economics

Calling the dip

The bell is ringing.

Last time around, I called the 2022 dip slightly too soon when bitcoin was at twenty thousand, then called it again, more firmly and with greater confidence, when it was at sixteen thousand, which was dead on accurate.

The current dip is sixty thousand or so. I may have called it a little too late, bitcoin was recently at fifty eight thousand, and is now at sixty two thousand, though I think it likely to briefly fall below fifty six thousand, in which case I will have again called the dip slightly too soon — but also likely to never see sixty two thousand again, in which case I will have called the dip slightly late. If you buy now, you might regret it, but you will not regret it for very long.

From dip to dip that is dollars falling by a factor of nearly four relative to bitcoin

From the 2017 peak to the 2021 peak, about the same.

The next peak will likely be some time in 2025, though my crystal ball is looking somewhat cloudy. If Trump takes action to restore the usefulness of the dollar as an international currency, could be rather slower. Bitcoin is still in its infancy, with software that makes actually useful still in a horrifyingly crude state, but being worked on. Likely four fold again.

26 comments Calling the dip

Isaac says:

I saw Sparrow Wallet upgraded to version 2 recently, is that still your recommended desktop wallet?

jim says:

I have not investigated, and not upgraded. Major changes tend to be enemy action. Just have not looked into it, though I should have.

Fidelis says:

Is it possible to build the crypto, free and soverign therefore, version of stripe? Its hard enough running a business, no one wants to limit their customers to people that have crypto and want to use it. Especially no one wants the added complexity of managing a strange new money, so two problems.

I understand in the long run you’ll have this all as programmatic finance of some sort, but for now the vast majority of people just don’t use crypto except maybe as a casino. You can probably solve the fractured ecosystem problem — Alice wants to pay in GayCoin, Bob wants to be paid in Bitcoin, the checkout interface just converts the payment through some working decentralized exchange and settles when the Bitcoin reaches Bob. Perhaps even have a Bank DAO thing in the middle that eats the risk in exchange for scale, so merchants can fully ignore the problem — but the fiat/crypto problem looks very sticky to me. Looks as if only solvable by exchanges until crypto becomes normalized.

It looks like crypto is rather early on the adoption curve when it comes to small payments. Could be very rough on SovCorps that will have a terrible time managing any amount of fiat. They will have the choice of only serving crypto powerusers, or accepting the cuck harness imposed by orgs like coinbase.

Pseudo-Chrysostom says:

Apples sells iphones to make more users of the apple app store app. Infrastructure building.

If you had an interface that can present people with their choice of clearing houses offering exchange rates between different financial instruments that – crucially – can’t be interfered with on the interface level by hostile actors, that’s already 99% of the problem done there and you hardly even need your own cryptocurrency done right at that point; though your own cryptocurrency done right would be a natural extension of the things you’d need to do for such a thing, and perhaps intimately entangled with it as well.

Fidelis says:

The problem is most people buy things online with either credit cards or some electronic banking scheme, of which each country has its own. You cannot achieve both sovereignty and access to this customer base, which is going to include the customers you need when first starting. You cannot really get away from this problem unless you’re selling to the technically savvy, which can be a rather hard crowd to sell to. It cuts off a lot of markets for the sort of simple slopware that is easy and quick to put out, and therefore a good target for a business venture using an all too interesting and potentially very complicated finance and management backend.

I would rather enjoy it if the soon to be flood of AI slopware generating images, parsing emails, making dumb meme videos and so forth, could be powered by burgeoning sovcorp frameworks. Look at something like openrouter.ai, theyve cleverly put themselves between customers and sellers by having a single point where you plug money in. Would be better if openrouter was a sovcorp, so if one of the apps happens to become too interesting, it would take more than a friendly email to shut down.

jim says:

> The problem is most people buy things online with either credit cards or some electronic banking scheme, of which each country has its own.

Supose you are buying oil from Russia. Can’t pay in US$, hard to get rubles.

There is already quite a lot oil being paid for with Bitcoin.

Suppose you are an entrepot in Aghanistan, the crossroads of Asia. No formal banking system. You are using Halawa, but dealing with countries not well connected to the Halawa system.

> If I’m selling bits/network access, well my only customers are crypto users now, aren’t they?

A whole of businesses in the domain name and hosting business take bitcoin.

Anon says:

Russia , Afghanistan are the exception not the rule.
You can buy from china , Arab gulf , Africa in US$ and that more than enough.
It will be another thing if/when china move in Taiwan.

jim says:

Russia is no small exception.

And you can buy from China from big well connected businesses, and small businesses that sell through a big well connected intermediary, but buying from a Chinese small business in fiat dollars is hard and rapidly getting harder. Increasingly, they are turning to bitcoin for international sales.

El Salvador, a country in which US fiat dollars are street cash, went Bitcoin in substantial part because it is hard to move those street dollars between El Salvador and the rest of the world.

skippy says:

A lot of countries, including some surprising ones, have quietly set up internal parallel payments systems in the past ten years. Without decoupling from the dollar, they are ready to move on if such a decoupling comes with minimum disruption.

jim says:

It is the minimal disruption that I doubt. Observe Russian efforts to set up an alternative to the dollar system. Not off to a good start.

The fundamental problem with a debt based finance system is that you have to trust the bankers, and no one trusts the bankers.

The fundamental reason the world keeps going to a debt based financed system is that it funds the state. A crisis comes, the state urgently needs funding, institutes a debt based finance system.

But the debt based system relies on a tradition of honesty and good conduct by bankers, which tradition was slowly built up over time in a hard money based system where it was possible for a bank to just go bust, and the penalties for going bust were dire. During a period of debt based finance, that tradition fades away.

skippy says:

International finance likely to be disrupted, businesses likely to be disrupted on some level, but even in some quite “poor” countries the US can now no longer simply switch off daily payments (or force them back to cash) for the general public. Russia has obviously had problems, but its Mir system means that its internal economy has kept spinning, and even thriving. SWIFT, Visa, etc. not the power they once were, even if they are still a power.

Soft money is a problem everywhere. Russia, though separate, is still a soft money fiat economy. So is China. If other countries are pushed out of the “world system” they are also likely to remain soft money fiat systems for a time.

jim says:

A government can ensure its soft money is used internally, and make transactions go smoothly enough. International transactions are more difficult. Again I point to the example of El Salvador.

El Salvador gets a lot of remittances from abroad, overseas workers sending money home to their families. And even though El Salvador is in the dollar system, and dollars are street cash in El Salvador, sending dollars to El Salvador was problem, and Bitcoin a better solution.

Transmitting money over distance, even whithin a single country, is apt to become difficult due to banks being disfunctional. And moral decline is rendering banks less and less functional, in some countries more than others.

Visa and mastercard work great, but getting permission to receive, rather than pay, visa payments is difficult, and the recipients catch no end of grief.

Visa and Mastercard are easy for payers within the Global American Empire, not so easy for payees. And for both payers and payees outside the Global American Empire, or on the periphery of empire, considerably harder.

Fidelis says:

I’m thinking from the standpoint of someone running a SovCorp.

I highly doubt people moving large or small amounts of oil will be the first adopters. It will first be small easy to conceptualize businesses first, and import things will be built later based on their success or failure; just as BTC was first used to buy pizza.

>A whole of businesses in the domain name and hosting business take bitcoin
So if I’m running a sovcorp, I now have this problem where I can ONLY accept crypto, or I can open the can of worms that is having a real bank account that is associated to the sovcorp, and deal with the very long list of problems that will cause.

I can think of many easy to spin up test case businesses that would be happy to be a sovcorp, if not for the fact you are dependent on your customers being crypto native. Would like to address this problem if at all possible.

jim says:

> So if I’m running a sovcorp, I now have this problem where I can ONLY accept crypto

Indeed you do. So the first use case for Sovcorps is managing conversion between one crypto currency and another.

To serve the nation state corporations and private individuals that need to use crypto currency for international transactions, we need level one bitcoin, liquid, which is a level two bitcoin, the various snark based level two bitcoin currencies that bitcoinOS and the Grail bridge makes possible, liquid lightning (which exists, but is unusable), tether, and tether lightning (which does not yet exist, but should).

And we need dexes and sovcorps to manage conversions between these different forms of currency.

What we are seeing serving this need are Daos, which go through an elaborate pretence of not being unlicensed limited liability publicly traded corporations built on a blockchain to avoid being charged with evading the Howey test. A sovcorp is just a Dao with less pretending.

jim says:

> the fiat/crypto problem looks very sticky to me.

For international transactions, not so sticky. On the periphery of empire, and outside empire, turning dollars in the inner empire banking system into money you can use in the outer empire and beyond the empire and vice versa is quite hard and getting harder, and a lot of businesses are using crypto currency to avoid this problem.

Fidelis says:

So who are my customers? I’m having trouble imagining how this works in a sovcorp framework.

The simplest thing to sell on the internet is bits, usually bits that come out of a server you control access to. If physical goods, sovcorp seems unreasonably dangerous to deal with, with little benefit. So the first sovcorps should probably be some software or network service, right?

If I’m selling physical goods in a way underserved by regular corps and finance, well there’s probably a reason they’re underserved. Making a sovcorp now increases the number of people that could potentially get everyone into trouble.

If I’m selling bits/network access, well my only customers are crypto users now, aren’t they? So now my potential customer base is way smaller, and being very online likely to have incredibly high standards for a digital good. So why should I bother? Because the product is cut out of the fiat world? Very serious limitation on use cases.

Ideally, you have some friendly jurisdiction so that some company can stand up a fiat payment endpoint for the normies, that pays out to your sovcorp vault address. On the payment webpage offer a discount for crypto payments, maybe a fence sitting customer will switch after they like your product.

Tom says:

Bitcoin is complete fucking garbage.
It can’t even handle 100M people trying to transact
and use it once per year, it has no privacy, and people
know it sucks balls like that so they’re refusing to
push it past $85000. I’m so sorry you dumbfucks
bought it at $0.10, Bitcoin is dying and you’re
gonna get REKT, SELL NOW 😉

Jim says:

I called the dip at US$62000. Last time I checked, US$87000. I previously called the dip when it was US$16000, and since I called, it has always been higher than US$16000. I later called the dip at US$62000, and since I called, always been higher than US$62000. I expect the price in US fiat to eventually go to infinity, because I expect US fiat to go to zero. A more meaningful measure is the cost of a house in bitcoin, which has been falling and will continue to fall.

Level two bitcoin is a solution for the transaction limit. Lightning, Liquid, and the Grail Bridge.

Tom says:

Respectfully to all Anons,

“Level two” is not a solution to the transaction rate limit (sub-7tps, lol), because even if as L2’s gain hundred-Millions of users, there is always a very substantial percentage fraction of those L2 users, tx’s, and use cases that absolutely MUST settle up to the L1. There is no paradigm in which L2’s can ever paper over those requirements for L1 settlement that that percentage of L2 users need. Thus demand for L1 must and WILL rise with any growth of L2, and thus you WILL see a prohibitively exponential rise in L1 tx costs as a result, continuing to price more and more users out. There is simply no way around the mathematical fact of this natural background demand rate ratio for L1:L2. Other than to launch an L1 that can handle more L1 tps, or to make BTC’s L1 handle more L1 tps before the competition does. 5000L1tps is a good minimum baseline research target requirement for a new competing L1 launch. The only reason you’re not seeing L1 tx fees explode, is nobody is really using BTC L1 yet, and nobody is really using L2’s yet, and central authority tradworld proxies/ETFs are daily aggregating and shuffling around Oracle database entries for clients and trades and payments and settlement instead of doing real L1 tx. And apart from their desire to takeover and centralize BTC to further enslave the masses, this is why you see banks now screaming to custody and proxy BTC via their stablecoins. IMO, if you don’t have L1 tps, you don’t have a real coin. Good luck to all 🙂

Jim says:

That is a big problem with lightning, because lightning only reduces the number of level one transactions by a hundred or so at most. But it is not a big problem with Liquid, and it will be no problem at all with the Grail Bridge. Transactions between Liquid and level one are few, large, and infrequent, because only done by a few big players, and at scale, transactions between level one and Grail will be fewer and larger.

Tom says:

It is not appropriate to believe that today’s BTC L1 tech, or for that matter any deployed L1 tech, is where it needs to be, nor anywhere near what it could be… Further, any coin’s tx protocols can always be updated while preserving relative UTXO balances.
It is not appropriate for the faction of BTC to continue blanket total rejection of any “L1 speedups” whatsoever. This sort of head-in-sandish, and or partisan refusal to even consider or evaluate… reeks of ulterior motive regarding their simultaneous bleatshilling and proffering of L2’s, especially given some of their lack of functionality, lack of privacy, and of their centralization aspects, in particular some of their not-exactly-disinterested realworld physical corporations that effectively control them.

IMO, I don’t think the L1 tech research curve and branches are anywhere near done being discovered, let alone beginning to be deployed. Nor do I think today’s L2 tech/deployments represent a solid paradigm that anyone should be banking on or cementing or lawfaring in place for decades… way too complex and fragile and subject to supercedement and thus entrapment and collapse of value.

When real TPS?
When real Privacy?
When AnCapistan?

Everything depends on achieving real TPS.

There is today’s BTC, it does not have real TPS.

And, we must conclude that we have yet to truly understand, design, and deploy, what a real “P2P Electronic Cash System” will end up being.

I wager that in 100 years, that future will not include what today’s BTC L1 and L2’s are shilling, that those will have long since been migrated and traded away for a real system.

Whether that real system is a “new” L1, or that today’s BTC is forced to undergo such massive changes to integrate it in order to avoid becoming obsolete, such that it is no longer recognizable as such, is immaterial.

Now please excuse yourselves so that you can go update your fiat denominated spreadsheets with this weeks ridiculous crypto gains 🙂

Jim says:

> is not appropriate for the faction of BTC to continue blanket total rejection of any “L1 speedups” whatsoever.

Is appropriate. Bitcoin is Bitcoin because it is Bitcoin, just as gold is gold because it is gold. L1 speedups cannot change the scaling problem, and they can take away the magic that Bitcoin is the one real crypto currency.

Speeding up level one is only useful if one can speed it up tens of thousands of times. Lesser speedups do not solve the problem, and can break the magic.

Nova can speed stuff up to millions of transactions per second, but so far a Nova based blockchain is only a gleam in the eye of developers.

Nova could be introduced into level one Bitcoin in the same way the Hogex was introduced into litecoin. And I hope it will be, but it will be a lot easier to introduce it into level two Grail Bridge.

Tom says:

Clarity: I don’t care about any supposedly monetary L1 that has anything else as a goal other than being a private cash money for the world. If an L1 does something more than that before then, ok, that’s for them. But if an L1 does that at the *expense* of what is needed to be a private cash money, when there is not yet a maximised private cash money… then no, that bling is not an acceptable resource tradeoff.

Jim says:

Well then, you should go with Litecoin, because it is private (if you use mweb addresses), and transactions are cheaper and considerably faster. But the trouble with Litecoin is that it is being inexorably crushed by Metcalfe’s law. If I want to transact with a far away business, and both of us hodl so the transaction is easy, Bitcoin. Everyone uses Bitcoin to transact, because everyone else is using Bitcoin to transact. As a result, Bitcoin inexorably rises relative to Litecoin.

But Litecoin does not scale either. What does scale is the level two Grail Bridge, which is still a work in progress. The Grail bridge can support privacy. Whether it will support privacy remains to be seen.

Tom says:

> L1 speedups cannot change the scaling problem, and they can take away the magic that Bitcoin is the one real crypto currency

Magic is an illusion and a trap, so is Bitcoin.
But yes, if it discovers more L1 speed, it will become closer to being designated a real crypto currency.

A currency, other than being useful at least “currently”, is only a currency if a relevant mass can use it. A Billion+ more users can use Gold and Cash, because they are currencies, BTC is not, not least because if they try to use it as a currency, it will price them out. And if they don’t get out before then, it will forever trap their UTXO behind the rising fee wall.

Yes, Litecoin at least has some type of privacy, but it is also bound by severe tps limitations.

As is anything that uses an ever-growing non-discardable “blockchain” that relies upon unknowable future advancements in storage and processing tech such that users can afford and use it the way the shills demand they do… by keeping and verifying andusing their own copy.

The “Grail Bridge” “BitVM” etc, are all ultimately bound up starved out and priced out by the same tps and settlement problems as the above L2’s are. Are you going to get 100’s millions to billion users using GB without blowing out L1 tps… no.

Will have to look at Nova.

Disgusting that 95+% of bitcoin crypto twitter refuses to even acknowledge or discuss the severe limiting fact of sub-7tps.

And continuing to build Metcalf dependency upon BTC’s 7tps is going to be a problem.

If someone riddles me a 5ktps L1 coin, then I’ll consider thinking about beginning to endorse that coin with caveats.
Or show a reduction ratio of say 2B users needs down to 7tps, and I’ll consider endorsing that “Layer 2” widget.

Sorry but I’m just not willing to accept the Kool-Aid that the BTC crowd has been trying to sell. Their tps math ignores the need for settlement and its ratios, and is thus their L1 tps is simply nowhere even remotely close to near where it needs to be to support the Billion+ users they claim to be able to support with the “layers” they’re shilling. Their Current Lies and Claims as to the Future are simply unethical, and only to do one thing, pump up the BTC price.

Can you believe these BTC fucks have been trying to sell African tribes on BTC. Even trying to roll one of their latest vaporware fad idea Fedimints and other layers of shit on them. You know the last GAE pedofag that tried to sell their snakeoil on those poor Africans… Bill Gates and his WHO and his AIDS and COVID and COVAX and DPT and Food.

It’s all ok though, the cold hard reality of tps ratio re usage needs for settlement, thus blowing out fees, will hit them soon enough, and this time the fee pressure won’t go away like it did in 2017-2018.

Should be fun to watch 😉

Jim says:

> The “Grail Bridge” “BitVM” etc, are all ultimately bound up starved out and priced out by the same tps and settlement problems as the above L2’s are.

Lightning can be priced out by high transaction fees, but it still allows enormously more than seven transactions per second. Vastly more than any current blockchain.

The seven transactions per second limit means that it is impossible for a large proportion of the word’s population to have their own lightning wallet. The majority would have merely custodial lightning wallets, and only substantial businesses would have a true lightning wallet. So lightning is, as you say, not a solution, merely postpones the crisis. But it can postpone the crisis for long enough for us to implement other solutions.

The Grail Bridge does not suffer from this problem. If the cost of an L1 transaction rises to the level of chartering an oil tanker, it will continue to work fine and continue to be able to sustain a million transactions per second. It will continue to sustain millions of transactions per second, while only doing one transaction or so per day at level one moving Bitcoin between level one, and Grail level two.

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