1/n
Revolution, Digital Gold, Ponzi, Scam..
“Bitcoin” – almost everyone has an opinion on it! Bitcoin, along with other coins in Crypto Land, have seen a steep correction in last few days.
Let's use this fall to simplify and de-jargonize the complicated world of Bitcoin.
Thread 🧵
1/n
Bookmark this visual comic form explanation of the whitepaper: https://t.co/6gEHGVV8UM
2/n
For both storing your money and for every transaction involving transfer of value, a financial intermediary or an administrator has been necessary before this. Such as Central Bank for Banking, SEC for securities, etc.
3/n
That isn’t how Satoshi Nakamoto looks :)
Nobody knows how he looks. Nobody knows if such a person even exists. In words, no one knows who owns Bitcoin. This has been fodder for conspiracy theories.
4/n
5/n
Before today's carnage, the total market capitalization of Crypto stood at ~$ 2 Trillion, with Bitcoin contributing c. half of it, although its weight in overall Crypto has been declining.
Check: https://t.co/Ca2PiJbTQR
6/n
As Dalio puts it - "Bitcoin is one hell of an invention. To have invented a new type of money via a system programmed into a computer & being able to scale like that in 10 years!"
This chart via JPM shows the ascent of BTC. Fascinating.
7/n
As per traditional finance, money has 3 purposes. It serves as:
✍️A medium of exchange
✍️A store of value
✍️A unit of account
The utility of BTC & Cryptos has been debated on all 2 parameters.
8/n
While the many critics of Bitcoin have challenged the idea that it can never serve as money, experts now agree on on it's utility as a store of value. The current debate is around medium of exchange due to the volatility.
To its many critics, Bitcoin has always asked back:
Where are we today?
To quote Twitter: "Bitcoin is inevitable":
✅Increasing use cases, leading to DeFi
✅A strong cult (seen the laser eyes?)
✅Early institutional adoption (Mastercard, Visa, PayPal, Tesla, Blackrock etc)
✅Stronger payment ecosystem
But there is a catch:
Of the many debated aspects, the one that is proving to be Bitcoin (and Crypto's) nemesis is energy inefficiency.
"Bitcoin consumes more electricity than Argentina". This headline caught the world's fancy in Feb '21 & it's been a topsy turvy terrain since, leading to this:
As we speak, BTC is down from its peak of ~$64,870 to $40,010 (recovered from intra day low of $30,202). But if one zooms out, it's still a phenomenal rally.
And this not the first correction.
It fell from its peak of $19K in Dec'17
to ~$10K in Feb '18, to ~$3K early 2019.
Let's discuss some lesser talked aspects:
A. Increased retail participation:
Rapid growth in new a/c openings on crypto exchanges. Chart shows unique crypto wallet accounts on https://t.co/5jhnEfoATp. Sharp upticks during FOMO rallies in end 17, mid-2019 & since Nov '20.
B. Increase in balances held in accounts between 1,000 and 10,000 BTCs, likely to be institutionally driven.
Interestingly, balances held in accounts with more
than 10,000 BTCs have declined significantly,
suggesting potential cashing out by early investors and miners.
C. Debate on volatility:
Despite the raging debate, data shows that Bitcoin's volatility has not trended lower over the
past several years. Tt remains about 4 times more volatile than Equities or Gold.
This has been a big impediment in its utility as a medium of exchange.
D. Constraints on liquidity
Lack of legal tender status will constrain
cryptocurrency liquidity compared to traditional portfolio hedges such as Commodities (Gold), Currency, Bonds or real estate.
JPM observes that a "large majority of this liquidity provision comes from high frequency-style traders who often end up fleeing when volatility picks up."
This explains the steep swings (such as now) and are tail risks that should be understood by more crypto enthusiasts.
E. Regulatory risks:
Citi in a report "BITCOIN - At the Tipping Point" opines:
"Despite most ardent wishes, it might prove almost impossible for a government to shut access to BTC or prevent its ownership or usage w/out effectively causing shutdown of the global Internet."
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2/x
Under Mr. Patrick’s direction, scientists at Fort Detrick developed a tularemia agent that, if disseminated by airplane, could cause casualties & sickness over 1000s mi². In a 10,000 mi² range, it had 90% casualty rate & 50% fatality rate
3/x His team explored Q fever, plague, & Venezuelan equine encephalitis, testing more than 20 anthrax strains to discern most lethal variety. Fort Detrick scientists used aerosol spray systems inside fountain pens, walking sticks, light bulbs, & even in 1953 Mercury exhaust pipes
4/x After retiring in 1986, Mr. Patrick remained one of the world’s foremost specialists on biological warfare & was a consultant to the CIA, FBI, & US military. He debriefed Soviet defector Ken Alibek, the deputy chief of the Soviet biowarfare program
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