Book of Satoshi
In the name of Satoshi the most hidden. The most beloved & the most despised.
Presented, herein, are nuggets of past few weeks of tribalism (with few historical facts peppered in), and peak bitcoin & generic crypto hatred
Paul Krugman, tweeted on Nov 23 2022:
Everything about crypto-currencies is fraudulent. They are not real currencies, the industry is one big Ponzi scheme. The selective outrage over TX's collapse is misplaced. BF took money from fraudsters and donated it to good causes. There's nothing wrong with that.
Pendulum of BTC prices over the years around Thanksgiving:
- 2010: $0.28
- 2011: $2.49
- 2012: $12.51
- 2013: $813
- 2014: $376
- 2015: $328
- 2016: $739
- 2017: $8,771
- 2018: $4,015
- 2019: $7,150
- 2020: $18,764
- 2021: $58,927
- 2022: $16,592
November 8 - birthday of Aaron Swartz:
A hacktivist who was involved in development of web feed format known as RSS and news aggregation website Reddit. He was arrested by MIT police and charged for downloading & making available for free, academic journals from JSTOR (a digital library - jstor.org). Charged with 13 felonies, sentenced to 35 years & fined $1.0m. Committed suicide Jan 11, 2013 (aged 26).
Alexey Pertsev:
A developer of Tornado Cash (an open source app) - detained in jail still without any charges until Feb 20, 2023. He was arrested in August 2022 but no charges filed & no bail allowed and has his assets seized by Dutch authorities. OFAC has blacklisted Tornado Cash because North Korea used it to launder their ill gotten crypto proceeds.
It feels sort of like blacklisting Microsoft Windows or Linux operating system because North Korean hackers used them to attack their targets. Maybe, indeed Alexey did something wrong - but its better when your charges are known - something apparently democracies are supposed to share!
ECB declares bitcoin dead:
The apparent stabilisation of bitcoin's value is likely to be an artificially induced last gasp before the crypto-asset embarks on a road to irrelevance. #TheECBblog looks at where bitcoin stands amid widespread volatility in the crypto markets.
European Central Bank
A longish read on 3AC and DCG:
DataFinnovation - ChainArgos - 4AC
New York banned proof-of-work mining:
The above should provide enough of a picture to realise that slowly gloves are coming off. The political guardrails upon which we attempt to glide towards our destined future will need to be cognisant of the disparity between narratives & generational divides. Indeed, criminality wherever found must be rooted out however it must be done in an evenhanded manner. The case of FTX will be the baseline upon which the younger generations will be guided. It could not be that hacktivists, open source developers, computer algorithms be punished irreparably in order to teach everyone a lesson whilst any alleged white collar crime of not just FTX but also 3AC as well as few other players who have their paws in certain listed companies (e.g. Silvergate) get swept away quietly. Justice will have to be seen to be done.
How do I personally feel about FTX?
Used it to build an alt-coin index that would hint to me when market was turning - will have to find an alternative exchange now. It had one of the better interfaces as far as exchanges are concerned (however not from speed of execution perspective or complex order types like ladder). Given, general shyness of KYC-ing everywhere it was nice to see you could easily send a request-for-quote to their OTC desk even if you were not KYC-ed. Also, used it to lend out a few alt-coins I cared to hold long term - was great feeling getting paid by short sellers but ofcourse nothing is risk free! So, all-in-all, was easy to use, but had deviated from initial innovation like MOVE/BULL/BEAR contracts to spot/futures on illiquid alt-coins that literally forever trended to zero (essentially a dumping ground for VCs).
In other news:
Its much quieter now that FTX has cleaned house - I no longer need to keep myself updated on hourly basis. Even in post-2017 crypto winter it did not feel so quiet. Am 60% done allocating for BTC & ETH which I am prepared to keep for long term (minimum 10 years).
Uniswap (decentralised cryptocurrency exchange) seems to be lobbying to get ETH core developers to rollout EIP 1153 that if implemented will help Uniswap's next iteration, v4, decrease its gas fees substantially; something that might give Uniswap an additional advantage just due to its sheer size & marketshare. Certainly, ETH foundation will need to ensure there are proper rules to control such lobbying and that there is no way to favour one protocol over another.
Moreover, Infura, the leading infrastructure provider for Metamask will officially be collecting user's IP addresses & wallet addresses. Incidentally, or tin-foil amusingly both are ConsenSys projects!
Now, for my thinking on MtGox's 160k BTC is as follows (in BTC terms only - ignoring any fiat & BCH). There are 2 payment schedule choices
- early payment (EP) - get between 15% and 21% of claim - i regard this as 17% for simplicity's sake
- final payment (FP) - get 6% of claim as intermediate payment (IP) + approx. 17% of claim when all court cases are disposed off (F)
Below are 4 buckets of claims; at today's approx. price of $17k/BTC
| Claim size (BTC) | EP (BTC) | EP (USD) | FP (BTC; IP + F) | FP (USD; IP + F) |
|---|---|---|---|---|
| 10 | 1.7 | 28.9k | 0.6 + 1.7 | 10.2k + 28.9k |
| 100 | 17 | 289k | 6 + 17 | 102k + 289k |
| 1000 | 170 | 2.89m | 60 + 170 | 1.02m + 2.89m |
| 10000 | 1700 | 28.9m | 600 + 1700 | 10.2m + 28.9m |
Going through 1600+ pages of trustee's documents a few things stand out.
- 70% of claims are for 0 to 50 BTC (there are those who just have fiat claim)
- max. 2% are for 1000+ BTC claims
- biggest hurdle for those wishing to go for FP schedule (as opposed to EP) is estate & inheritance planning given the strictness & vagueness that still existing in the court cases
- therefore, i suspect 80% of claimants will go for EP
- however, even till today after all the drama in the markets, majority I know of are apparently not planning to sell; incidentally or ironically some cannot sell in order to avoid being reclassified as a short term gain thus taxed heavily in their relevant jurisdictions
- finally, Fortress is probably going to make 6% on each claim that choose EP in return for Fortress assisting the trustee with getting Coinlab to not block this). My estimate is that this is about 7k BTC (so $119m at today's price) additional gain for them.
Lastly, Grayscale rejected providing proof-of-reserves of the BTC its supposed to hold in the GBTC trust. So, chain forensic analysts have been attempting to build out their own view of what Coinbase Custody might be holding on-behalf of Grayscale. They have found what looks to be about 317k BTC (approx. 50% of what GBTC should hold). Additionally, Fir Tree Capital Management has filed a lawsuit against Grayscale in order to gain access to its books & records.
It would be ironic to have GBTC sell all BTC; crater price that may threaten Saylor's liquidation. Joke is that oldies (in terms of crypto years) were the buyers during covid crash when $3.5k/BTC was defended. So what if we had to do it again but this time how many will be willing to save Saylor? Especially, after FTX debacle it all depends on how many actually have dry powder & patience left to handhold the mistakes & greed of "smart money"
Listens:
Bilal Hafeez
