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jfan

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Everything posted by jfan

  1. The Silk Road admin sentenced to 2 life sentences. The Alpha-bay admin committed suicide in a Thai detention center. The Welcome to Video admin got 18 months in a South Korean jail. The BTC-e admin sentenced to 25 years. Don't do illicit things on the blockchain.
  2. Some interesting tidbits from "Tracers in the Dark" 1) 2021, as per Chainalysis - $14 billion of criminal transactions - 0.15% of crypto transactions are illicit - 400 employees - 600 customers (law enforcement, tax agencies, financial institutions, exchange companies) - Chainalysis' valuation $8.6 billion - Their competitor - Elliptic 2) During the takedown of Welcome to Video, a South Korean run child abuse darkweb site, it was discovered that a US homeland security border agent was an active participant on this site. He was abusing his girlfriend's daughter and posing as a moderator for the site to steal login/passwords of other users to obtain videos. He plead not guilty because he argued that his BTC transactions were surveilled without his consent and violated his privacy. Courts turned down that argument because all transactions on the blockchain are public and therefore not subject to privacy laws. 3) Ransomware gangs are trending to the use of Monero and Z-cash where "privacy" is much harder to break using more traditional blockchain cluster analysis techniques. This got me thinking about Jason Lowery's Softwar book and how BTC given its transparency and proof-of-work protocol, could help impose a real-world cost to ransomware gangs to access centralized database system.
  3. Chainalysis has a plethora of information on its website. This is their latest report. I like this little snippet, unfortunately, I couldn't find a publicly traded company in this industry. The 2024 Crypto Crime Report.pdf
  4. Couple of old academic articles 1) On the traceability of BTC due to its open ledger system (A Fistful of Bitcoin) - misconception that large illicit activities are best done with BTC 2) On the fallacy of BTC immutability and a different form of governance/risk of 51% attack - BTC was smaller at the time of this article, but highlights that governance of BTC just in a different form Recommend reading Tracers in the Dark on the history of Silk Road, Mt Gox, Alpha-Bay, BTCe, Chainlysis and FBI investigations/corruption. A Fistful of Bitcoin.pdf The_Economics_of_Bitcoin_Mining,_or_Bitcoin_in_the_Presence_of_Adversaries.pdf
  5. 4.4% at cost 8.1% at mark-to-market 13.7% cash
  6. lol...already running one and a nerdminer. It would interesting to see if people start contributing to the hash rate in a small scale non-economic manner. Better than spending money buying lottery tickets weekly.
  7. The blockchain war book is particularly interesting and ties in many of the debates we have here: 1) payment system vs non-sovereign money 2) A centralized system of power vs a decentralized system of governance Book describes 2 camps within the bitcoin ecosystem, big blockers and small blockers. This debate arose because of the amount of data that each block can contain is 1 Mb which causes a limitation in scaling the BTC network as a payment system. Interestingly, the big blockers comprised mostly of the China miners/mining equipment developers/big mining pools/many American-based crypto exchanges (Coinbase), and those representing big business focused on a non-Visa payment system. The small blockers comprised primarily of developers and those that wished to create a new decentralized money (their ethos was open-source, network community consensus on the underlying rules). The author describes the big blockers having a shorter time frame, believed that amount of hashing power represented the degree of influence they should have, and their understanding of the computer science was less skilled than the small blockers. Whereas small blockers were better programmers, and promoted safe coding practices not to risk disruptive hard forks, replay risk, etc in addition to their focus on network consensus of both validating and mining nodes before changes could be enforced. Both sides played by the rules of engagement and dirty as well. Bitmain was not a paragon of ethics and secretly had an IP that was called ASIC boost, that allowed their miners to hash more efficiently and helped them have a profitability advantage. Segwit was a smaller blocker BIP soft fork initiative, that effectively increased the blocksize to 2Mb without increasing the 1Mb limit (don't ask me how). However, Segwit would neutralized ASIC boost's ability to use less electricity. The code base is maintained on Github by a few smaller blockers (1 main person at the time of the books writing), and there were several Reddit, Bitcoin talk, email lists, that discussed these issues (some maintained by small and others by big blockers). Ultimately, the smaller blockers won, but this outcome wasn't because they were any better at strategy and programming skill. They made some gambles that could have turned on them very badly if the big blockers saw these opportunities, if the big blockers had better computer science skills, if ethereum had not undergone a controversial hard fork that was very disruptive to recover stolen ETH by a hacker at around the same time this debate was occurring. Long and short of it, I think BTC will always be faced with politically/economically self-interest entities that want to centralize it in additional to the technical/developer risks of keeping BTC functioning on a decentralized manner. A complete history of Bitcoin's consensus forks - 2022 Update | BitMEX Blog Below is a problem that is yet to be fixed Long and short of this meandering post coupled with @wachtwoord's paper above, a few things come to mind. 1) payment systems don't accrue value like a store-of-value function, but big centralizing forces will always be a threat because they will capture the most value if BTC is mainly a payment system 2) how decentralized are the full nodes in the network out there? 3) who is going to update, maintaining and provide the necessary solutions for bugs, soft forks as this technology progresses through time and scale?
  8. @Luca I came across this short article that you might find interesting regarding the value proposition of Bitcoin. Bitcoin's unique value proposition | BitMEX Blog There are a number of technical articles as well here. I downloaded the Block Size Wars - The Battle for Control Over Bitcoin's Protocol Rules by Jonathan Bier. I just started it, but it shed some light behind the scene of its development. You might also find it helpful.
  9. Research Archives | BitMEX Blog Came across this site recommended by Nic Carter from the author of Blocksize Wars.
  10. What are people's thoughts on Marathon's slipstream offering? Is this a threat to transaction censorship or preference to certain transactions?
  11. 2024 Crypto Crime Trends from Chainalysis I have not read this one specifically yet, but have come across prior articles from the same group addressing this topic.
  12. @Cigarbutt I'm not particularly tech savvy, but you can spend a few hundred dollars and build your own node as well as a nerdminer/bitaxe miner to learn about how the network works. Below are some sites to buy simplified DIY miner parts, or you could go to their respective GitHub sites. NerdMiner - bitronics.store Bitaxe My son and I built a raspberry pi used umbrel os to spin up a node. Umbrel - Personal home cloud and OS for self-hosting We spend a lot of time pontificating about why the price should or should not go up, but I think it might be useful to experiment with the user-facing technology to better understand the value proposition (if there is one) since BTC does have global reach. Hope this helps.
  13. Yes, thank you this article.
  14. @Cigarbutt Here are a couple threads on BTC valuation 1) Capriole Investments | Bitcoin Energy-Value Equivalence From the same author with his model visualized on tradingview Bitcoin Production Cost — Indicator by capriole_charles — TradingView 2) Jurrien Timmer from Fidelity has a bunch of supply, demand, and valuation models that he posts on Twitter. 3) The Rational Root on X has some cool charts from on-chain data and price movements.
  15. I know some find this show a bit polarizing, but here is a video on bitcoin mining in Africa discussing it potential impact (use of stranded energy sources and its impact on stabilizing energy supplies for the local populace). At the end, they discuss a South African company that can facilitate BTC transactions/storage without the internet. I've attached Gladstein's article here as well. Stranded: How Bitcoin is Saving Wasted Energy and Expanding Financial Freedom in Africa - Bitcoin Magazine - Bitcoin News, Articles and Expert Insights I have not fact checked the article below, but this is an interesting article on this country's investment arm treatment of bitcoin mining. Ethiopia To Become The First African Country To Start Bitcoin Mining (forbes.com) I think this may be how BTC addresses the Cantillon effect to some degree. Here in the West, we have no pressure to adopt or innovate around the technology, we are more concerned about it as an investment, its mainstream financialization, but in the ROW, there can be a different focus.
  16. Perhaps this is already explained above in this thread. I was just trying to figure out the impact of the fees on their returns. Is my math off here? If everything was market to market instead of market to private valuation, this should normally trade at a 23% discount + hold co discount (?20%) or 57% of NAV normally given the high fees. So this implies that their true NAV needs to be at a minimum > $26/share to get a 10% return at a current market price of $15/share. To get a 15% return over 10 years, the market price needs to be at 30% of true NAV, or an intrinsic value of $50/share at current market prices.
  17. For those interested beyond just the money go up or down aspect of BTC, I came across a few neat videos on how the user experience is changing. I'm used to purchasing BTC from regulated exchanges and online brokers as well as storing on Ledger hardware wallets. There are a number of open source desktop wallets that you can download and use. The one i particularly like is Sparrow wallet. It has a really nice user experience and easy to connect with your own node. Specter wallet is another good quality standard. Nunchuk and Blue wallet have both desktop and mobile options. The hardware wallets are also evolving as well. Air gapped wallets with and without private key storage are now available and can interact with the above desktop wallets. Seedsigner is interesting as it can be built with parts totally < $70 and communicates with QR codes with your hot wallet devices. Coldcard uses microSD to airgap. Keystone pro 3 is the fancy version for these functions and extends to altcoins. Both these desktop and hardware wallets can create multi signature options to enhance security.
  18. For me the biggest drivers are the continued total network hashrate increase along with the halving of the block reward after April.
  19. I haven't dove deep into the public miners that out there but did quickly glance at Riot's and Marathon's 10-K. It doesn't seem to me that they do much hedging of their BTC to "sell their BTC" without dipping into their BTC treasury. Riot does hedge their power-purchase agreements and sells BTC to pay for employee compensation and likely capital purchases. Marathon has this in their filings and doesn't have any hedging/derivatives at first glance. Arguably, if their cost of mining is far less than $40K/bitcoin, and the market BTC price is dependent on least efficient miner, then these mining companies should be profitable even when the market price dives. Furthermore, they could selling their profitable BTC over time to obtain more efficient mining equipment without ever needing to hedge and likely still get to hodl most of their mined BTC. For fun, I did check out how many 140 Th/s miners I would need to have a chance to mine a block within 1 year. It would take 100 miners to mine a block in 301 days. With the state-of-the-art most efficient miner costing $14/Th, the start up cost would be $196K + operating costs. SoloChance.com - Solo Mining Chance Calculator wrt to Professor George's article, despite his stance on that only cash flowing businesses can have intrinsic value, I am glad that he did some research on how the BTC network functions, and am hopeful that he continues to dig further. Everyone has to start somewhere.
  20. Here is an article from Professor George on this topic in the globe and mail. bitcoin-globe.pdf
  21. My best guess is fair value is around $42k today. By the end of 2024, $100k. Ps thanks for the ETF response
  22. I'm a bit confused about the difference in cash redemption vs in-kind ETFs. My basic understanding is that cash redemption requires the ETF to go out an purchase BTC with the cash they have in hand vs in-kind, allows the ETF to find a market marker that can exchange similar assets with others. Is my understanding correct? If it is the cash redemption, would the implications mean that the number of transactions at the base layer also increase in volume and so will the transaction fees due to higher demand?
  23. I think this might be a very good point. There can be things that add alot of value but can't capture any of it. Just off the top of my head, businesses such as WhatsApp and Spotify, add value but can't capture it. Meta paid >$20 billion for WhatsApp in 2014 but it has not been successful thus far in generating revenue, free cash flows, etc. But with a 1.5 billion users, this messaging network is undoubtedly created lots of value but what is the right monetary premium? The BTC network scales as people find it useful to store/transfer wealth relative to other monies that they have access too. Will this increasing demand necessarily the monetary premium? I'm not sure that there is necessarily a linear relationship here, as it will depend on the prices of commodity inputs necessary to secure the network and the progressive energy efficiencies of the technology. I could imagine that if there was a sudden abundance of cheap energy, silicon, and step change in mining efficiencies, despite increased demand, the prices could drop or moderate downward.
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