Amy Castor asked her favourite nocoiner luminaries for their blockchain predictions for 2021. [Amy Castor] Here’s an expanded version of my answers.
The loving eye of Sauron
Crypto: “Bitcoins are serious money that finance should take seriously! Take us seriously!”
FinCEN, Treasury: “Sure!”
Crypto: “No, not like that,”
2021 will see more regulation of cryptocurrency — as coiners discover to their dismay just how incredibly regulated real-world finance is.
Just wait until someone sits them down and explains regulatory real-time compliance feeds for trade surveillance. The Stablecoin Statement from the US Treasury in December last year included the following paragraph: [Treasury, PDF]
To facilitate well-functioning payments and trading markets, stablecoin arrangements should put in place data management systems to record and safeguard data and information collected and produced in their operations. Reliable processes should also be employed for the recording, retention, and reporting of real-time data, including price and transaction information, for dissemination to market participants and regulators.
The crypto world hit the roof over this — how dare they invade our privacy like this!
But you know, that sort of thing is completely normal in finance. Every trade, every voice call, every chat channel — recorded and fed to regulators in real time. Because traders in real finance also get up to whatever shenanigans they can, and this is what it takes to get them to behave.
(This is one of the main ways the CFTC busts traders for spoofing and so forth — because the traders so often plan this stuff in compliance-recorded channels. Smart doesn’t mean not dumb.)
(OK, they don’t generally get everything about everything. There’s such a thing as pushing back against unduly burdensome compliance obligations. But monitoring of transactions is quite normal, and monitoring and recording chats and voice is something that regulators can do and have done.)
If you want to get into the world of real money, you’re going to be treated like you’re in the world of real money.
Magic beans and bubble machines
We’re currently in the throes of a completely fake Bitcoin bubble. This is fueled by billions of tethers, backed by loans, or maybe bitcoins, or maybe hot air. Large holders are spending corporate money on bitcoins, fundamentally to promote the value of their own holdings.
Retail hasn’t shown up — there’s a lack of actual dollars in the exchange system. One 150 BTC sale last night (2 January) dropped the price $3,000.
If 150 BTC crashes the price, then almost nobody will be able to get out without massive losses. The dollars don’t appear to exist when tested.
DeFi failed to get retail into crypto, and the crypto venture capitalists seem to have lost interest — so they’ll come up with some new shell game to extract nickels from the degenerate gamblers.
The iFinex expanded universe
I could predict the guillotine will finally fall on Tether — but I predicted that for December 2017, and these guys are amazing in their ability to dodge the blade just one more day.
On 15 January, iFinex has to front up to the court and officially admit what they said in September:
The parties met in video conference on Thursday 17 September. I’m told that iFinex’s lawyers admitted they don’t have the requested documents; the NYAG has said that iFinex need to admit that formally. Also, the money went through various shell companies with other people’s names on it, and the NYAG is going to want to know who they are.
The current Tether pump looks very like a last-ditch attempt to get the last remaining actual dollars out of the system, and into the hands of the large holders.
Or maybe, 14 January: Stuart Hoegner and Paolo Ardoino go to India to research orphanages.
Nothing has changed in crypto since 2011
There will continue to be no use cases for crypto that absolutely anything else does better. Everything the Buttcoin Foundation was talking about in 2011 is still dumb and broken. [Buttcoin]
The idiocy manifested the moment you could reliably trade bitcoins for actual money. The particular technological handwave changes from time to time — bitcoins, altcoins, ICO tokens, DeFi — but the scams are still the same, and so are the suckers who fall for them.
Coiners in general have no memory or sense of history of what is, allegedly, their own area. If you have anything riding on any of this, you need to read up on the early days. Buttcoin Foundation, and everything Tim Swanson ever wrote for a more sober and detailed version. [Great Wall of Numbers]
The buttcoiners turned out to be the historians for crypto.
How did I do in 2020?
I stuck my neck out last year too — how are my psychic powers doing?
The “crypto winter” will continue. There will be no new retail interest, and no new reason for retail interest.
I’ll go so far as to predict another mainstream crypto bubble won’t start in 2020 — I think it’s too early, and we haven’t grown back a fresh crop of suckers. The sort of people who are desperately seeking a get-rich-quick scheme, but don’t remember the 2017 bubble.
I was right on no new retail interest — but, through judicious application of billions of tethers, and holders spending company money on bitcoins, crypto is back in the news! Though I think that’s less like winter ending and more like massive space heaters.
All new hype in the crypto sphere in 2020 will be slightly-rebranded scams to squeeze the remaining actual dollars from the few obsessive gamblers still day-trading cryptos.
DeFi.
The price of Bitcoin could go up, down or sideways. It’s whatever the margin traders need it to be that day.
c.f., the charts in the past month.
Some “blockchain” projects will see production! Almost all of these will be centrally-administered systems where the blockchain is just a data store, and the others will be much the same but coming up with new excuses to say they aren’t.
The press release machines haven’t been pushing “blockchain” so hard.
There will be enough venture capitalists funding “blockchain” projects to make people who should know better think this is good news for (the price of) Bitcoin, and isn’t all just the sort of VCs who were foolish enough to buy Gram tokens setting even more money on fire.
DeFi — look at how Andreesen Horowitz got Compound listed on Coinbase in June for a worked example.
Successors to IEOs and DeFi — the broader category of Initial Sucker Offerings — will surely make number go up! The promises will sound like a pseudoscientist explaining a perpetual motion machine, where he explains every little detail except where the free money/energy comes from. You will be assured that institutional investors are heavily into this.
No successors, just DeFi. When that didn’t work, they just printed tethers like there was no tomorrow. And when the New York Attorney General comes calling in January, there might not be!
The comedy godl will continue.
Magic 8-Ball by Zaneology, CC-by 2.0. [Flickr]
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I saw some 2020 “retail” signals in these U.S. markers:
1. There’s a Bitcoin ATM in the gas station down the street from me (I haven’t used it but read that you can buy but not sell).
2. The Bitwise crypto index fund started trading in the 4th quarter (BITW), and immediately traded at an insane premium to NAV (they market to retail advisors).
3. The RealVision website launched a new Crypto-dedicated section on its website, with free access to content (the traditional content continues to have a paywall).
> There will continue to be no use cases for crypto that absolutely anything else does better.
This probably should be rephrased. “There will continue to be no use cases for crypto where it beats any alternative” maybe.
yeah, you get the idea 🙂
Greetings David, discovered your stuff the other day and have added your book on Bitcoin to my reading list. Do you address claims about Bitcoin being an “antifragile” technology?
I don’t think I addressed that particular buzzword in the book. I don’t think it’s a meaningful claim – the evidence for it is variants on “it’s not dead yet!” and never mind functionality, quality as an investment, everything else that’s wrong with the bitcoiin world, etc.
That’s sort of the impression I have. The survival of the system is what counts, rather than the security – to say nothing of the prosperity – of individuals.
An excerpt from the article that originally inspired my question:
“Even errors are a positive force. As the network has grown, each potential point of failure has become less vital to Bitcoin’s functioning as a whole. While that means weak points and individuals have been sacrificed for the good of the system, no decision making has been involved in the process.
“And each time Bitcoin has been pronounced dead, it’s come back—in a stronger state than before.”
https://decrypt.co/46719/how-bitcoins-antifragility-makes-it-almost-unstoppable
What is one to make of the institutional support for Bitcoin across the world, which has been growing despite the technology’s sketchy nature and checkered history? This is apparently what has induced a family member of mine to go from being a BTC skeptic to a full-blown BTC fanatic who appears hellbent on committing every single penny he can get his hands on to what he now sees as a golden goose and a surefire insurance policy against impending inflation. (The fact that he leans far-right libertarian and is susceptible to conspiracy theories may help to explain his thinking and behavior.)