out of thin air.
And not only that, but people dipping their toe into Crypto saw this ‘Bitcoin’ and bought it on name recognition, driving demand — and hence price — for the imposter coin up even further
Quite the parlour trick.
This, understandably, made quite a lot of people angry:
People lost their fucking minds over this.
Because bitcoin and crypto currencies are unregulated — they are the wild west — there’s no recourse to authority.
No one could run to teacher and say “Bitcoin Cash copied my homework”.
Cryptocurrency works on consensus.
Whatever version of Bitcoin people have heard of is the one they will use.
It’s like a recipe. No one can claim to own the recipe for, say, a fried breakfast. But you’re likely to make your fried breakfast the way people around you make it. The way you’ve grown up with it. And you’re going to believe that’s the right way of doing it. Especially if your way of making breakfast is valued $2,700, and if people start using another recipe they hear about, you’ll lose a lot of money.
So for about a year, people in the crypto space argued, incessantly. Bitcoin has its flaws — it can only process a certain number of transactions per second. Bitcoin Cash can process more transactions, faster and with less fees. But confuses things and makes the whole industry more muddied and opaque to later adopters.
But what people mainly objected to was the brazen cheek of the people that created Bitcoin Cash out of thin air, and proclaimed it The One, True Bitcoin.
Remember Satoshi? The mythical founder of Bitcoin?Against Protests Greenpeace Of Head Naidoo Kumi International At U4xOwWn
Many people have claimed to be him. Many journalists have searched for him.
Occasionally a fruit cake claims to be him. Him. The Founder. Father Nakamoto. Returned in his second coming to guide his flock of adherents through the choppy waters, and unto the promised land of Crypto-maximalism. A bitcoin in every pocket. A blockchain on every phone.
Enter “Dr” Craig S. Wright. Who, aside from falsely claiming to have not one, but two PhDs, also claims to be Satoshi Nakamoto.
Is prevention Fall For Tuesday Scheduled Event He has been unable to furnish any proof to substantiate this claim. After proclaiming his true identity (and presumably ownership of the keys/passwords to $10billion worth of dormant Bitcoins from the earliest Bitcoin wallets created by Satoshi) he promised the BBC he would provide “extraordinary evidence” to back up this claim. He then almost immediately reneged, in a statement:
Event prevention Scheduled For Fall Tuesday Is I believed that I could do this. I believed that I could put the years of anonymity and hiding behind me. But, as the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot. When the rumours began, my qualifications and character were attacked. When those allegations were proven false, new allegations have already begun. I know now that I am not strong enough for this. I know that this weakness will cause great damage to those that have supported me, and particularly to Jon Matonis and Gavin Andresen. I can only hope that their honour and credibility is not irreparably tainted by my actions. They were not deceived, but I know that the world will never believe that now. I can only say I’m sorry. And goodbye
Now. In October, Craig and a gambling and casino billionaire called Calvin Ayre came up with this rather nifty idea: If this Hard Fork trick worked with Bitcoin and created new money out of thin air… maybe it would work with Bitcoin Cash too.
Apologies. What I meant to say was that unappreciated genius Dr. Wright, and philanthropist Mr. Ayre — being men of the people, decided to (at great personal expense and risk) future-proof Bitcoin Cash so that the next generation might enjoy financial freedom and bask in comfort.
They wisely realised that Bitcoin Cash was only operating at about 0.1% of its maximum transaction volume. And that just didn’t feel like enough head-room. Not enough margin of safety. What if it became 1000x more popular overnight? No. Better to copy Bitcoin Cash completely, and change one line of code to allow more transactions per minute.
So they — Craig and Calvin — announced they were hard-forking Bitcoin Cash, to create Bitcoin Cash Satoshi’s Vision (catchy!). A.k.a The One, True Bitcoin.
Now the original creators of Bitcoin Cash weren’t going to take that lying down. No sir. You can’t just clone a crypto, and create new coins out of thin air!
So they announced they too were going to hard-fork Bitcoin Cash. To create Bitcoin Cash Adjustable Blocksize Cap. That would leave people in no doubt as to what the True Bitcoin is.
To muddy the waters even further, the first Bitcoin Cash would still continue to exist, alongside Bitcoin SV, Bitcoin ABC, and — of course — the original Bitcoin itself.
You’re not the only one.
Understandably, many people in the wider crypto space mused, “what the blue fuck is going on?!”
And with so much potential money at stake, people got upset, and a little weird.
Craig — determined to prove that he is the real Satoshi, and angry at Roger Ver (remember him? The man who came up with Bitcoin Cash in the first place) insisted that he be allowed to control the rights to the Bitcoin name, and sent this charming email to Roger:
Jihan Wu, the other man behind Bitcoin Cash (the original one. No, not the original Bitcoin. The original fake Bitcoin. Keep up) throws his hat into the ring.
At this point it’s worth mentioning that Jihan Wu owns Bitmain. The company that manufacture most of the specialised computers that mine Bitcoin. And the company that organises the largest Bitcoin mining pool. (A pool is a group of regular people that mine bitcoin together, maximising their chances of striking it rich — kind of like a national lottery syndicate).
So… he has some vested interest in this.
Bitcoin Mining capacity is measured in ‘hashpower’ — basically how many sums your computer or syndicate of computers can perform every second.
Essentially there are only a finite number of computers in the world that can mine Bitcoin (any of the four versions), and it’s whoever controls most of them ends up deciding what the official breakfast recipe is, or what Pythagoras Theorem actually means.
It’s all a bit 1984… “We have always been at war with Oceania.” … “This Bitcoin is the true bitcoin, and always has been.”
prevention Scheduled Event Tuesday Fall Is For Of course, John McAfee (multi millionaire eccentric and Bitcoin enthusiast) wades in, tweeting an email he sent to Jihan:
Jihan is the billionaire owner of a company about to IPO. These children are running around roleplaying medieval knights, jousting and measuring each other’s cocks.
I mean, really. For fuck’s sake.
Henry Kissinger once said:
Academic politics are so vicious precisely because the stakes are so small
And yes, whilst there’s an enormous amount of hypothetical money in play here, all of these people think they are building the future. The sad truth is by my estimate there are less than 1,000 daily users of Bitcoin Cash, globally. And that’s not a figure that’s growing.
So this is what I’m really reminded of:
When the split occurred, and we were lumbered with four bitcoins?
Well, everything went to complete shit.
Because a) no one knew what Bitcoin Cash was. Massive uncertainty. Retailers couldn’t accept it. Exchanges such as Coinbase didn’t know what to do with the Bitcoin Cash they had — or what to buy from and sell to their users.
b) The ‘hash war’ made people realise it’s fairly easy to point a lot of computing power at Bitcoin (whichever version) and try to undermine it. If a couple of bad faith actors (albeit billionaire bad faith actors) can do that, what could a government do? How secure is Bitcoin really? And if Bitcoin itself is insecure, then every other cryptocurrency — backed by less computing power and users, must be as insecure.
And finally, and perhaps most importantly, it made people realise what I’ve come to realise. That a lot of cryptocurrencies are just (as comedian Hasan Minhaj puts it):
Scheduled prevention Tuesday Fall Event For Is Beanie babies for tech bros
1,800 crypto currencies exist. That’s about 10x as many as there are paper currencies in the physical world.
Long Island Iced Tea company changed its name to Long Blockchain Corp and its share price on the NYSE quadrupled in a week.In Bbc News Shelves Mexico Doll Barbie Frida Shop From Banned Kahlo 1zYvxT0
Dentists don’t need their own cryptocurrency.
WhopperCoin’s sole purpose is to buy Big Whoppers from Burger King in Russia. Aka a loyalty card. prevention Event Tuesday Fall For Scheduled Is Zerorequirement for a separate currency.
A tiny, tiny minority of geeks and tech-enthusiasts argue passionately online about the relative merits of PotCoin, CannabisCoin, KushCoin, Bongger, and Ganjacoinproas truly meeting the cryptographically secure payment needs of the casual weed enthusiast.
It’s a lot of noise, make-believe, roleplaying and more.
So, to end on a hopeful note in a pessimistic tome,
I do believe Bitcoin (digital gold), Monero (truly anonymous transactions), Ethereum (smart contracts and other clever things) — and possibly Ripple (banking)— are actually useful tools that will see further adoption in the real world.
Is Fall Event Scheduled prevention Tuesday For Most other things… hell. Chums. I really don’t know. People still buy tulips, right?
Here’s the update. We’re in the red. Still down less than the overall market — some consolation.
I’ll send round an email this weekend with the steps to take next — i.e do you want to cut your losses and take your money, or keep it in there, forget about it and revisit in 2020?
To the moon! 😉