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For those of you who follow me for @OfficialESC insights, @rogerkver's ongoing thread with @cedricmakes is producing the most important conversation about cryptocurrency valuation that I've ever listened to.
1/?
THREAD
My understanding of the last video and its implications:
- Cedric runs hedge funds which invest in cryptocurrencies
- His investment theses parallel my own: cryptocurrencies get their value from use as a medium of exchange
- Dark net market use is a good MoE metric
THREAD
My understanding of the last video and its implications:
- Cedric runs hedge funds which invest in cryptocurrencies
- His investment theses parallel my own: cryptocurrencies get their value from use as a medium of exchange
- Dark net market use is a good MoE metric
2/?
- Most accepted (by count, not volume) is exclusively BTC (~50%), followed by XMR (~25%)
- Remaining ~25% accept a combination of cryptos including ETH, LTC, and now BCH
- BCH is the only new entrant in the past two years
- Most accepted (by count, not volume) is exclusively BTC (~50%), followed by XMR (~25%)
- Remaining ~25% accept a combination of cryptos including ETH, LTC, and now BCH
- BCH is the only new entrant in the past two years
3/?
- Sanctioned governments are major new entrants to dark net markets (DNMs)
- Cedric believes other countries' governments are adopting cryptocurrency to trade with these sanction countries
- Game theory suggests a race to adopt the best medium-of-exchange (MoE) currency
- Sanctioned governments are major new entrants to dark net markets (DNMs)
- Cedric believes other countries' governments are adopting cryptocurrency to trade with these sanction countries
- Game theory suggests a race to adopt the best medium-of-exchange (MoE) currency
4/?
My take on the above:
It's exactly in line with the #DecentralizedEuroThesis, plus a plot twist that it's *governments* rather than citizens adopting crypto.
Also, the price of any cryptocurrency adopted at this scale will absolutely skyrocket.
My take on the above:
It's exactly in line with the #DecentralizedEuroThesis, plus a plot twist that it's *governments* rather than citizens adopting crypto.
Also, the price of any cryptocurrency adopted at this scale will absolutely skyrocket.
5/?
For context on the principles I'm about to reference: https://www.eatsleepcrypto.com/bitcoin-valuation-and-the-importance-of-adoption/
For context on the principles I'm about to reference: https://www.eatsleepcrypto.com/bitcoin-valuation-and-the-importance-of-adoption/
6/?
Early in this video, Cedric explains why this is so important.
Cryptocurrencies are being used as currencies to move massive amounts.
As the Equation of Exchange (EoE) shows, currencies increase in price proportionally to their use as an MoE.
Early in this video, Cedric explains why this is so important.
Cryptocurrencies are being used as currencies to move massive amounts.
As the Equation of Exchange (EoE) shows, currencies increase in price proportionally to their use as an MoE.
7/?
Furthermore, use as an MoE (on the Silk Road, a DNM) brought Bitcoin "mainstream"
We owe @Free_Ross for this, and if you haven't signed the petition for his freedom, please do.
Ross did more for Bitcoin than almost anyone to date. https://www.change.org/p/clemency-for-ross-ulbricht-condemned-to-die-in-prison-for-a-website
Furthermore, use as an MoE (on the Silk Road, a DNM) brought Bitcoin "mainstream"
We owe @Free_Ross for this, and if you haven't signed the petition for his freedom, please do.
Ross did more for Bitcoin than almost anyone to date. https://www.change.org/p/clemency-for-ross-ulbricht-condemned-to-die-in-prison-for-a-website
8/?
Back to the video, Cedric believes nation state actors will be the greatest adopters of cryptocurrency, potentially kicking off the next wave of use in commerce.
Back to the video, Cedric believes nation state actors will be the greatest adopters of cryptocurrency, potentially kicking off the next wave of use in commerce.
9/?
My take:
This means a bull run for any cryptocurrencies which are adopted, *and* close to their MoE price floor.
Price floors come from multiple sources, the strongest is from use as a medium of exchange.
In short, the price floor of a currency moves up as it's adopted.
My take:
This means a bull run for any cryptocurrencies which are adopted, *and* close to their MoE price floor.
Price floors come from multiple sources, the strongest is from use as a medium of exchange.
In short, the price floor of a currency moves up as it's adopted.
10/?
More of Cedric's points:
- The internet has been eating brick-and-mortar stores; the DNMs are now eating black markets
- They are still only a sliver of total black market commerce
More of Cedric's points:
- The internet has been eating brick-and-mortar stores; the DNMs are now eating black markets
- They are still only a sliver of total black market commerce
11/?
On #cryptonometrics/DNM research:
- Wasabi used to be a good proxy for DNM activity
- A report came out on state actors on the dark net:
https://cai.usu.edu/files/darkowl-nationstate-whitepaper.pdf
- Sandworm - a hacking group is of particular interest; they are locking & ransoming countries' infrastructures.
On #cryptonometrics/DNM research:
- Wasabi used to be a good proxy for DNM activity
- A report came out on state actors on the dark net:
https://cai.usu.edu/files/darkowl-nationstate-whitepaper.pdf
- Sandworm - a hacking group is of particular interest; they are locking & ransoming countries' infrastructures.
12/?
Questions from Cedric:
- How do we determine which countries are coordinating events on the dark net?
- What coins are they using***?
- Are they hoarding?
Questions from Cedric:
- How do we determine which countries are coordinating events on the dark net?
- What coins are they using***?
- Are they hoarding?
13/?
There are more DNMs which accept Bitcoin Cash.
My take:
This will increase BCH's price floor until that price floor eclipses its price, forcing the price up.
Personally, I believe $BCH is inflated well above its price floor, but less than most other cryptocurrencies.
There are more DNMs which accept Bitcoin Cash.
My take:
This will increase BCH's price floor until that price floor eclipses its price, forcing the price up.
Personally, I believe $BCH is inflated well above its price floor, but less than most other cryptocurrencies.
14/?
Cedric:
- Measures DNMs via drugs & chemicals, now also malware
- Can tell if malware is potentially government based on ransom price
- Is watching the relative acceptance of cryptocurrencies in ransomware schemes as a proxy for overall and/or future adoption
Cedric:
- Measures DNMs via drugs & chemicals, now also malware
- Can tell if malware is potentially government based on ransom price
- Is watching the relative acceptance of cryptocurrencies in ransomware schemes as a proxy for overall and/or future adoption
15/?
I just have to say - this is SO BRILLIANT.
I have no affiliation with Cedric or his site but I'd imagine it's a good deal - if any of you decide to sign up, please let me know.
https://1000x.report/join/?tw
I just have to say - this is SO BRILLIANT.
I have no affiliation with Cedric or his site but I'd imagine it's a good deal - if any of you decide to sign up, please let me know.
https://1000x.report/join/?tw
16/?
Roger makes the point around 20:00 that it's disheartening to see that most DNMs have exit scammed rather than being shut down by law enforcement.
I would bet that they've exit scammed *because* they felt pressure from law enforcement.
Roger makes the point around 20:00 that it's disheartening to see that most DNMs have exit scammed rather than being shut down by law enforcement.
I would bet that they've exit scammed *because* they felt pressure from law enforcement.
17/?
Cedric is spot on that uncensorable domains and sites are about to take off.
These will be further empowered by non-custodial financial services (NCFS), exclusive to Bitcoin Cash.
Cedric is spot on that uncensorable domains and sites are about to take off.
These will be further empowered by non-custodial financial services (NCFS), exclusive to Bitcoin Cash.
18/?
Cedric:
- DNMs will be crowdfunded (!)
- Roger mentions dividends on BCH's SLP tokens
- Technology exists to limit exit scams and damage from DNMs being taken down
Cedric:
- DNMs will be crowdfunded (!)
- Roger mentions dividends on BCH's SLP tokens
- Technology exists to limit exit scams and damage from DNMs being taken down
19/?
Cedric asks:
- Who has the resources to build these?
1) Ideologues (cypherpunks)
2) **Governments**
- How can we identify these early?
Cedric asks:
- Who has the resources to build these?
1) Ideologues (cypherpunks)
2) **Governments**
- How can we identify these early?
20/?
Cedric & Roger:
- Govt's are writing laws around crypto adoption
(see: https://www.forbes.com/sites/billybambrough/2020/02/16/blow-to-bitcoin-as-significant-us-crackdown-suddenly-revealed/#311e18c81191)
- Countries which enable commerce become wealthy
- Therefore, it's in countries' interests to write lenient crypto-commerce laws
Cedric & Roger:
- Govt's are writing laws around crypto adoption
(see: https://www.forbes.com/sites/billybambrough/2020/02/16/blow-to-bitcoin-as-significant-us-crackdown-suddenly-revealed/#311e18c81191)
- Countries which enable commerce become wealthy
- Therefore, it's in countries' interests to write lenient crypto-commerce laws
21/?
- Last to adopt crypto will be the biggest loser
- In this way, governments are similarly incentivized as speculators to adopt cryptocurrencies
My take:
- Unlike speculators, governments will be *using* cryptocurrencies
- Use as a medium of exchange massively drives price
- Last to adopt crypto will be the biggest loser
- In this way, governments are similarly incentivized as speculators to adopt cryptocurrencies
My take:
- Unlike speculators, governments will be *using* cryptocurrencies
- Use as a medium of exchange massively drives price
22/?
Cedric:
What does the first and the last adopter look like?
Last adopter is the combination of two features:
1) Most advantaged
2) Most bureaucratic
My take:
This is one of my favorite ideas - I've been meditating on it for years...
#DecentralizedEuroThesis
(cont.)
Cedric:
What does the first and the last adopter look like?
Last adopter is the combination of two features:
1) Most advantaged
2) Most bureaucratic
My take:
This is one of my favorite ideas - I've been meditating on it for years...
#DecentralizedEuroThesis
(cont.)
23/?
The last adopters of cryptocurrency will be those who don't need it.
"Who needs cryptocurrencies?" is a common refrain, and a poignant question.
Karma is dealt according to the earnestness with which it is asked...
(cont.) https://twitter.com/EatSleepCrypto/status/954353493803925504
The last adopters of cryptocurrency will be those who don't need it.
"Who needs cryptocurrencies?" is a common refrain, and a poignant question.
Karma is dealt according to the earnestness with which it is asked...
(cont.) https://twitter.com/EatSleepCrypto/status/954353493803925504
24/?
In short, citizens of third world countries whose economies are in the toilet.
These are the first adopters of cryptocurrencies, and they'll benefit the most once the cryptocurrency they use is fully adopted.
#DecentralizedEuroThesis
In short, citizens of third world countries whose economies are in the toilet.
These are the first adopters of cryptocurrencies, and they'll benefit the most once the cryptocurrency they use is fully adopted.
#DecentralizedEuroThesis
25/?
A worldwide flipping of wealth follows - from the oblivious, free-riding members of the global upper class to the *productive* citizens of the third world - in direct proportion to opportunity costs incurred through circumstances.
The rich will be poor, and the poor rich.
A worldwide flipping of wealth follows - from the oblivious, free-riding members of the global upper class to the *productive* citizens of the third world - in direct proportion to opportunity costs incurred through circumstances.
The rich will be poor, and the poor rich.
26/?
Along the way, currencies will gain stability as they replace those citizens' national fiat.
Political risk normally factored into one country's national currency is hedged into the cryptocurrency adopted by citizens of several.
#DecentralizedEuroThesis
Along the way, currencies will gain stability as they replace those citizens' national fiat.
Political risk normally factored into one country's national currency is hedged into the cryptocurrency adopted by citizens of several.
#DecentralizedEuroThesis
27/?
This creates a snowball effect, where citizens of more countries are incentivized to use that cryptocurrency instead of their national currency because of its low volatility.
This becomes a virtuous cycle.
This creates a snowball effect, where citizens of more countries are incentivized to use that cryptocurrency instead of their national currency because of its low volatility.
This becomes a virtuous cycle.
28/?
Citizens of various countries adopt the same currency, so its overall volatility dips below any of the component countries' currency.
This is the same phenomenon as portfolio balancing, where a random portfolio is often less volatile due to negative non-correlations.
Citizens of various countries adopt the same currency, so its overall volatility dips below any of the component countries' currency.
This is the same phenomenon as portfolio balancing, where a random portfolio is often less volatile due to negative non-correlations.
29/?
To verify this, I looked at the top 5 countries by inflation rate from 2018, the most recent complete data.
The basket of their currencies which represents the "Decentralized Euro" is less volatile than any of the individual fiat currencies.
#DecentralizedEuroThesis
To verify this, I looked at the top 5 countries by inflation rate from 2018, the most recent complete data.
The basket of their currencies which represents the "Decentralized Euro" is less volatile than any of the individual fiat currencies.
#DecentralizedEuroThesis
30/?
The results were a perfect validation of the hypothesis, and you can find them here in my model of the #DecentralizedEuroThesis.
Please like, retweet, and give credit is all I ask :)
https://docs.google.com/spreadsheets/d/1HsCK7j5M2y81cAjL7fvTB7EH7dC0vpeV0bux8W1-G54/
The results were a perfect validation of the hypothesis, and you can find them here in my model of the #DecentralizedEuroThesis.
Please like, retweet, and give credit is all I ask :)
https://docs.google.com/spreadsheets/d/1HsCK7j5M2y81cAjL7fvTB7EH7dC0vpeV0bux8W1-G54/
