This time is different, and why we will have a super cycle.
Last cycle there was a lot of talk about a possible “super cycle” and, bitcoin having a small pull back, but then continuing up and breaking the 4-year cycle trend.
Chain of Events and Catalysts Leading to Super Cycle:
In Q1 2024, according to many experts… we will be getting the bitcoin spot ETF. Likely in the first week of January, 2024.
We will also are likely to get rate cuts in Q1 or Q2 2024. Which will make capital flows increase by making cost of capital cheaper.
In Q2 2024, we will be getting the bitcoin halving, currently looking like the first or second week of April.
In Q2 or Q3 (if not sooner) we will also likely see massive money printing before the US Presidential Election in Q4 2024.
In Q1 2025, the FASB accounting rules for Bitcoin will go into effect, although it has already been approved… I think that many institutions will wait for this.
In 2025, many banks and institutions will hold bitcoin on their balance sheets, which will further push adoption and may increase the allocation by other funds and institutions.
I think that the FASB accounting, and banks adding bitcoin to their balance sheet, along with the spot bitcoin ETF will eventually lead to pension funds and sovereign wealth funds putting bitcoin on their balance sheets. This is likely to occur in 2025-2026, in my opinion.
Michael Saylor, and others in the space with vast knowledge of business and investing have discussed how long it takes for businesses to be able to make purchases and get approval for investments through their company. This could stretch into 2026-2027.
In 2027, I think we get more people trying to front run the halving, that is likely to occur in Q1 2028.
Below are some links about FASB accounting in bitcoin and one on banks holding bitcoin on their balance sheet:
FASB:
https://bitcoinmagazine.com/markets/fasb-votes-in-favor-of-fair-value-accounting-for-bitcoin
Banks:
Just did some 3rd grade math...
About 19,550,000 bitcoin currently mined...
5.38% on exchanges = 1,051,790 bitcoin on exchanges if using the 19.55 million...
5.38% on exchanges of 21 million total supply = 1,129,800 bitcoin on exchanges...
There are more than 50 millionaires per bitcoin on exchanges...
60,000,000 millionaires / 1,200,000 bitcoin on exchanges
MOORE’S LAW IN THE DIGITAL AGE: IMPACT ON BITCOIN MINING, CLOUD COMPUTING, AND BEYOND
/ Blog / By Matthew J
Moore’s Law in the Digital Age: Impact on Bitcoin Mining, Cloud Computing, and Beyond
Moore’s Law, introduced by Gordon Moore in 1965, has been a cornerstone in the world of technology, predicting the exponential growth of computing power over time. This article explores the enduring relevance of Moore’s Law in 2023 and its impact on various technological domains, with a specific focus on bitcoin mining, cloud computing, and the broader landscape of computing technology.
Moore’s Law and Bitcoin Mining:
One of the critical applications of Moore’s Law is evident in the field of Bitcoin mining. Moore’s prediction of doubling transistor count every two years has driven advancements in hardware, resulting in smaller, more powerful, and energy-efficient electronic products. This exponential growth in computing power is crucial for the security and stability of the Bitcoin network.
Bitcoin miners, such as KnCMiner Mercury, AntMiner S1, and HashFast Baby Jet, demonstrate the rapid evolution of mining hardware with increasing hash rates. As the hash rate grows, the security of the Bitcoin network strengthens. However, Moore’s Law also presents challenges, such as the potential centralization of the bitcoin network through mining pools and centralized mining, prompting the need for continued innovation and adaptation in the bitcoin space.
Moore’s Law and Cloud Computing:
Moore’s Law significantly influences the capabilities and architecture of cloud computing services. The continuous improvement in server technology allows cloud providers to offer increasingly powerful virtual machines and data storage at affordable prices. However, this progress raises concerns about data centralization and potential security vulnerabilities.
The rise in processing power, driven by Moore’s Law, emphasizes the importance of robust data security and privacy measures. As hardware becomes more potent, the industry faces the challenge of addressing sophisticated cyber threats through enhanced encryption and security protocols.
The Evolution of Moore’s Law in 2023:
While Moore’s original theory of doubling transistor count every two years has undergone changes in practice, its underlying principles of technical growth and innovation persist. The technology sector continues to prioritize the development of more powerful, energy-efficient, and inventive computing technology, albeit with a more nuanced understanding of Moore’s Law.
In the context of bitcoin, the constant increase in processing power has led to the development of more durable cryptographic algorithms and longer key lengths. This adaptation aims to counteract potential security risks posed by the benefits derived from Moore’s Law.
Conclusion:
As Moore’s Law continues to shape the trajectory of technological progress, its impact is evident in diverse fields, from bitcoin mining to cloud computing. The industry’s pursuit of more potent, energy-efficient, and innovative computing technology remains unwavering, even as the exact doubling of transistor count may have slowed. The future of technology relies on a dynamic interplay between Moore’s Law, hardware evolution, and the resilience of various sectors to address emerging challenges and opportunities.
Miners by advertised hashrate.
Hashrate denoted in Mhash per second:
KnCMiner Mercury:
100,000
AntMiner S1:
180,000
BFL 230 GH/s Rack Mount:
230,000
KnC Saturn:
250,000
Avalon2:
300,000
HashFast Baby Jet:
400,000
KnC Jupiter:
500,000
BFL 500 GH/s Mini Rig SC:
500,000
Bitcoin Ultra Enigma 1:
750,000
Avalon3:
800,000
HashCoins Hermes:
1,000,000
HashCoins Apollo:
1,000,000
AntMiner S2:
1,000,000
Black Arrow Prospero X-3:
1,200,000
HashFast Sierra:
1,200,000
HashCoins Poseidon:
1,344,000
HashCoins Zeus:
1,600,000
CoinTerra TerraMiner IV:
1,600,000
ROCKMINER Rocket BOX:
2,100,000
AntMiner S3:
3,000,000
KnC Neptune:
3,000,000
BTC Garden AM-V1:
3,500,000
METCALFE’S LAW: THE NETWORK EFFECTS OF BITCOIN
/ Blog / By Matthew J
Metcalfe’s Law:
Metcalfe’s Law is a fundamental principle used to comprehend the network effect of communication systems such as cryptocurrencies and blockchain networks.
Metcalfe’s Law was first used in the telecommunications industry, and has subsequently been applied to several social and technological networks. Metcalfe’s Law was created by Robert Metcalfe, the co-inventor of Ethernet, and is used to assess the importance and influence of networks based on the number of connections between its users.
According to Metcalfe’s law, a network’s value is directly inversely proportional to the square of its users or nodes:
Formula:
V = n ^ 2
The network’s value is represented by V, while the number of users or nodes is represented by n.
Metcalfe’s Law indicates that as a network’s total number of users grows, so does the network’s value. This is because, in a decentralized network, more users mean more potential for transactions, and network effects, which in turn can lead to greater adoption and value appreciation of bitcoin. According to this law, the value of the bitcoin network increases not linearly with the number of users but quadratically.
This model suggests that the adoption and practical applications of the bitcoin network determine its worth. The more users who find value in using bitcoin for various purposes, the more robust the network’s growth potential is. Metcalfe’s Law also suggests that the size of the network directly affects its value. As more users utilize bitcoin for transactions, investments/hodl’ing, or other purposes, the demand may increase, which leads to price appreciation.
Types of network effects in Bitcoin
Various types of network effects in bitcoin are explained below:
The user adoption network effect, which occurs as more users join the network, increases the network’s value and utility, draws in more users, and is one of the main network effects.
The security network effect emphasizes the significance of a large number of miners or validators participating in a network since security is of the utmost importance in bitcoin. As more miners are added bitcoin becomes more secure, preserving the integrity of the blockchain and the transactions that take place there. I will be delving into Moore’s Law in a different short article. Moore’s law is a better fit for the network effect of mining and security, in my belief.
Some people suggest that Reed’s Law or Odlyzko’s is a better fit for bitcoin price models, but I disagree.
Why does Metcalfe’s Law matter in bitcoin?
Metcalfe’s Law is an essential concept in the bitcoin space, as it highlights the significance of network adoption, decentralization, the network effect, market valuation, scalability, and security.
Network adoption and value
Metcalfe’s Law, which highlights the significance of network adoption, is particularly relevant in bitcoin. The bitcoin network’s value increases non-linearly as more people join it. This increase in value has the potential to draw more users, creating a beneficial feedback loop cycle.
Decentralization
Metcalfe’s Law supports the idea that a larger, more widely dispersed network is more secure and more difficult to attack. The risk of single points of failure or control decreases as the network gets more decentralized due to the growth of nodes. I will be making another article about Moore’s Law, which has a correlation to the mining and decentralization aspect of bitcoin’s network effect.
Does Metcalfe’s law help explain Bitcoin’s price formation?
Yes. Metcalfe’s Law can help explain Bitcoin’s price formation. It is relevant to Bitcoin because it implies that the value and utility of the Bitcoin network rise quadratically/exponentially with its number of users and participants (holders, investors and traders).
The adoption of Bitcoin has been accompanied by a positive feedback cycle in which increased users have resulted in a rise in bitcoin’s value, drawing even more people in. Bitcoin had a small user base in the early days, and its value was relatively low, this has been accelerating and increasing over time.
Possible downsides of using the Metcalfe’s law model to determine Bitcoin’s price projections or changes.
There are numerous factors, such as market sentiment, governmental changes, macroeconomic trends, overall global money supply liquidity, and technology improvements that impact the bitcoin price. Additionally, because of Bitcoin’s volatility, speculation can greatly impact short-term price changes. Metcalfe’s law does not account for all variables, but still can be a useful and worthwhile metric.
Further and More Advanced Understanding Resource:
There is a resource below that is much more in depth on Metcalfe’s law and how it applies to bitcoin and the bitcoin valuation:
https://caia.org/sites/default/files/metcalfeslaw_websiteupload_7-5-18.pdf
Over 50,000 bitcoin have flowed off from the binance exchange over the last 6 months.
I suspect this trend will continue with CZ lawsuit and $4.3 billion settlement.
PROOF OF WORK / HASH RATE / COMPUTATIONAL POWER
/ Blog / By Matthew J
Intro:
Bitcoin, operating on the principles of mathematics and cryptography, relies on key concepts such as digital signatures, hash functions, and the intricate relationship between hash rate and proof-of-work mining. This short article aims to elucidate these concepts and their significance in securing the Bitcoin network.
Hash Rate:
Hash rate, a pivotal metric in the world of cryptocurrencies, measures the computational power employed to process and secure the Bitcoin network. The security of Bitcoin hinges on the mathematical properties of cryptographic algorithms, ensuring the network’s resilience against manipulation. Higher hash rates indicate increased computational speed in solving complex mathematical puzzles, thereby enhancing the security of the network.
Proof-of-Work (Mining):
Mining in the Bitcoin network involves solving intricate mathematical problems, referred to as hash puzzles, through computational power. Miners engage in a competitive race to be the first to solve these puzzles, earning the right to add a new block to the blockchain. The hash rate, akin to the speed of solving these puzzles, plays a crucial role in determining the efficiency and security of the network. The current mining reward, or block reward is 6.25 bitcoin. This will be reduce to 3.125 in 2024, this is called the halving, which occurs every 210,000 blocks.
Hash Functions:
Bitcoin employs cryptographic hash functions, such as SHA-256 and others, to generate unique, fixed-size hash codes from input data. Blocks in the blockchain are linked through the hash of the previous block, creating an immutable chain. This cryptographic structure ensures the security of the blockchain, as altering a single block would require changing all subsequent blocks.
There are online tools available to see how a hash works, please see:
Computing Power:
Computing power in the Bitcoin network represents the collective strength and efficiency of connected computers. Analogous to workers in a factory, these computers aim to solve the cryptographic puzzles, validating transactions and creating new blocks. More powerful computers or a higher number of workers enhance the network’s ability to solve puzzles swiftly, contributing to overall efficiency.
Relationship with Security:
The correlation between hash rate and security is evident – a higher hash rate signifies a more secure network. As the computational power increases, the difficulty of manipulating the blockchain rises, safeguarding the integrity of transactions. In the event of an attempt of a 51% attack of the bitcoin blockchain, it would cost millions in mining equipment/hardware, electrical costs. A 51% attack is when a person or group tries to gain control of a majority of the blockchain, to try to corrupt the network. If successful, they would end up mining an empty block and not collecting their block reward… because bitcoin nodes would reject the block. Nodes validate transactions, and they would not validate someone trying to create a double spend/51% attack. TLDR: It is more profitable to mine bitcoin and join the network, than to attack it.
Changes in Hash Rate:
Fluctuations in hash rate indicate shifts in network activity. An increase implies heightened security, greater computational resources, and increased electrical power consumption. The Bitcoin network has a difficulty adjustment approximately every two weeks (2,016 blocks), ensuring equilibrium as the hash rate evolves. According to Moore’s law, the observation that the number of transistors in an integrated circuit (IC) doubles about every two years. This can be related to the increase in computing power nearly doubling, approximately every two years.
Popular Proof-of-Work Blockchains:
While various cryptocurrencies employ proof-of-work, Bitcoin commands about 99% of the total hash rate. Other notable blockchains include Ethereum Classic, Dogecoin, Litecoin, Bitcoin Cash, and Bitcoin SV. The distribution of hash rates among these networks reflects their strength, security, and adoption. Bitcoin is the only relevant blockchain, as seen by the 99% hash rate dominance.
Conclusion:
In summary, hash rate, proof-of-work, and computing power are integral components of the Bitcoin network’s architecture. Higher hash rates contribute to increased security, efficient mining, and overall network robustness. Understanding these concepts is fundamental to comprehending the intricacies of the cryptocurrency landscape, especially in the context of Bitcoin’s dominance in the proof-of-work paradigm.
I would be remiss to not mention the importance of PoW mining to decentralization and the role it plays in game theory as well.
Looking ahead:
Over the last 24 months the bitcoin hash rate is up from 146 EH/s to a peak of 575.3 EH/s.
I am predicting that we will reach 1 Zettahash/second (ZH/s) by the end of 2024.
BITCOIN’S SCARCITY: A COMPARATIVE ANALYSIS WITH TRADITIONAL ASSET CLASSES
/ Blog / By Matthew J
At the core of Bitcoin’s value proposition lies its scarcity, a unique feature that sets it apart from traditional asset classes. Unlike fiat currencies subject to inflationary pressures from central authorities, Bitcoin boasts a capped supply of 21 million, a predetermined scarcity embedded in its protocol that shields it from manipulation by any central entity.
Historically, gold has been esteemed for its limited supply and inherent scarcity, but Bitcoin takes scarcity to new heights by offering unmatched transparency and predictability. Every four years, or 210,000 blocks, Bitcoin undergoes a halving, reducing the rate at which new coins are created and steadily approaching the fixed supply limit of 21 million.
Comparing Bitcoin to traditional assets like stocks and bonds reveals a marked contrast in supply dynamics. Stocks can be influenced by corporate decisions to issue new shares, buy back existing ones, or pay dividends, introducing an element of uncertainty. Similarly, the bond market is subject to central banks’ decisions to issue or retire bonds, further complicating supply predictability.
To grasp the significance of Bitcoin’s scarcity, consider its finite digital supply in contrast to the ever-growing US National Debt. The debt has surged by almost $3 trillion in the past year alone, a staggering increase when compared to the fixed supply of Bitcoin. The ratio of this increase to Bitcoin’s capped supply underscores the scarcity of the cryptocurrency and contributes to the argument for a continued rise in its price.
As of now, we find ourselves at less than 1% adoption, with less than 7% of Bitcoin left to be mined over the next 116 years. There are currently 40 million wallets with a non-zero balance, an adoption rate of approximately 0.75% when compared to the total addressable market of 5.3 billion internet users.
Breaking down the wallet distribution, 12 million hold 0.01 Bitcoin, 4.5 million hold 0.1 Bitcoin, and 1 million hold a whole Bitcoin. This suggests that while there may never be as many whole Bitcoin holders as the current number of deca-millionaires, Bitcoin’s distribution is broadening.
Remarkably, Bitcoin has swiftly risen to become the 16th largest currency globally in just 15 years, achieving this feat with less than 1% adoption within its total addressable market. Looking ahead, predictions suggest that by the estimated halving around 2028, Bitcoin could ascend to become one of the top 7 largest currencies, with a potential scenario where it reaches the 5th position. This rapid ascent underscores the growing recognition of Bitcoin’s scarcity and its transformative impact on the global financial landscape.
TLDR:
3 trillion (National Debt 1yr increase) / 21 million (bitcoin)= 142,857.143
The US Debt has increased by 142,857.143 times as many dollars in the last year as all the bitcoin that will ever be in existence.
3/32 halving’s have occurred (9.375% only about 10% of the way through halving’s)
93% of supply in first 15 years, and a price that went from 0 to a top of $69k in 2021.
The Remaining 7% of supply will be mined over next 116 years.
There are currently 40 million wallets with non-zero balance, with 1.2 million daily active addresses.
The total addressable market is about 5.3 billion people (internet users).
If you take the 40 million wallets with a non-zero balance, and divide it by the total addressable market of 5.3 billion people… you get a current adoption rate of approximately 0.75%
We are at less than 1% adoption with less than 7% of bitcoin remaining to be mined over the next 116 years.
12 million wallets hold 0.01 bitcoin
4.5 million wallets hold 0.1 bitcoin
1 million wallets hold 1 bitcoin.
This is likely between 200k-500k individual people, most people have more than one wallet. There will never be as many whole coiners as the current number of deca-millionaires.
Currently bitcoin is ranked the 16th largest currency in the world, after only being around for about 15 years, and with less than 1% adoption by total addressable market.
https://www.fiatmarketcap.com/
I predict that before the estimated halving around 2028, that bitcoin will reach top 7 largest currency and I could even a scenario where it reaches #5 by 2028.
Unpopular opinion:
SEC is delaying bitcoin ETF to fight off the 💩 coin avalanche of ETF proposals that would follow....
If you look at the 💩 coin tokens they frequently mention, they are mostly fund tokens that are held by Grayscale and the like...
They are trying to prevent a tsunami of 💩 coin ETF's.... it's not even about them fighting bitcoin.
Intro:
Bitcoin, operating on the principles of mathematics and cryptography, relies on key concepts such as digital signatures, hash functions, and the intricate relationship between hash rate and proof-of-work mining. This short article aims to elucidate these concepts and their significance in securing the bitcoin network.
Hash rate:
Hash rate, a pivotal metric in the world of cryptocurrencies, measures the computational power employed to process and secure the bitcoin network. The security of bitcoin hinges on the mathematical properties of cryptographic algorithms, ensuring the network's resilience against manipulation. Higher hash rates indicate increased computational speed in solving complex mathematical problems/puzzles, thereby enhancing the security of the network.
Proof-of-Work (Mining):
Mining in the bitcoin network involves solving intricate mathematical problems, referred to as hash puzzles, through computational power. Miners engage in a competitive race to be the first to solve these puzzles, earning the right to add a new block to the blockchain. The hash rate, akin to the speed of solving these puzzles, plays a crucial role in determining the efficiency and security of the network. The current mining reward, or block reward is 6.25 bitcoin. This will reduce to 3.125 in 2024, this is called the "halving", which occurs every 210,000 blocks (approximately 4 years).
Hash Functions:
Bitcoin employs cryptographic hash functions (SHA-256), to generate unique, fixed-size hash codes from input data. Blocks in the blockchain are linked through the hash of the previous block, creating an immutable chain. This cryptographic structure ensures the security of the blockchain, as altering a single block would require changing all the subsequent blocks.
Computing Power:
Computing power in the bitcoin network represents the collective strength and efficiency of connected computers. Analogous to workers in a factory, these computers aim to solve the cryptographic puzzles, validating transactions and creating new blocks. More powerful computers or a higher number of workers enhance the network's ability to solve puzzles quickly, contributing to overall efficiency.
Relationship with Security:
The correlation between hash rate and security is evident. A higher hash rate signifies a more secure network. As the computational power increases, the difficulty of manipulating the blockchain rises, safeguarding the integrity of transactions.
Changes in Hash Rate:
Fluctuations in hash rate indicate shifts in network activity. An increase implies heightened security, greater computational resources, and increased electrical power consumption. The bitcoin network adjusts mining difficulty approximately every two weeks (2,016 blocks), ensuring equilibrium as the hash rate evolves.
Popular Proof-of-Work Blockchains:
While various cryptocurrencies use the proof-of-work mining consensus, bitcoin commands about 99% of the total hash rate. Other PoW (Proof-of-Work) blockchains are dogecoin, litecoin, bitcoin cash, ethereum classic and bitcoin SV, often referred to as 💩 coins in the bitcoin community. The distribution of hash rates among these networks reflect their strength, security, and adoption.
Conclusion:
I'm summary, hash rate, PoW, and computing power are integral components of the bitcoin network's architecture. Higher hash rates contribute to increased security, efficient mining, and overall network robustness. Understanding these concepts is fundamental to comprehending the intricacies of the cryptocurrency landscape, especially in the context of bitcoin's dominance.
I would be remiss to not mention the importance of PoW mining in regard to decentralization and its role in game theory.
https://www.coinwarz.com/mining/bitcoin/hashrate-chart
Looking Ahead:
I am personally predicting a bitcoin hash rate of 1 Zettahash/second (1ZH/s) by the end of 2024.
Over the last 24 months the bitcoin hash rate has exploded from 146EH/s to a peak of over 600 EH/s.
I have a small bet with a friend and fellow Bitcoin Veteran that bitcoin will reach 1ZH/s by the bitcoin halving in 2024.
I think we reach Zettahash by the halving.
I think we hot Zettahash within 6 months. Probably near the halving.
If Bitcoin does a 5x from the current price.
The total bitcoin market cap would still be only about 1/3 the size of the gold market cap.
We are so early.
😳🤯
There are currently 9 corporations that have a higher market cap than bitcoin.
Bitcoin is the best money ever created.
The "most valuable" company, Apple, ticker AAPL has a market cap 4x bigger than bitcoin.
We are so early.
There are about 13 millionaires for every wallet address with 0.1 bitcoin today (about 59,400,000 fiat millionaires and about 4.5 million wallet addresses with 0.1 bitcoin)
There will never be as many whole coiners as there are currently decamillionaires in fiat terms. (2.72 million decamillionaires currently)
Are we bitcoin "early adopters"?
When I first began my bitcoin journey...
I had my doubts, and set out to prove that bitcoin was a fraud, a ponzi...
Before I go much further, I will say that this was a very humbling experience. The more I researched and learned about bitcoin, the more I realized that state run currency/fiat is the real ponzi.
Back to my original question...
Are we bitcoin "early adopters"?
When first really starting to learn about bitcoin, it is easy to get distracted... it is easy to see that bitcoin is about 15 years old. That sounds like a long time, and if you listen to YouTube 💩 coin channels, pumping their own bags... you might believe that you/I/we are late.
I'm here to say, they couldn't be more wrong.
We still don't even have a spot bitcoin ETF.
There are only a handful of major corporations that have bitcoin (I'm talking about companies that aren't mining bitcoin)
The internet has about 5.3 billion users/"internet adopters" or about 2/3 of humans.
₿itcoin has about 12 million wallet addresses holding 0.01 bitcoin (350$ in fiat terms)
There are about 60 million, millionaires... or 5 millionaires per bitcoiner holding 0.01 bitcoin.
₿itcoin has about 4.5 million wallet addresses with 0.1 bitcoin (around 3500$ in fiat terms at today's price)
₿itcoin has about 1 million wallet addresses with 1 bitcoin.
It is important to remember that some people have multiple wallet addresses... but even if they didn't...
There are about 2.72 million people that have a fiat net worth of $10 million. There are almost 3 people with a net worth of $10 million for every whole coiner. This is how early we are.
The 3 people with the highest fiat net worth have a net worth higher than the entire market cap of bitcoin. This is how early we are.
We are early.
We are winning.
Very cool #bitcoin website/dashboard.
Good resource for finding noKYC 🌽