When do you think Bitcoin Market Cap exceeds the Federal Deficit?
Just saw an M2 Pro laptop for $1200 at Costco. I was thinking about upgrading, but then I realized, if I just wait, it'll be cheaper in BTC by a factor of 2 or more by the end of the year.
Bitcoin helps so much with self-control.
Most people's spiritual states are so bad that they feel the need to alter it with alcohol, sugar, porn, weed, psychedelics and shopping/consumption.
Pushups >> Laser eyes
But not many posting videos...
I talked to Alex Voss and Marthinus Gobler about Free Private Cities, their history and their potential for BItcoiners. We discussed Special Economic Zones, Honduras's ZEDEs like Prospera and much more.
#Bitcoin Fixes This #120
Did you know the two major parties in El Salvador conspired to keep Bukele off the presidential race in 2019? It was only through some clever legal manuevering that Bukele managed to get on the ballot and win decisively.
Funny how few human rights groups or US politicians even know about this.
Success breeds a lot of criticism, especially by those that have something to lose.
The Coming VC Crisis
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VCs have had it good for a long time. Their business model of getting 2% in fees every year and 20% of the returns on the money has been extremely lucrative. There have been a lot of VC "successes" that have driven their returns and it seems like there are new VC funds being found every week.
But beneath the surface, there's a storm brewing. The returns just aren't what they used to be. There was a run in the 90's and 2000's where a single hit would be enough to propel your fund into the stratosphere. A Google or a Facebook in your portfolio was enough to make your fund very profitable.
More recently, there was the ICO/token craze which got VCs insane returns, mostly by scamming retail. These were unheard of exits which were sometimes many multiples in just 6 to 12 months. These were very profitable for a while, but of course, all unsustainable things must come to an end, and we've seen it the last few years. The last two major VC-driven tokens, WorldCoin and BitClout have done horribly and most of these "crypto" funds are underwater.
The problem is that there's way too much demand. That is, there are too many VC funds chasing after too few startups. This is unsurprising in a world of fiat money since there's no opportunity cost for money and as fiat money continually gets printed, a lot of that money finds its way to VC funds. Got a $50M asset? You can get a loan for $40M using that asset as collateral and invest some of that in a VC fund. That loan money, of course, comes from nothing and is printed into existence. So there's essentially a fast growing supply of money whereas the supply of startups is more or less steady, especially as many either die or graduate to being bigger companies.
As a result, we've had the phenomenon of startups getting crazy valuations as there was so much newly printed money chasing a pretty small supply. Higher interest rates more recently have meant that there's been less money printing, and thus less money has been flowing into VC firms. Hence, there was a bit of a correction on startup valuations, but as we all know, this is a temporary situation. There's about to be a lot more money printing and much of it will flow into venture capital. So why am I arguing that VCs are soon going to face a crisis? Doesn't more money printing mean more VC money?
The startup ecosystem isn't what it was 20 years ago. There are fewer and fewer superstar companies like Amazon and Google. The "successes" of the last few years like Lyft and Coinbase haven't fared well in the public markets. Retail knows that they're getting dumped on. The startups coming to market who are supposedly disrupting things aren't really profitable, and that means they're not getting great exits.
What's happening is that the fiat system's natural protectionism of incumbents is hitting up against the money being poured into startups. The abundance of money has made these startups less and less like real businesses and more and more like market playthings. Startups now are less healthy than startups from 20 years ago because they've been coddled by too much money. At the same time, the top firms in the economy are being protected by the fiat system, whether through subsidies or cooperating with intel agencies, they've found ways to build regulatory moats around their businesses. There simply isn't that much room left at the top.
Naturally, this means that VC funds are making less money because successful exits are getting harder. More of them are underwater and the returns for LPs are getting worse and worse.
Then, there's Bitcoin, which has beaten the returns of most VC funds. As more people use Bitcoin as savings, the prospect of putting money into a VC fund looks less and less attractive. The returns that VCs are getting just isn't cutting it and the newly printed money has a much better savings vehicle in Bitcoin.
And that means we'll soon get to a point where many VC firms will no longer be able to raise funds. And that's a good thing. Venture capital is a bloated ecosystem that has gotten fat on fiat money and has largely been able to avoid reality for a long time. A closer alignment with reality, that is profit, is going to make for better companies in the end.
In other words, the long term prospects of venture capital look grim because smart money is headed toward Bitcoin.
Twitter discovery is hard. Nostr discovery is even harder because the calculations involved are not trivial in a decentralized context.
But I think people would be willing to pay for a better experience and this is where clients could differentiate themselves.
For free subscribers: Liberal Utopia, Prison Inflation, Birth Control Side Effects, Cypherpunk Origins and more!
For paid subscribers: Citrea, Revelio, COPA case and more!
#Bitcoin Tech Talk #383
Congrats to Taylor Swift.
Over the long term decentralized will always beat centralized because centralized has a finite lifespan.
First principles thinking is hard and takes time. It's real work.
Visual substitutes and proxies of information are easy and take little to no time. It's fake work. It's meaningless trust in authority.
Bitcoin is the former, fiat is the latter.
Looking forward to listening
I swear, every company is trying to be a SaaS player now. They'd rather rent stuff to you than to sell stuff.
This is, at a deep level, what it means to own nothing.
The Nationalization of the Work Force
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The economic numbers, like unemployment, inflation and GDP, are getting gamed. Layoffs are being offset by government hiring. Slowdown in the economy is being offset by government spending. No one in the actual economy wants to spend, so the government is counter-balancing it with spending of its own.
As interest rates rise and all the economic health indicators look increasingly horrible, the short-term Keynesian band-aids are being applied. After all, politicians have to *do something*, lest they be accused of not caring. This is, of course, an excellent example of high time preference behavior. Politicians really only worry about the next election and long-term consequences be damned! So what if government keeps growing? So what if inflation destroys peoples' savings? So what if the private sector mal-investment never has a chance to clear out? The game is to keep things the same so that they can get re-elected and they can always dip into the cookie jar of inflation to fund it.
In the short term, this is a very understandable strategy. Creating government jobs not only makes the unemployment numbers look better, but it also has the nice side effect of making those that get these jobs way more statist. These are not people that are going to vote for a reduction of government, they have strong financial incentives to never do that. And spending on unnecessary wars to prop up defense contractors? You think those people would ever vote for less spending?
The divide right now is not between liberals and conservatives. The divide is between the rent-seekers and productive people. And as currently comprised, it's about 50/50. And it's not who you think that's on the productive side. Sure, obvious groups like government employees, media and even the military, educational and health care industrial complexes are very obviously on the rent-seeking side, but there are others that you may think are productive but are not. Big tech, for example, is overwhelmingly on the rent-seeking statist side. The war-mongerers are on the statist side.
The productive people are the middle and lower class people that haul away your garbage and fix your AC and deliver your packages. And as the populace re-aligns, the productive people are correctly calling out the uniparty as the party that wants to keep the rent-seeking going.
There's only so much you can steal from the productive people before there's a revolution. But this is where the infinite pool of money that the central bank can draw from becomes the tool to tip the balance. You can co-opt the productive people by giving them government jobs. And make no mistake, that's exactly the strategy being executed right now. The public sector is growing fast, even as the private sector shrinks. They are nationalizing the work force so that voters are dependent on the state. And honestly, it's not that far from socialism. If 100% employment by the state is socialism, then we're about half-way there, roughly speaking.
But this strategy has consequences. As more people come on the government payroll, either through direct payment, as with government employees, or through subsidization of industries, the money to pay them has to come from somewhere. If it's explicit taxes, that will get the politicians voted out real quick, so it's not really an option. Inflation, on the other hand, is great because it's a stealth tax and there's plausible deniability by blaming greedy corporations and so forth.
But inflation debases savings and soon, people can't afford to live on their old salary. Not least of this is the bloating public sector, whose salaries tend to adjust last. Thus, there quickly becomes a large and powerful lobby of government workers who will demand raises. And this creates a major dilemma for those in power. Do you give them raises and exacerbate inflation, or do you deny them raises and get voted out of power? The high time preference nature of politicians almost guarantees the former outcome. But then, that extra money adds inflationary pressure to the economy. This may hold things off for a bit, but the bigger the public sector, the faster prices in the rest of the economy increase. Inflation becomes a problem again. Soon, the government employees, stronger now, perhaps as a larger constituency and having a precedent to work with, will again demand raises.
Raises -> Inflation -> Raises -> Inflation -> …
The only end here is hyperinflation and that's not pretty.
I'm not going to suggest that it's around the corner, but as Caesar once said, "aleta iacta est" or "the die has been cast." The expansion of the public sector is inevitable and thus, so is inflation and eventually hyperinflation.
I talked to @AaronvanW about his new book, The Genesis Book. This was a fun conversation about economics, hacker culture and the Cypherpunks, the pre-history of Bitcoin, if you will.
#Bitcoin Fixes This #119
https://rumble.com/v4biplw-bitcoin-fixes-this-119-cypherpunk-origins-with-aaron-van-wirdum.html
The people with no stake in the future, the ones without any children, should not get to make them pay for their excesses now.
Lawfare has to be one of the most fiat things imaginable.
VCs like to act like they're expert consultants on everything from marketing to capital management. In reality, that's all a smokescreen to hide the fact that they're money middlemen. They take money from LPs and distribute them to startups, which is what banks used to do.
You can get better and more objective consulting services from people that aren't trying to fatten you up like a commercial pig.
Free issue for the first Monday of the month!
Citation Cartels, Fauxductivity, VC redux, non-standard TXs, LN Offline Payments, Tether Profits and much more!
#Bitcoin Tech Talk #382
https://open.substack.com/pub/jimmysong/p/bitcoin-tech-talk-382