BTC #24: LIGHT IS TO DARK AS BTC IS TO HARD MONEY

How are health and wealth linked in other bizarre ways?  Isnt that the topic of this series?

How to solve a 2000 year old problem………….

Byzantine Generals’ Problem: How do you make sure that multiple entities, which are separated by distance, are in absolute full agreement before an action is taken?

In other words, how can individual parties find a way to guarantee full consensus?

A Byzantine fault is any failure in the system that presents different symptoms to different observers. It implies no restrictions and makes no assumptions about the kind of behavior a node can have (e.g. a node can generate any kind of arbitrary data while posing as an honest actor).

In the Byzantine General’s Problem, coordination or lack thereof determines the outcome of a situation.

The actual occurrences and taxonomy of Byzantine faults in different systems is a complex and extended topic. However, it’s defined in such a way that results in a formal definition of Byzantine fault tolerance (BFT).

Note that Byzantine faults are the most severe and difficult to deal with. Byzantine fault tolerance has been needed in airplane engine systems, nuclear power plants, and pretty much any system whose actions depend on the results of a large number of sensors.

It turns out it is also used in cells and the use of the circadian mechanism solved the issue for biology eons ago.

Satoshi solved it for money with the BTC algorithm about 13 years ago.

The Byzantine Generals’ Problem is the analogy most often used to illustrate the requirement for consensus for distributed ledger technology (DLT).

The nodes in the distributed system must all agree on a certain set of rules, and be able to move forward by agreeing on a particular assessment of a transaction before it is added to the database.

This is not easy, especially where thousands of nodes exist. In addition to that, each one must agree on the validity of new information to be added, thus preventing bad actors from sabotaging the ledger and rewriting history.

A specific type of consensus algorithm must be adopted to achieve this, enabling the nodes to work together to update the ledger securely.

When a cell’s circadian mechanism is destroyed the end result is catastrophic tissue/organ failure because bad actors influence mitochondrial redox and tissue function.  Before the complete failure occurs, malfunctions exist.  In biology, we call those things illness.

Without proper clock timing set by sunlight, time in your cells is no longer operational and the Byzantine General problem is your main problem in disease.

97 percent of vitamin D comes from the sun striking your skin. It produces a compound that goes to the liver and then it goes to the kidneys. To produce that 97 percent you need that healthy sun from being outside during the appropriate time of day. You also need a healthy liver and healthy kidneys. Sadly blue light, nnEMF, and alien magnetic fields destroy the ability of your liver and kidney to make Vitamin D. Sometimes just going out in the sun is not enough until you realize that your mitochondrial redox in your liver and kidneys must return before you can make and utilize Vitamin D again. This is Black Swan Wisdom.  BTC is like the sun for money.

The sun is the key to wellness in health.

Circadian biology provides the consensus life needs to operate well. In this way, BTC and your cells are linked.  Yet again, more proof that wealth and health are linked in ways most do not understand.

BTC #23: Quantum Zeno effect of money = TIME

The quantum Zeno effect is a general Rx of nature since it describes the situation in which the time evolution of any quantum system can be slowed by sufficiently frequent “observations.”

The quantum Zeno effect was first proposed as a thought experiment by the British scientist Alan Turing in 1958, although it wasn’t rigorously described until 1977 or observed in the laboratory until 1989.

The link between health and wealth can be described  in this analogy:

Silicon-based technology is a slave to time,  while cells made of hydrate carbon semiconductors allow us to deconstruct time via a decentralized network of proteins that use excitons to slow time down to get the effect that cells need to live.

AKA:  Fiat money is to BTC money as silicon to topologic insulators of carbon.

BTC as an excellent store of value provides freedom to slow time down to use and monetize it.  Fiat uses the anti-Quantum Zeno effect and decreases the value of money quickly.

You’ve probably heard about Schrödinger’s cat, which famously is trapped in a box with a mechanism that is activated if a radioactive atom decays, releasing radiation. The act of looking in the box collapses the atom’s wave function — the mathematical description of its state — from a “superposition” of states to a definite state, which either kills the cat or lets it live another day.

But did you know that if you peek into the cat box frequently — thousands of times a second — you can either delay the fateful choice or, conversely, accelerate it? The delay is known as the quantum Zeno effect and the acceleration as the quantum anti-Zeno effect.

The quantum Zeno effect was named by analogy with the arrow paradox conceived by the Greek philosopher Zeno: At any given instant of time, an arrow in flight is motionless; how then can it move? Similarly, if an atom could be continually measured to see if it is still in its initial state, it would always be found to be in that state.

Both the Zeno and the anti-Zeno effects are real and happen to real atoms. But how does this work?

HYPERLINK VIDEO

My current belief is that all biologic topologic insulators in cells, especially the one buried in mitochondria, are very tiny Maxwell demons that can skirt the second law of thermodynamics by constantly observing the quantum state inside of cells to slow time down giving cells an advantage that have to use the second law of thermodynamics to exist.  They do this by making the “energy ledge” in cells larger in a relative way by shrinking time down using the Quantum Zeno effect.  This effect is something we do not observe, but the things in our cells do the observation for us to slow time down to get the job of living done.

This occurs because of the scale of the changes that increase this energy ledge are much smaller than the macroscopic objects that human can process with their senses.  Recently physicists are now beginning to realize that small quantum systems do not act like a cup of hot cup of coffee or a star in space.  Two recent studies are now aligning with many of the things I teach my members.

HYPERLINK

Your mitochondria and a chlorophyll molecule  are a lot smaller than a cup of coffee and a star

HYPERLINK 2

The second recent study in H-theorem was written that also supports my beliefs.

HOW DO WE USE IT IN OUR CELLS?

Excitons form when sunlight hits chlorophyll or RBCs.  Light creates a quantum hole in both organelles and that hole moves inside the organelle while constantly being observed.  This slows time down inside a cell.

Biology is solely based upon putting these two equations to work in hydrated proteins. If one studies proteins sans the water, the results will not be equivalent.  The study of regular biochemistry in most books is based upon the subtraction of water to study the proteins in isolation.  In science today, this bio-chemical paradigm is being replaced by the new science of topology.  In October of 2016, the Nobel Prize for physics was given for the science of topology.  Molecular biology is really the study of the physics of organisms and how cell organization puts quantum weirdness to work to build life.

It also turns out that the remarkable efficiency of photosynthesis in algae where DHA first Photosynthesis appeared on Earth 650 million years ago,  and their evolutionary descendants plants,  also deploy quantum superposition so that energy can simultaneously travel along all possible paths of the bridging maze of chlorophyll to reach the reaction center.  In fact, experiments have now shown that the exciton always gets to the reaction center before time expires.  In other words, it never fails in experiment because it always slows time down.

This is why it is a basic LAW of nature and quantum mechanics.  It is difficult to accept until your comprehend what Nature is up to.

Excitons can explore all paths to the reaction center, simultaneously,  without any time delay ever occurring.  This trick has also been found in bacteria like Chlorobium tedium.  Science knows bacteria where here before plants and eukaryotes.  It appears this quantum trick has been used by life from genesis 3.8 billion years ago.

It is so exciting because it clearly has now raised the spectre to modern cell biologists that animals, like humans, also can use the very same process in many cell systems.  Biology has yet to realize this, but the new field of quantum biology has found much evidence for the effects in many skin and blood systems.  I believe this process occurs in the skin’s melanin and eumelanin.  It also happens in carotenoids and in the cells suspended in blood.  Once the excitons are collected by these reaction centers the energy is transfered to water where protons tunneling transfers the signal at the speed of light to mitochondria at cytochrome 1.  Here it enters the Q-cycle to affect cytochrome c and the ATPasewhich are both red light chromophores and both tied to ATP production.  Water is also a red light chromophore.  I believe the phosphorus in our skin, proteins, and blood cells is critical to charge separating water into protons cables to transfer the energy and information from our surfaces to the mitochondria below.  This process occurs just as it does in leaves.  The difference is the distance and reaction center in animal cells are the Q-cycle and the the last two cytochromes.

Erwin Schrodinger told us in his 1944 book that life seemed somehow to skirt the second law of thermodynamics.  This flummoxed him because the 2nd law of thermodynamics is axiomatic in its truth.  He was confused by this skirting issue because he also said, despite life’s uncertainty, life is clearly stable or it could not exist.  That is the truth in the reality of life.  Nature uses a decentralized network to create excitons that get constantly observed in the chlorophyll antenna to suspend time before the energy on the electron is thermalized to water in a leaf.

Understanding reality means we have to accept “holes in reality” actually exist in Nature.  Moreover,  there are new things that excitons create that life makes use of.

Life is capable of reproducing offspring who are stable and they appear to transmit their moving subatomic particles in a reliable way to create functional offspring.  In this sense, life appears to skirt the second law by using the subatomic weirdness in leaves, RBCs, and our colony of mitochondria to create a perpetual motion machine for electrons and protons and it all driven by incident sunlight.  He also remarked in his book that in order for life to maintain its stability and sustain the living state without throwing its future into chaos it had to control the flow of heat from hot to cold and cold to hot by being much larger than its constituent parts of atoms and subatomic parts.

Life has to be built on a scale that would hide all these weird quantum effects from our 5 senses.  Life & BTC appears to use the Quantum Zeno effect to hide the truth in Nature from our 5 main sensory receptors that feed data from environmental waves to our thalamus.  The main effect of BTC is not observable because it is buried in the coding of the Satoshi’s algorithm.  When this is hidden, a new reality can exist.  When we observe these quantum effects on a continuous basis time is slowed.

When you realize it only two things in the universe are absolutely scarce – time and bitcoin.  It turns out time is scarce because it is also created by quantum algorithm and its effects can be stretched or slowed down.  Slowing down time is extremely rare in the macroscopic world.  The BTC algorithm is the only situation where a man made algorithm can slow time down to create massive value.  Every thing of value requires humans expend time to get it.  Bitcoin is the first human invention that seems to break this relationship in finance to mimic what nature does in cells.  The shrinkage of time to obtain value defines what economize really means.  Bitcoin is expert at maximizing time by creating value, just as circadian biology is at using dark and light cycles to create health.

Scarcity is the starting point of all economics.  The quantum zeno effect in cells is how Mother Nature slows time to create health.  In the white paper of Satoshi, buried deep inside the algorithm that created Bitcoin was a mechanism that mimics the Quantum Zeno effect to shrink time down to create value. The algorithm does this by constantly observing the hashrate to create the difficulty adjustment. The act of constant observation mimics the Quantum Zeno effect in cells.  This gives Bitcoin its inherent circadian mechanism and it creates its own circadian cycle, of scarcity that manifests in the halving cycles.   In this way, Bitcoin and health are linked by how they slow time down and add value back to the system quickly to create a new reality, health and wealth.

The human allotment of time in our life is a function of our health.  Time & health are as scarce as our lifespan is limited. Interpersonally, time scarcity manifests as the total time we can collectively allocate towards serving one another; whether we are making goods, providing services, or gaining knowledge/wisdom from one another — we have but a finite quantity of hours to commit towards our efforts. In this sense, time scarcity is the immortal quantum tyrant subjugating all of us. Only through cooperative action of constant observation can we break free of the restraints time scarcity clasps upon us.

Schrodinger was fascinated by the size of the first gene extracted from fruit flies in the 1940s.  He guessed that a gene would behave to larger than biologists expected in the 1940s to bury the quantum effects.  The biologists who found the fruit flies ’ gene’s found them to contain only a couple of hundred atoms in diameter and later those genes would be found not exceed a few million atoms in length.  Schrodinger was right in his guess,  but wrong in his reasoning.

He knew that cells had to be much bigger than the genes that controlled them to work on large enough scales to avoid the downsides of quantum theory.  Scale, after all, is the key metric that allows quantum mechanics to perform the queer tasks it does.  However, it never occurred to him, before he died, that the upside of quantum weirdness might actually be quite useful to life.  Photons hit semiconductive proteins to make “holes in reality” that create life using the most counterintuitive parts of quantum theory to create reality and life.

This knowledge must force medicine to change its opinion of how biology operates.  Zeno propounded that knowledge can be attained through the use of reasonTruth can be distinguished from fallacy—even if, in practice, only an approximation can be made. According to the teaching of Zeno, the senses constantly receive sensations: pulsations that pass from objects through the senses to the mind, where they leave an impression in the imagination (phantasiai) In this way, the impression can and should be thought of as a quantum processing effect in the unconscious decentralized network of the neuronal pool, manifesting and arising from the mind was called a phantasm.  That phantasm is a hole a reality called a thought that we can use to change reality.  BTC is a new thought that can be used to change your life. 

The mind has the ability to judge (συγκατάθεσις, synkatathesis)—approve or reject—an impression, enabling it to distinguish a true representation of reality from one that is false. It can process what an exciton means.  Some “quantum impressions” can be assented to immediately, but others can achieve only varying degrees of hesitant approval, which can be labeled belief or opinion (doxa).

In life, we believe it is only through reason that we gain clear comprehension and conviction (katalepsis). Certain and true knowledge (episteme), achievable by the thinking sage, can be attained only by verifying the conviction with the expertise of one’s peers and the collective judgment of humankind.  This verification is best made when the thinking mind is connected to the decentralized network called Nature.

CITES:

https://iopscience.iop.org/article/10.1088/1742-6596/196/1/012018/pdf

CAN YOU WIN A NOBEL PRIZE FOR A HALF TRUTH?

Conversions between carbohydrates and lactic acid play an important role in life.  It is the basis of the cycles that operate in mitochondria.   At the end of the 1910s Otto Meyerhof mapped these conversions by measuring heat trends and oxygen consumption in frog muscles. When the muscle is working, lactic acid is formed from carbohydrates, and Otto Meyerhof showed that during recovery, this is followed partly by the oxidation of lactic acid and partly by reprocessing of lactic acid to carbohydrates.

The EmbdenMeyerhofParnas (EMP) pathway allows the metabolic use of glucose to generate ATP, NADH, and several biosynthetic precursors such as 3-phosphoglycerate or pyruvate.

Most of the metabolic energy derived from glucose comes from the entry of pyruvate into the citric acid cycle and oxidative phosphorylation. These pathways occur under aerobic conditions. Under anaerobic conditions, pyruvate can be converted to lactate in muscle or ethanol in yeast.Among the important findings determined as part of the elucidation of the glycolytic pathway were:The finding by Hans Buchner and Eduard Buchner that fermentation, the conversion of sucrose to ethanol, could occur in the absence of a living cell.
The finding of a hexose bi-phosphate intermediate (fructose 1-6 biphos) in glycolysis
The activities required for the reactions to occur were composed of a heat-labile, non-dialyzable substance (enzymes) and a heat-stable, dialyzable substance (coenzymes).
Many scientists, including Gustav Embden, Otto Meyerhof, Carl Neuberg, Jacob Parnas, Otto Warburg, Gerty Cori, and Carl Cori, contributed to the complete determination of the pathway.
Glycolysis is formally known as the Embden-Meyerhof-Parnas Pathway.

Glycolysis takes place in the cytoplasm of the cell. The goal of the initial reactions of glycolysis is to convert glucose into fructose 1,6-bisphosphate. This traps glucose in the cell as glucose 6-phosphate and forms a phosphorylated compound (fructose 1,6- bisphosphate) that can be cleaved into phosphorylated 3-carbon intermediates – DHAP & 3PGALD. These 3-carbon units can then be used to generate ATP by substrate level phosphorylation and by making pyruvate & NADH for the citric acid cycle and oxidative phosphorylation.The first step in glycolysis is the phosphorylation of glucose by ATP to form glucose 6-phosphate. This reaction, catalyzed by the enzyme hexokinase, traps glucose in the cell.  This glucose was made by the action of sunlight on carbon dioxide and water via photosynthesis.  Our cells have to recapture the glucose so mitochondria can then strip it apart to create CO2 and water to reverse the process of photosynthesis.

What he did not know was that lactic acid concentrations vary with the free radical pulse rate of mitochondria and with the oxidation state of iron in the cytochromes of mitochondrial respiratory proteins.

Meyerhoff won a Nobel Prize for medicine in 1922 for a partial discovery of how a pathway operates related to lactic acid metabolism.  Even today the real actions of this pathway remain unknown because the biophysics of the pathway has not been studied properly.

Sunlight is a small part (visible spectrum) of the electromagnetic spectrum when one looks at it top-down. Photons and electrons make up this spectrum and their energies are the differences within the spectrum. What they both are made from, however, is identical from a subatomic perspective. Sunlight splits water into hydrogen, oxygen, and 4 electrons at a basic level. Hydrogen from water is a proton. Electrons are liberated from both atoms that make up water (I laid this out in the photosynthesis blogs at jackkruse.com). This water is used to grow all aspects of our food supply on planet Earth. Not one food breaks this rule unless man makes it.

This means our food contains information about the electromagnetic spectrum in both photon and electron and proton messages. I told you all food is broken down into electrons in our mitochondria. What I have not mentioned a lot is that long-chain fatty acids crafted from food metabolism provide our mitochondria with protons too. Protons are ripped from foods by mitochondrial dehydrogenase. The protons mitochondrial strip from foods is all protium and not deuterium. This allows the matrix to remain gel like and piezoelectric. When it is squeezed the electric charge in the mitochondrial membranes is harvest like juice is when an orange is squeezed (see my latest Quantum Health TV video for more).

Protons carry a positive charge and electrons carry a negative charge. The electromagnetic force acts with infinite power and range on all CHARGED particles in the universe. This includes your quantum cell and especially your mitochondria. This means they are under the strict control of the electromagnetic force, as electrons (NADH) are from food. These electrons enable us to electronically induce molecular changes in proteins and in our electron transport chain in mitochondria to electrify the hormone cascade in the hypothalamic-pituitary axis when sunlight enters the eye.

Nature is based on probability and not cause and effect. Why?

These electron and proton paths can and should be thought of as possible fates, or even quantum superposition to deal with multiple possible realities food faces in our mitochondria processing plant; their ultimate fates are controlled by the electromagnetic force to perform different actions within the electron transport chain.

The electromagnetic force changes as seasons change as the Earth moves around the sun. Sunlight is the lever that varies the squeeze on our colony of mitochondrial to liberate its current or redox potential. This DC current powers the energies of electrons in foods up or down depending upon the season the food grows in. It turns out this is precisely how insulin evolved and is regulated in our mitochondria by the current it releases in beta cells of the pancreas. It is tied to “where” electrons and protons are being fed into the chain. When electromagnetic energies in the environment are altered, we appear to harbor two basic possible mechanistic states that the electron transport chain can choose between based on the two states we face.

No food and a subsequent lack of electrons and increased protons from fat storage,
or an excess of food, with the result of too many electrons or too much energy from photons and a lot of protons.
Therefore the electron transport chain has to have a built-in mechanism to deal with both situations. This is just like a simple circuit being controlled on a laptop semiconductor chip. When we starve, we have poor electron flow or current, and very few electrons enter cytochrome 1. Insulin’s action would be low during this time because the superoxide pulse is linked to actions of this cyctochrome.

In the mitochondria at complex 1, when the current is low, we deliver plenty of endogenous electrons from FFA to flow through the FADH2 input at cytochrome 2. This happens through the action of an electron transporting flavoprotein dehydrogenase coming from the first step of beta-oxidation of real fats from our fat stores. For example, this could be a fatty acid like palmitic acid.

When food is sparse in winter, the current of flow is low, and it is near impossible to generate reverse electron flow through complex 1, so activation of insulin signaling is rapidly aborted by the continuing action of tyrosine phosphatase. Tyrosine is an aromatic amino acid that absorbs sunlight and acts as a semiconductor to absorb light and emit an electromagnetic pulse that signals a mitochondrion what to do next. Dr. J. Bose showed us this mechanism in crystals in the 1890s. This resonant mechanism of sunlight yokes insulin action to environmental light signals and temperatures. The photoelectric current signals phosphorylation of pathway proteins to change “where electrons” enter our mitochondria.

I told you years ago food clearly has a quantum electron effect because it contains light energy that is unaccounted for in the glycolytic pathway. Most biochemists and those in the paleosphere fail to realize the effect is tied to the electrons’ energy state and nothing else. Foods grown in longer light cycles have higher energized electrons and they are handled very differently than electrons from low light level foods because of where they enter the electron transport chain in our mitochondria. Our mitochondrial cytochromes are proteins that can decipher the differences in energies, and this why they enter the ETC at different cytochromes and provide different levels of ATP and oxygen generation. Here you can begin to see how the electromagnetic force directly impacts the proteins in the insulin signaling pathway.

What few realize:  Diabetics have a dawn phenomenon related to a lack of circadian cycling.  A lack of light cannot be fixed by adding a drug .  For prediabetes and Type-2 diabetes who regularly monitor their blood sugar, there is a well-known issue called the dawn phenomenon. It is characterized by a rise in blood sugar during the early morning hours, despite lifestyle measures and even medication.  Sunlight has massive impacts on many circadian genes that alter mitochondrial biology.  Most mitochondria in humans are in the brain, so the effect of sunlight on these genes should pay off handsomely to clinicians who understand the link. The Rev-erb gene is the gene that the electromagnetic force operates on.

A lack of AM sunlight = a lack of electromagnetic force to activate the Rev-erb gene. An altered daily rhythm of expression of the Rev-erb gene underlies the dawn phenomenon. Future investigations to reverse diabetes must be built around light and not drugs to get a full understanding of the disease. Rev-erb is expressed only during the day but not at night.  In humans, the rev-erb gene is found in GABA neurons and the gene’s expression is highly enriched in a particular brain area called the suprachiasmatic nucleus.  The SCN  is mainly composed of GABA neurons.  Humans have a photopic retina because they are diurnal.  When the body awakes and takes in food, insulin is secreted from the pancreas to signal the body to lower blood sugar. Insulin is more effective in doing this job upon waking than at other times of the day. This high insulin sensitivity is probably because the body is anticipating feeding behaviors upon waking up.  Sunlight alters the daily functioning of rev-erb gene in the brain to control insulin release and action in the gut. Neural Rev-erb must be operational to regulate mitochondria in the liver to control the hepatic insulin sensitivity rhythm.  This quantum controller operates independently of eating behaviors or basal hepatic glucose production.  In humans, we now know the Rev-erb gene in white blood cells, correlates well with the central clock function in the brain.

The nuclear receptors REV-ERB (consisting of REV-ERBα and REV-ERBβ) and retinoic acid receptor-related orphan receptors (RORs; consisting of RORα, RORβ and RORγ) are involved in many physiological processes, including regulation of metabolism, development and immunity as well as the circadian rhythm.  What does this imply?  It means there is a specific part of the AM solar spectrum diabetics lack.  Can you guess which one it is?

Nuclear receptor Rev-erb α: is a heme receptor that coordinates circadian rhythm and metabolism.

For more on that watch the video below.

CITES

https://quantumhealth.tv/programs/quantum-chronicles-episode-3-part-1

Ding, G., Li, X., Hou, X. et al. REV-ERB in GABAergic neurons controls diurnal hepatic insulin sensitivity. Nature (2021). https://doi.org/10.1038/s41586-021-03358-w

BTC #22 : FIAT, SHITCOINS, BTC ARE COUPLED OSCILLATORS

Today we begin with the lesson and then we unpack it so you can understand why some people will always be addicted to shitcoins, others will lead a fiat life until they get hit with a tsunami wave and others will understand BTC from the get go.  It has a lot to do with circadian oscillations.

Nature is a decentralized energy network and so is Bitcoin.  This means there are things in the BTC ecosystem that work like the relationship between predator and prey.  It is your job to see and understand this.  Why does this idea persist?  The algorithm that created bitcoin is really an algorithm of time.  It was created to show that timing matters a lot in the coupled system.

FEEDBACK CONTROL OF METCALFE’S LAW: The predatory Bitcoining maximalist act like the predator in this ecosystem.  They provide a valuable feedback service in this ecosytem by turning off people from buying Bitcoin.  The people turned away are non critical thinkers.  Think of them like low dopamine humans in the mitochondrial ecosystem.   People who turn away because of hurt feelings exhibit behaviors that place themselves at the back of the line and allow critical thinkers to front run them. In this way, the people turned off, the low dopamine prey,  wind up supporting the predators in this coupled system by buying Bitcoin a long time after the predator types.  They usually buy into to shitcoins or fiat games before they ever consider buying Bitcoin.  This is a key symptom in this coupled cycle.    This is how the predator consumes its prey.  As a result the price rises for all in the ecosystem.  The predators have more than the prey, but both sides of the oscillating system remain viable and healthy.  One can not exist without the other.   This tide rises all the predators boats as the process evolves and supports the ecosystem expansion.

This predatory oscillation works best on financial journalist, academics, VIPs & think tank types.  Those educated by classical beliefs often are the low dopamine prey in bitcoin.

HOW COUPLED OSCILLATIONS OPERATE IN NATURE

Connect one pendulum to another with a spring, and in time the motions of the two swinging levers will become coordinated.

This behavior of coupled oscillators is long a fascination of physicists and mathematicians also can help biologist seeking to understand such questions as why some locations overflow with plants and animals while others are bereft.   It can also help crypto owners understand why there is an ecosystem of shitcoins and fiat schemes in the Bitcoin ecosystem.  It turns out, the “prey ecosytem” strengthens the Bitcoin network long term.

In nature, we should pay closer attention to coupled oscillations because they determine outcomes.  The ecosystem provides the incentives that determine outcomes.

The basic idea of oscillating populations is not new to ecology of any system, biologic or cryptographic.

If you want to understand the complex interactions of crypto assets and fiat instruments you must understand how they work together with timing.

We know that any predator-prey system, say lions and zebras for example, shows oscillations.

If there are lots of lions preying on zebras, numbers of zebras decline; then because zebras are scarce, lions starve and their numbers dwindle, allowing the zebra population to build up again. You see this oscillation, changing on a regular basis from lots of predators with few prey to lots of prey with few predators. The pattern is like waves or pulsations.

What gets interesting is when two independently oscillating systems, such as lions preying on zebras and cheetahs preying on impalas, become connected through the invasion of a third predator” leopards, for instance.  This is what is happening to the Bitcoin ecosystem now with shitcoins and fiat instruments.

When they become connected, the situation is very much like connecting two springs together,  the ups and downs work in unison to create cyclic patterns who all have a reference to time.  This is best represented in the halving cycle of Bitcoin, the alt coin cycle, and the business cycles of fiat systems.

In the case of lions, cheetahs and leopards, bringing leopards into the system causes lion and cheetah populations to oscillate in phase with each other peaking and declining at the same time.  This is how BTC and altcoins operate in crypto ecosystems.   That works to the leopard’s advantage when both lion and cheetah populations are low, leopards can pounce on the plentiful prey. This is why Bitcoin maximalist focus on alt coins during bull market runs.  But then lions and cheetahs increase again, eventually building up their numbers and combined competitive strength enough to drive out the leopards at least until the next low point in the lions’ and cheetahs’ population cycles.

Predator-prey systems can also become coupled when a new prey species invades and competes for resources with prey species in two previously unconnected predator-prey systems. This is where fiat instruments come to play for crypto.  For example, an extremely fast antelope might begin competing with zebras and impalas for food. Even though neither lion nor cheetah is fast enough to prey on the new antelope, the antelope’s activity links the previously unconnected lion-zebra and cheetah-impala pairs. In such a case, the ups and downs of the two original prey species are thrown into chaotic but coordinated patterns.  Fiat creates the chaos that Bitcoin and altcoins require.

This process is what is known as coordinated chaos a phenomenon that occurs in some physical systems, such as lasers, but hasn’t been pointed out in crypto ecology before this blog.  By oscillating out of phase with the other two grazers” zebras and impalas” the antelope can coexist with them, prospering when their numbers are low.  Fiat instruments feed both systems during crypto bear markets.  

In living systems, considering such scenarios with the aid of mathematical simulations, the models can help address questions biologists have wrestled with for decades, such as how species that appear to be exploiting the same resources can coexist and why some predator-prey systems are particularly resistant to invaders.

In the past, ecologists have taken a traditional Newtonian view of the world, where everything comes into a nice equilibrium.  But oscillations sometimes destroy that equilibrium, by design. What I’m suggesting is that we crypto ecologists need to acknowledge the inherent oscillation in consumer-resource systems, such as predator-prey, BTC-shotcoin, herbivore-plant and parasite-host systems, and start approaching these old ecological issues in terms of coupled oscillators.  Then and only then will you see the forrest through the trees and understand the ecosystem of Bitcoin, alt coins, and fiat systems for what they are.

HOW TO MAKE SENSE OF THIS FOR BITCOIN

Why do some go irresponsibly long in #BTC? BTC is the only asset that has a Sharpe ratio of greater than 1. The Sharpe ratio describes the increased rate of return received for the extra volatility sustained when holding a riskier type of asset. To understand the Sharpe ratio, one must take into consideration the returns of holding a risk-free asset, compared to holding a riskier asset with higher returns. In this case, a risk-free asset is considered something like a US treasury T-Bill, which is backed by the full faith and credit of the US government, along with the world’s largest economy. This includes FAANG = FB, Apple, Amazon, Netflix, Google. None equal BTC Sharpe ratio.

From 2015-2019 Bitcoin’s 4-year Sharpe ratio was constantly above 2.0, and it has reached above 3.0 in 2019 and was 2.65 for 2020. So far in 2021, BTC is above 3. this defines the parabolic wall of the bull market where Bitcoin dominates as a predator should.

How to interpret a Sharpe ratio?
A ratio higher than 1.0 is considered acceptable.
A ratio higher than 2.0 is considered very good.
A ratio of 3.0 or higher is considered excellent.
A ratio under 1.0 is considered suboptimal.

The negative Sharpe ratio means the risk-free rate is greater than the portfolio’s return, or the portfolio’s return is expected to be negative.

The Sharpe ratio is the difference between the returns of the higher-returning, more volatile assets when compared to the risk-free, much lower returns of a safer asset like US T-Bills. It is important to note that Sharpe ratios only measure the returns based on the amount of risk and the ratio doesn’t actually measure the volatility of the underlying asset itself.

The Sharpe ratio filters out the noise of investor psychology to find the nuances of Bitcoin risk

The Sharpe ratio filters out the noise of investor psychology to find the nuances of Bitcoin risk and reward at different stages of its macrocycle. This can be done by using a simple rolling Sharpe Ratio that analyzes Bitcoin risk-adjusted returns over time.

Ultimately, with respect to BTC timing is critical. Timing is a key feature of coupled oscillating systems.  Correct timing matters deeply: while the individual investor may be satisfied with long-run outperformance, Bitcoin’s macrocycles urge further nuance.

Historically, the trade following the Halving represented the most attractive risk-adjusted opportunity in BTCs history. May 11, 2020, was the most recent Halving. Investors with personal savings and unconstrained time horizons will find comfort in the story of Bitcoin’s long-run outperformance. 90% of days BTC has been higher. This is an astounding ratio. Bitcoin returns are disproportionately skewed to the upside, timing matters.

Much like a call option, Bitcoin risk-adjusted returns rapidly decay or improve depending on market timing. The implication of this record? Over any rolling four-year period of BTC history, Bitcoin’s Sharpe Ratio historically outperformed virtually every other asset class. If an investor had held for at least four years during any point in Bitcoin’s history, they would have demonstrated superior risk-adjusted returns relative to almost all other investment opportunities. Nothing is better than it.  This defines predatory behavior.

Thinking about Bitcoin’s Sharpe Ratio over four-year intervals may be correct in theory, but it is limited in practice. In reality, markets are governed by animal spirits – the swings of fear and greed – This is how alt coins and fiat fears feed the Bitcoin chaos ecosystem.  This is why most “prey investors” are more likely to enter the market after periods of non-linear growth.  Altcoiners and fiat players buy after the top because they do not understand the coupling in the Bitcoin system.

BTC is like sunlight, Altcoins are like blue light, and fiat is like gold in this mitochondrial energy analogy.  Great quotes do not come from great people. They come from ordinary people who think differently about ecosystems.

Many new entrants are thus destined to enter mid to late-cycle, fated to experience grueling drawdowns after buying local or even global highs. The assumption that investors can and will HODL underwater positions for multiple years is unfeasible, especially with the prospect of underperformance relative to other asset classes. The financial and emotional burden of drawdown will likely lead many to capitulate their positions before they are able to realize an entire four-year cycle.  This is why predatory Bitcoiners feed on shitcoiners in bull runs.  It is happening as I type this in this halving cycle.

Given the path dependence of returns, the long-term Sharpe Ratio fails to adequately capture Bitcoin risk.

Oscillating around a value of 1, the one-year forward-looking Sharpe Ratio peaks at the beginning of

Oscillating around a value of 1, the one-year forward-looking Sharpe Ratio peaks at the beginning of Bitcoin’s price inception, 2012 Halving, and several months following 2016 Halving. After these three periods, an interesting dynamic at play: aggressive Sharpe Ratio decay from a high of 3 (spectacular) to a low of −1 (abysmal).

Further, examining the 1-4 year forward-looking Sharpe Ratio for Bitcoin from the Halvings (see pic above), we find a similar effect:

  • Exposure to Bitcoin for 1 year after the 2012 Halving nets a Sharpe Ratio of over 3, and holding for an additional 3 years degrades this to approximately 1. From a spectacular investment to a “good” investment.
  • Exposure to Bitcoin for 1 year after the 2016 Halving nets a Sharpe Ratio of over 2, and holding for an additional 3 years degrades this to less than 1. From a great investment to a sub-standard investment.

How important is market timing when managing Bitcoin risk?
Analyzing Sharpe Ratio decay gives us a powerful risk framework for BTC. Not all Bitcoin investments are made equal: Bitcoin acquired at different points in a macrocycle should be treated differently as part of a diversified portfolio. To illustrate this concept, consider the idea of “time-to-profitability” (TTP) demonstrated in the picture below:

  • Bitcoin acquired at the 2011 high has a ≈2 year TTP
  • Bitcoin acquired at the late 2013 high has a ≈3 year TTP
  • Bitcoin acquired at 2017 high achieved profitability in November/Dec of 2020.

Not only were investors who purchased Bitcoin at these highs faced with absolute drawdown, but they were also faced with relative underperformance against worldwide equity indices (and possibly other asset classes). Bitcoin can be an excellent tool within a diversified portfolio, but most professional investors cannot simply buy and HODL for extremely long periods of time if they are likely to face both absolute and relative underperformance. Regular investors can if they can handle the tax consequences.  This idea is critical in trading within an IRA account.

The legacy wisdom of financial markets sometimes cautions investors against market timing, captured by the dominance of indexing strategies and the underwhelming reputation of the modern hedge fund. Whatever the merits of this argument in traditional markets, the wise Black Swan will find a fundamentally different heuristic exists for Bitcoin.

This doesn’t mean that other strategies like buy and HODL are not valid. They are over 4 year periods, but within the coupled system Bitcoin is very asymetric and responds to its main oscilator:  Time.

Time in the BTC system is monitored by the difficulty adjustment.  The difficulty is a measure of how difficult it is to mine a Bitcoin block, or in more technical terms, to find a hash below a given target. A high difficulty means that it will take more computing power to mine the same number of blocks, making the network more secure against attacks. The difficulty adjustment is directly related to the total estimated mining power estimated in the Total Hash Rate (TH/s) chart.

The difficulty is adjusted every 2016 blocks (every 2 weeks approximately) so that the average time between each block remains 10 minutes.  This is one of the most important vital signs I monitor in Bitcoin price.  

The difficulty comes directly from the confirmed blocks data in the Bitcoin network.  Price falls can be very accurately predicted when you understand how important timing is in this algorithm.  Just as sunlight is the key variable for life, the difficulty adjustment is the life blood of BTC pricing.  

The bottom-line explanation of difficulty adjustment is that every time a mining rig is shut down, the bitcoin protocol increases the incentive for other miners to stay online to run the network. It’s as if every time a Walmart shuts down, all the remaining stores became more profitable.

Gazed upon long enough, difficulty adjustment can take on a kind of transcendental religious quality. It’s not the reason bitcoin is useful day-to-day, but it is the reason that bitcoin (like other true blockchains, and very much unlike centralized stores) is nearly immune to true destruction, whether by state regulation or market fluctuations. It’s the reason bitcoin is superior to a centralized digital currency system like Gold, even if bitcoin is more expensive to run in aggregate. It’s what makes blockchains more persistently “real” than mere data saved to a hard drive, or even, arguably, to a Google cloud server farm.

This mining process used in Bitcoin, is formally known as Proof of Work. It is also sometimes referred to as “solving a cryptographic puzzle.” Calling this a ‘puzzle’ or ‘problem,’ though, is fairly misleading; solving a “puzzle” often relies on some sort of logical reasoning, but the solution to a bitcoin block is essentially randomly generated by the bitcoin protocol. Mining rigs are making very complicated, equation-backed guesses as fast as possible, in the hope that they’ll be the first to hit the random solution and reap that sweet, sweet, reward, a Bitcoin.

This randomness is key to understanding the difficulty adjustment, just as sunlight is key inside of cells to understand how sunlight creates order out of chaos every day to lead to circadian control of biologic processes inside of us.

Time was built into the BTC monetary network by design using the difficulty correction.   It is simply to say that for investors focused on managing risk, timing really matters in the Bitcoin ecosystem because of the difficlty adjustment in the BTC algorithm.  The difficulty adjustment mimics the role of the sun in biology.   In this way, BTC mimics the Leptin Rx.   BTC does this because Nature and BTC both use decentralized network effects to dominate their ecosystems.

A once-in-cycle trade, but don’t forget to expect the unexpected
The historical analysis of BTC behavior leads me to conclude that, historically, the best risk-adjusted entry existed at or within several months following a Bitcoin Halving. The Sharpe ratio remains at plus 3 200-400 days post Halving. Today we have 93 days left in the halving cycle.  Each day is worth a lot because the Sharpe ratio is now above three and this is where massive price gains are found.  After this time, the Sharpe ratio falls off a cliff.

How institutional investors will change this cycle is now the biggest mystery in my mind.  believe the curves will be right shifted for returns and price, just as metabolism is changed by sunlight in spring and summer.

This post-Halving window, when combined with hedging practices like protective puts or a managed stop loss, helps build a case that, on a risk-adjusted basis, Bitcoin will usually outperform other asset classes.

THE KEY PROBLEM IN THE CURRENT HALVING CYCLE:
As Bitcoin has sprung to new highs in 2021, the current reality is that investors will eventually demand exposure to this asset. Ironically, as these requests pile in mid to late-cycle in 2021, money managers and individual investors will be faced with a dicey dilemma: remain on zero as Bitcoin makes weekly headlines or enter a drawdown-prone asset at local or absolute highs. C goes up in 2021 the risk ratio rises as the market comes to a top. Rather than enter as greed floods the market (next few months), the post-Halving window (April 2020- Sept 2020) granted investors an early window to incorporate Bitcoin into their broader macro strategy. This is why the member event on July 4th, 2020 was critical. IT WAS THE BEST TIME TO GET IN.  Where are we now?  We likely are in the middle of this bull run.  I expect it to last into October of 2021 and not just July of 2021.

What drives this cycle? It is the supply and demand curves buoyed by Metcalfe’s law and sculpted by the current difficulty cycle.  I think the difficulty cycle adjustments will tell me when the top is in.  Price in the Bitcoin ecosystem is wholly determined by these two effects, but timing adjustments will define this halving’s outcome.   And the supply and demand curve has an unusual twist in this current halving due to a severely curtailed supply of BTC marked by increasing institutional demand. The current post-Halving window is upon is now as BTC#18 laid out and represents a rare time to add high expectancy, low-downside Bitcoin exposure. That window will only be open for the next few months until the Sharpe ratio begins its cyclic fall. In this cycle, based upon the historical past of BTC, that fall will approximately happen August -November of 2021.

TIMING IS THE KEY FEATURE OF NAKAMOTO PUT INTO THE BTC ALGORITHM TO DRIVE ITS VALUE

If people choose to store their wealth in a monetary good which exhibits less hardness, then the producers of this monetary good are incentivized to produce more monetary units, which expropriates the wealth of existing unit holders and destroys the monetary good’s salability across time.

This is the fatal flaw of soft fiat/gold money: anything used as a store of value that can have its supply increased will have its supply increased, as producers seek to steal the value stored within the soft monetary units and store it in a harder form of money.  In this way, over time both instruments act like a negatively yielding bond.  Your returns on value diminish by the design of the instrument.  Bitcoin solved this problem in its White paper.

The difficulty adjustment in the White paper made Bitcoin responsive to time and that set it up to be the predator to fiat, gold, and now altcoins in the current ecosystem.  This has big implications for people who do not understand it.  It has bigger implications for nations for do not accept it.

Now are you predator or prey in the Bitcoin ecosystem, right now?

BTC #21: HOW TO CHANGE YOUR FIAT FOCUS IN LIFE

Example Questions to Change Focus from FIAT TO BITCOIN

Here is a starter set of questions to help you change your fiat focus and make the most of what you can get from #BTC:

  • What do I want my money to accomplish for me?
  • What’s my next best move with my money given my current context?
  • How can I make the most of this new monetary network in my life?
  • How can I solve my fiat problems? If I knew how to solve my fiat problem, what might I do with my money?
  • Who can I learn from about this new monetary network?
  • Who can I team up with to maximize the use of this monetary network?
  • What’s unique that I can bring to the table for my health when I use BTC?
  • What’s the ideal solution in how to use this idea?  What’s the minimum solution for my applications?
  • What would good look like after I use this Rx?
  • What can I learn from this use case?

Change has a perspective which is relative. Close up, change appears to unfold slowly. At a distance, change appears destructive. In between the worms eye view and the birds eye view lies reality.  Changing your focus is a skill you can use to improve your results in any situation. How do you change your focus? … Change the question. It’s that simple. For me embracing Nature was a nudge to rejecting my fiat education. When I was up against a wall in my medical career or when my personal life’s was dragging me down or when I was facing the unexpected, I learned I need a way to change my focus. Asking myself the right questions was the solution. I stopped focusing in on food and biochemistry and embraced Nature’s decentalized algorithms. My life changed. In my personal life, I embraced the suck of the relationships I had created and thought about them in a different way and asked myself new questions. Why did I allow things persist this way, when I could alter them? This process works because thinking is just asking and answering questions. It forces you to stop looking at your life from your default perspective and makes you see your actions in a new way by asking new questions. If you ask yourself better questions, you get better answers. If you want to change your focus, change the questions you ask yourself.

By changing the questions, you change your focus, which improves your results.  If you just tell yourself to focus on something else, that doesn’t work. In fact, the more you tell yourself not to focus on something, the more you end up focusing on the wrong things. Instead, you can put your brain into a fully resourceful state, simply by asking the right questions. Your brain is great at solving problems, but you need to ask the right way. You’ll also find that as you improve the questions you ask yourself, you’ll improve your energy.

The ultimate cheat code of our time: having your debt denominated in fiat and your savings denominated in #BTC

This was my first crypto podcast after over 500 podcasts on quantum biology.  

BTC#20: DEBT, LIQUIDITY, and YCC CRISIS FOR BTC VALUE

Governments are massive borrowers world over. US lately talked about another $1.9T stimulus. Such massive fiat borrowing leads to rise in yields of bonds.  Stocks don’t like rising bond yields. The most expensive stocks become the most sensitive stocks to the rising yield. Those are the FAANG stocks. Yield curve control (YCC) occurs when a central bank publicly announces and executes purchases of government bonds at a specific maturity to ensure that yields are maintained at the desired level. Because bond prices are inversely related to their yields, buying bonds and pushing up their price leads to lower rates.

The Australian Central Bank just began Yield Curve Control by buying their own debt last night in 2/28/2021. By keeping yield artificially low, YCC weakens the value of a currency more drastically than QE . When YCC is placed on the bond market, hard assets and commodities usually spike. Things like BTC and gold should go up. Interestingly gold is not reacting this way, and BTC is already rallying strongly today. The longer the YCC is kept, BTC should skyrocket. The Fed is using the Central Banks of Japan and Australia as their test cases to see how markets react to these experiments. My prediction is by summer as yields rise and the cost of funding government rises, the Fed will enact YCC to cool off the risks of a higher bond yield. Real rates in the bond market are already negactive according to Black Rock’s CIO. Later in 2021 , when rates become obvious negative rates it will like pouring jet fueld on BTC price. I will bet that gold lags because it is a dead monetary system compared to the living organism that is BTC.

Collateral effects:  it’s like if they’re coordinating all around the World for the YCC so that when the worlds’ CDBC are ready and in place, they’ll drop directly to NIRP and implement depletion of your bank account if currency isn’t used before a certain date. China’s CCP has already done this with the digital yuan. Pretty totalitarian approach is what I believe governments will take. you’re not using your currency : that money will go to the gvnt accounts so they’ll pay off their debt

If you’re using your currency: velocity could kickout quickly, inflation could take off, real economy will rapidly crash/deflate and government will pay their debts off with all the confiscated money using cheaper dollar & more taxations. All nations are on schedule for the great reset using the Great Facade of COVID. COVID IS THE POLITICAL COVER TO AVOID A PUBLIC REVOLUTION.

In May of 2020 the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) approved an interim final rule that permits depository institutions subject to the supplementary leverage ratio (SLR) to elect to temporarily exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the SLR denominator. The interim final rule strengthens the ability of electing depository institutions to continue taking deposits, lending, and conducting other financial intermediation activities during this period of stress caused by the coronavirus, also known as COVID-19. The interim final rule is in effect through March 31, 2021.

Things will get more exciting this year if SLR change is not extended by 3/31/2021.  Powell announced yesterday that he will make a decision on the SLR on 3/17/21.  This is what is holding the stock market and BTC price in check for the last two weeks.

Treasuries held by US banks:

Consider what JP Morgan said recently:

I said it last year, this change in SLR and YCC will be permanent until they totally devalue fiat money and get CBDC as their currency. It will not be a temporary patch.

Why do I think this devaluation is closer than Wall Street thinks?

Gold is acting opposite to how it should. And the Fed cannot just use SLR or YCC because when employing yield curve control isn’t capable of exercising as much control as they will need with a hyperinflating currency while employment is in the tank. Why?  In the US, the Fed already owns 40% of all 10-year Treasuries. So they will have to revert to the permanent peg they used in WW2. We also have record debt (30T) and massive unemployment from COVID (30M).

Quantitative easing has either be continued for ever or the economic system including the currencies will collapse. In both cases the winner is Bitcoin. That is why I am very bullish. BTC is like the bankers in WW2. They were selling to both sides as the fought each other.

In addition to discussing SLR extension to assist the Treasury market, Zoltan Pozsar on Operation Twist or a weaker USD:

If Fed is proactive to gain control until their CBDC is ready, they might try to do another Operation Twist, where they sell some short-end Treasuries to provide the needed collateral and buy additional long-end Treasuries, within the context of their otherwise automatic $80B/month Treasury buying plan. Otherwise, we could see T-bill rates go lower or even mildly negative in the months ahead as T-bond rates continue to push up higher, and cause financial plumbing issues.

Lots of moving parts here because a TGA drawdown of this size would be a first. Operation twist ended the gold market rally in 2011. Interesting times to own Gold and BTC.

SUMMARY:

I have been in Clubhouse for two weeks discussing the issues in this blog.  The consequences of the 3/17/21 Fed decision on the SLR is massive.

The Federal Reserve can create base money out of thin air in a process they call “quantitative easing” or QE for short, but has very limited methods to inject it into the broad money supply. They can only buy bonds and certain other assets with it. They have no way to send money to real people and businesses in the economy, outside of financial markets.

The Treasury Department, on behalf of Congress and the President, can send money out to people and businesses, but needs to issue bonds associated with that spending, which just moves money around. The bonds pull capital out from one place (the lenders) and puts it in another place (where it is spent). Therefore, the government also doesn’t have many ways to directly increase the broad money supply within the context of the existing legal structure.

However, the combination of the Treasury Department and the Fed working together, with the Treasury Department sending checks out into the broad money supply and the Fed creating new base money to buy the bonds associated with that spending (rather than extracting that money from real lenders buying the bonds with existing money), outright increases the broad money supply,If the do not extend the SLR this might be our reality below.

Living the dream is not about living the fiat dream.

It’s about avoiding the fiat nightmare by banking on yourself using BTC as your bank.

BTC#19: ARE WE AT THE ALTER OF CURRENCY COLLAPSE?

Going forward over the next 3-5 years, I still expect many currencies including the dollar to continue to devalue vs hard assets (BTC), and for the dollar to probably be among the weaker major currencies during that timeframe.

I just finished my Q & A for members and laid out the case for the super cycle coming in the next few months.  I know this was complex but the video above is a parody of what I told my tribe.  Many people are not ready for what is coming.  It is coming faster than the market and the public expect and the market is calling the bluff of Central Bankers world wide.

As the ten yield yield rises  the Central Bank has one card to play.  They will have to peg the short term bonds yield to stop the rising cost of government.  In this environment commodity prices are going to spike.  Growth Stocks will decline, and the currency will be under attack and the it will end in a devaluation.

We may be at the beginning of that edge right now.

Assets like Bitcoin in this environment will act like a basket ball underwater.  The rapid rising of the ten year bond yield pushed Bitcoin down 30% but that fall is exogenous to the halving cycle.  This means there is a huge potential energy bounce coming soon.

Eating Our Own Cooking = the collapse of fiat is real

The market has responded to the Central Bank actions and will force it to make a decision.  The Fed is creating debt and now buying its own debt.  Since Central banks are the biggest buyer in the market they can control price.  They can surpress yields and if they fail, they can revert back to 1942-1951and put a permanent peg on the short end of the yield curve to make financing the government bills cheaper.  The Treasury did this to pay for the WW2.  The tradeoff here is that it destroys your currency.  In 1950 the US had no debt so doing this had only one bad outcome:  High inflation that would slow the economy.  At the end of Truman second term his efforts were destroyed by the Fed’s peg rate.

With today’s debt rates the risk is complete hyperinfation and eventual currency devaluation in rapid fashion.  I believe we are at that edge right now.

Based on the action of the VIX I believe most of Wall Street is unaware how close to the edge we really right now.

As bond yields in the 10 year go higher government funding cost become explosive and they lose control of the balance sheet rapidly.  If the Fed pegs bond rates scarce assets will soar high.  Example is below.

The choice of the Fed will make is going to play out by summer.   Congress is adding fuel to this fire by passing a 1.9 Trillion stimulus bill that has no COVID relief.  This money printing will push the dollar lower.  I see the perfect storm brewing.

If the currencies collapses you can bet BTC will go up in parabolic fashion.

I hope you are all ready for this reality during the Ides of March.

BTC #18: ARE ALL HALVING CYCLES EQUAL?

The halving cycles are associated with price dislocations.  Generally the 18 months after a halving is when it is very bullish to own BTC to capture alpha on its price.  Right now we are six months past that dislocation.  The price movement from Feb to October 2021 is predicted by many models to be staggering.  The stock to flow model is the one most cited on the internet seen below.

The halving process reduces the future supply of bitcoin by 50% for the next 210,000 blocks, when this process will repeat again. If demand stays constant, and this factor is not already priced into the market value of bitcoin, the value of bitcoin would rise. However, it is increasingly difficult to determine the intrinsic value of bitcoin due to its complexity.

The third halving was marked when the 630,000th block was mined. This bitcoin halving will see the mining reward drop from 12.5 bitcoins per block to 6.25 bitcoins.  At the end of this halving 93.75% of all Bitcoins will be in existence.  Right now 61% of Bitcoin has not moved in over a year.  This tells us in this halving we are in now that supply is being constricted.

As you can see from the above table, the amount of bitcoin mined and the block reward drops by half at every halving event. By 2032, over 99% of bitcoin will have been mined and it is estimated to take up until 2140 until 100% of the total bitcoin is mined.

The ideal time to be in the BTC market is day 200-400 of the halving cycle.  This is where parabolic growth appears to manifest.  That time frame fluctuated based on some variables.  Currently we are in that phase now in this halving cycle.  This cycle however may not be like any other.  

With halvings investors need to pay attention to key metrics.  The key data points to watch leading up to the halving which include; countdown clocks, the overall hashrate, and the price per BTC and the bitcoin network difficulty rate.   All of these determine when the next halving comes to the market.  Right now that target looks to happen in April of 2024.

The hash rate for me, reminds me of the metabolic rate of the Bitcoin organism.

Observers can watch BTC’s price using markets.Bitcoin.com, as well as observe BTC’s network hashrate via charts.Bitcoin.com. Both of these resources are updated every day in real-time and people can observe the network difficulty as well. The data and analysis web portal Coin Dance,which covers all three Bitcoin-based branches (BTC, BCH, and BSV), is also a great resource to use if you are watching the network’s activities after the halving.  Glassnode has all of this data as well.

The first halving, which occurred in November of 2012, saw an increase from about $12 to nearly $1,150 within a year. The second Bitcoin halving occurred in July of 2016. The price at that halving was about $650 and by December 17th, 2017, Bitcoin’s price had soared to nearly $20,000. The price then fell over the course of a year from this peak down to around $3,200, a price nearly 400% higher than Its pre-halving price.

The mathematical theory of the halving and the chain reaction that it sets off works something like this:

The reward is halved → half the inflation → lower available supply → higher demand → higher price → miners incentive still remains, regardless of smaller rewards, as the value of Bitcoin is increased In the process.

In the event that a halving does not increase demand and price, then miners would have no incentive as the reward for completing transactions would be smaller and the value of Bitcoin would not be high enough. To prevent this, Bitcoin has a process to change the difficulty it takes to get mining rewards, or, in other words, the difficulty of mining a transaction. In the event that the reward has been halved and the value of Bitcoin has not increased, the difficulty of mining would be reduced to keep miners incentivized. This means that the quantity of Bitcoin released as a reward is still smaller but the difficulty of processing a transaction is reduced.  All of this is built into the code of BTC blockchain.  Satoshi was brilliant.

SUMMARY

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.  In this Fourth Turning all trust is gone.  We have Biden getting ready to print another 1.9 Trillion dollars.

The environment is changing now favoring Metcalfe law dynamics.  As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.  This is especially evident with the actions of corporations like Micro$trategy this AM.

1.  Bitcoin’s price appreciated +9881% overall after Halving #1.

2. Leading up to Halving #2, Bitcoin rallied 383% to reach the pre-Halving top of $794.91.Bitcoin rallied 4080% in 524 days to reach the Market Cycle top of $20,074.

3. After the 2018 Bear Market where price retraced -84.5%, Bitcoin bottomed at $3152, approximately 511 days before Halving #3.  Leading up to Bitcoin’s third Halving, Bitcoin rallied +343% to reach the pre-Halving top of ~$13,900.  Overall, Bitcoin has rallied +805% since its $3152 March 2020 bottom so far, eclipsing the previous All Time High of $20,000 in the process.  Today, on Mardi Gras Day it is at its all time high above 50,000K

Bitcoin’s post-Halving #3 performance confirms an important, historically-recurring tendency across all Halvings:

1. The Bitcoin Halving serves as a major catalyst for new Bitcoin Bull Markets.
2. Several months after each Halving, Bitcoin tends to eclipse its old All Time High, rallying to new, uncharted price levels.
3. Most of the exponential growth in Bitcoin’s price as a result of the Halving tends to occur after the Halving

Let’s now focus specifically on Bitcoin’s performance after Halving #3:

Bitcoin is up +648% since its $8161 price point at the time of Halving #3.  This number is lower than other cycles.

MY CAVEAT:  Demand is already far surpassing the ability of miners to produce Bitcoin, and demand is rising exponentially. We found this out from the recent GBTC buys.  The likelihood that we are entering a super cycle for the asset class is very likely. The 4 year cycle theory may no longer apply right now.  

What defines a supercycle?   Everything begins to accelerate at an incredible speed for the value of the king of digital currencies.

We must pay tribute to Michael J. Saylor for having had the audacity and intelligence to adopt this strategy since August 2020. He just borrowed another 900 million dollars for 0% interest and plans to buy BTC with it immediately.  What do you think this does to the value here considering how the supply is narrowing?

Besides, Michael J. Saylor has become a formidable ambassador for Bitcoin. Rather than simply profiting from Bitcoin, Michael J. Saylor has decided to reveal his Bitcoin Playbook to as many people as possible.  This will drive Metcalfe’s law in the Bitcoin ecosystem.

At a conference held in early February 2021 by MicroStrategy, Michael J. Saylor has answered the many questions that all the treasuries of major companies are asking themselves now.  Elon Musk already bought 1.5 billion of Bitcoin as a result of Saylor’s idea being made public.

If we extrapolate Bitcoin’s post-Halving #1 performance to Bitcoin’s post-Halving #3 performance, Bitcoin could rally anything between +1742% and 2200%.

A +1742% rally after Halving #3 would result in a ~$150,000 Bitcoin.

A +2193% rally after Halving #3 would result in a ~$188,500 Bitcoin.

What if we extrapolated Bitcoin’s post-Halving #2 performance (+4080%) to Bitcoin’s potential post-Halving #3 price appreciation?

A +4080% rally after Halving #3 would result in a ~$342,000 Bitcoin.

This defines what the current super cycle might create for you Treasury.  So if you think it is too early to buy at 51,000 dollars, you are not part of my tribe.  You might be part of their tribe below.

Bitcoin bottomed 511 days prior to Halving #3.

Should Bitcoin rally for 511 days after Halving #3, that would mean that Bitcoin would peak in early October 2021.  That means the run that is coming from February 2021 until November might blow your mind.

Once they understand the DNA of Bitcoin they will buy it in droves.  I think that time is upon us. 

  • The circadian biology of Bitcoin is found in its hash rate.  A new Bitcoin block is found every 10 minutes, this genetic code enables Bitcoin’s cells to effectively communicate and coordinate with each other despite enormous distances. It is the internal clock that sets the metabolic rate of the Bitcoin organism.  Hashrate has speed up in this cycle becoming an early indicator that this cycle is different.
  • The code of life is written into an organism at its inception. Satoshi carefully architected Bitcoin’s DNA, or genetic code, to be the best sound money ever created. We can think of Nakamoto’s white paper as Bitcoin’s DNA genetic code.  It represents instructions that have been written to incentivize the organization and coordination of cellular function.  When corporations understand what this code means to value they will act rationally.

Will you?  

CITES:

https://www.microstrategy.com/en/investor-relations/press/microstrategy-announces-pricing-of-offering-of-convertible-senior-notes_02-17-2021

CPC# 51: WHY CLOTTING/CHRONIC FATIGUE ARE TIED TO COVID?

Why take an Rx blood thinner when the sun does it for free?  Does this explain why darker skin people get COVID more, and get severe clotting issues with COVID, and die more frequently when they live at high latitudes and in cities where nnEMF and blue toxicity dominate?  Can you explain this Uncle Jack?  Look at the picture above and realize what is going on in blood when your skin is irradiated by terrestrial sunlight.  Do you think the same waves are made in the blood when you are under fake light?

Do plants grow the same in the sun or with grow lights?  Might this problem show up in us too?

Our modern lifestyle dehydrates us chronically and causes us to lose the ability to create Vitamin D and use magnesium in a proper thermodynamic way in cells.  Both of these problems lead to clotting and a lack of immunity.  It also is the reason why Cancer shows up in people who avoid the sun because of idiotic public health beliefs that the sun is toxic.   This is our greatest risk factor for skin cancer in my opinion. Australia is the classic example of this modern risk factor today.  Anyone who is struggling to get their Vitamin D levels higher likely has a co-morbid magnesium deficiency due to a lack of water from poor mitochondrial function at cytochrome C oxidase.  People forget that one of the main by-products of mitochondrial energy transformation is the production is water at cytochrome C oxidase.

Many of these people dehydrate their colony of mitochondria when they live in an environment loaded with non-native EMF and blue light.  What is the first thing that happens in the mitochondria when this occurs?  It reduces the amount of melatonin the mitochondria make.  This impairs both autophagy and apoptosis.  When this happens neither change program is efficient at removing defective engines and disease present.  That is Why COVID, CLOTTING, and CANCERS ARE all linked to a lack of sun and too much tech exposure.

Magnesium in a cell is a hydrophilic element on the periodic table, and without water, we lose intracellular Magnesium (Mg). 56 enzymes in mitochondria use Mg2+ as a cofactor.  It turns out making melatonin is a Magnesium and water-dependent process.  Making Vitamin D is also water and Mg dependent.  There are 3 metabolic transactions from Cholesterol (Cholecalciferol) that occur under the surface of the skin where our “storage version” of Vitamin D (Calcidiol) is made.  This 25(OH) version of D3 gets transformed in our kidneys and liver to the “active version” of Vitamin D (Calcitriol or 1,2,5 (OH) in the liver. All 3 reactions require Mg2+ as a cofactor. Mg, however, needs the mitochondria to make cell water in the cell to work properly.  If the mitochondria do not make water, taking an Mg supplement is a waste of time and resources. It is physiologically impossible to have a 25(OH) blood test (“Storage-D”) to be less than 35 ng/dl and a Magnesium RBC level to be above 6.5mg/dL because of the negative feedback loops tied to calcium levels in our blood!

As a result, this is why melatonin levels are off in these patients.  With time this ruins their sleep because melatonin forms another coupled cycle with cortisol and adenosine.   This is why Magnesium and Vitamin D deficits walk together in mitochondrial damaged patients.  This is why COVID people get the side effects they get.  Some kids with COVID have enough redox power to avoid clotting but they get chronic fatigue instead.  It will not change until their redox power is returned by changing the environment they are in.   If this is allowed to persist chronically it is only a matter of time that clotting will occur or that will develop another chronic mitochondrial disease, like cancers.  I think this is why Oz is loaded with melanoma.

If you want success in life, become a problem solver for your patients. Not a fixer.

Magnesium is also a co-factor for telomerase that controls our telomere lengths.  When you marry this with a low melatonin level you begin to see why cancers will come as these people age.  It is also the reason why dark people get the worse outcomes from COVID and why they COVID to begin with.  Taking a vaccine won’t solve this problem but getting in the sun will.  I also think people who use a ton of sunscreen are at risk for clotting, COVID, and chronic fatigue.   What else exacerbates this linkage?  A modern diet with undiagnosed high O6/O3 ratio due to seed oil usage with the use of carbohydrates out of season which also causes dehydration.  One mole of fat creates 100-110 nmol of water.  One mole of carbs produces 55 nmol of water in the mitochondria.  Carbohydrates also contain more deuterium, and deuterium main function in the body when it gets into the mitochondrial matrix is to decrease the piezoelectric ability of the mitochondrial via the increased kinetic isotope effect.  IT makes the mitochondria act more like a diamond, and less like quartz.  A diamond carbon lattice is not compressible, while the SiO2 lattice of quartz is.  This is why quartz is piezoelectric and why a diamond aren’t.  This is why Nature only creates carbs in strong light cycles when the sun can offset the lack of metabolic water production from the sun in mitochondria at cytochrome c oxidase.

In medical school, I learned that Vitamin D was a hormone that was important in bone metabolism and that is where it really ended until I began to read about Vitamin D3 15 years ago.  In all that published research, it uncovered what it really does for our cells. The major effect is that it modulates the immune system as its receptor is found on T helper cells (regulator cells), the same cells that are destroyed by COVID spike protein or how HIV infection wipes out in AIDS victims. So if your Vitamin D levels are low, FOR ANY REASON, they turn off the epigenetic switches on RNA/DNA/mtDNA genes that turn on the proper functioning of immune system protector cells to keeps us free of diseases from viruses, bacteria, mold, and fungal infections. In fact, since I got my level checked 15 years ago, I have not been seriously ill. The sun provides what we need.  No mRNA can do this.  When you give a person with low redox and a low D level an mRNA vaccine we should expect new variants of COVID that are more lethal.  It appears our Public Health experts in the centralized medical systems did not expect this.  My clients, in my decentralized practice, however, did.

SUMMARY

Artificial light creates a positive charge in most of the things in a cell. Galactic cosmic radiation also has positive nuclei and charge. These positive charges were accelerated in the shockwaves of supernovae throughout the galaxy and they randomly enter our solar system.

Redox power from the sun, manifests in living systems is all about optimizing the net negative charge in cells.

Its proxy is found in the charge carrying ability of water (dielectric potential) made in mitochondria which control intracellular endogenous glutathione levels.  All things that cause inflammation carry a net positive charge.  This is why pH matters in the care of COVID patients in a hospital.  It predicts who is really in trouble.

If you need a clotting drug, you are, BY DEFINITION already blue light toxic, nnEMF overdosed, and get far too little sun on all parts of your body.

CITES:

https://www.bloomberg.com/news/articles/2021-02-12/common-blood-thinner-reduces-risk-of-covid-19-hospital-deaths

https://www.ajc.com/life/study-vitamin-d-deficiency-found-in-over-80-of-covid-19-patients/A6W5TCSNIBBLNNUMVVG4XBPTGQ/

BTC #17: IS THE AXIS ON DeFi BEING DEFINED NOW?

Creators are hard-driving, focused, dominant, independent risk-takers.  Who are the emerging players on top of the Monopoly board in DeFi?

DeFi update Feb 5, 2021:
DeFi is becoming a cash flow machine. These protocols are generating annualized earnings (est.):
Uniswap = $140M (60% of swaps)
Aave = $100M (interest & flash loans)
Sushi = $90M (15% of swaps)
Maker = $45M (seniorage-based credit swap lines)
Most protocols are <2 years old. Ponder that.

We’re on the ground floor of incredible change that is on the way in DeFi!

The current DeFi narrative depends very heavily on the future of Ethereum. It is highly questionable now if it can ever evolve into a network, that has e.g. identity, governance, privacy, and scalability issues completely resolved in a manner, that’s required from a true financial services network. My bet is on something, where those four things are solved first.

I think paying attention to the volume of the coin of dollar business they do will give us clues who will crush it on ETH 2.0 monopoly board I spoke about earlier in this series. It will also tell us ETHER 2.0 is the real ground to rebuild the new monopoly board under DeFi financial services.

Genius isn’t necessarily coming up with everything from scratch, it’s knowing how to take some existing ideas and perceive them in a radically different way to come to a new way of thinking that can unlock value in something that’s very, very new.  Your ability to critically think you must engage your imagination.  This blog is about my synthesis of where the axis of value is being built on the Monopoly board.  The true sign of wisdom is not the knowledge you acquire, it is how the data you feed into your brain is filtered through your imagination to get to a place where you can see the results of innovation before anyone else does.  

My top 5 crypto right now Feb 2021:
1. Bitcoin
2. Aave
3. Uma
4. YFI
5. ETH
I think 2, 3, 4 are the first pieces being added to the Monopoly board. I think they are lots on the board with foundations being poured now. It is early…..but what they do is all about how many of us are getting yield on our crypto accounts.

WHAT IS Aave?

For example, Aave is best described as a decentralized system of lending pools.
Users deposit funds they wish to lend on ETH2.0, which are then collected into a pool. Borrowers may then draw from those pools when they take out a loan. These tokens can be traded or transferred as a lender wishes.

To make it clear regarding revenues of ($aave):  Estimated weekly Income : USD 2,067,975 Weekly incentives : USD 143,655 Yield APY : 6,1%  Price to Sales : 67,5 x Volume/Market Cap : 19,58%  DeFi is growing faster that anyone can imagine.

Why does AAVE have intrinsic value?
As the Patreon blog says, ETH 2.0 is not decentralized but Aave protocol is. That is why I think it becomes a key property on the monopoly board.  AAVE plays a central role in the management of the Aave software, allowing users to vote on changes to its rules and policies.
Aave was released in mid-2020 and has went from 80-430 since I first bought it when I was in my last few days in Mexico in Dec 2020.

AAVE owner are able to vote on interest rates for certain loans and aspects of how deposits are managed. This makes it interesting to me. Interest is how banks operate. Aave is a replacement for bankers in the DeFi space.  Aside from this utility, AAVE derives value from its finite supply, and the fact that it uses revenue from fees to buy AAVE and remove the cryptocurrency from circulation. This makes it decentralized.
Currently, 80% of fees collected by the Aave system are used to burn AAVE. THIS TELLS ME SUPPLY IS SHRINKING SO THE PRICE HAS TO GO HIGHER.  I believe it might go higher than any other coin in 2021.  The remainder is used to pay lenders in their space. The constant burning of AAVE is expected to reduce its supply, thus driving up the price of the token if demand remains constant. So far it has worked as I thought.

The 4 elements I have cited here (identity, governance, privacy, & scalability) are essential elements for a truly decentralized financial system. They are four legs of the DeFi table, if you don’t have one the system will eventually be out of balance and mean revert to the intrinsic value of the labor put into the code.  For me, this is why I am not yet sold long term on ETH 2.0 as a chronic winner.  I do think what is being built on it, may far surpass its value.  I want to discuss how I see the “early axis of this monopoly board” is being built today in front of eyes.

Many don’t understand how projects using the Ethereum 2.0 protocol equates to higher Ethereum token prices, so here is how it happens. As the DeFi projects continue to go up like Aave, UMA, UNI, YFI it means ETH has to be used up to complete the transactions.  

The way ETH 2.0 goes up is Gas. ETHER is the gas that makes the DeFi projects operate. So for a more accurate answer, I suggest doing some homegrown research.

My understanding is that actions taken on the Ethereum blockchain have operating costs per transaction. Right now early in the ETH 2.0 game gas is expensive. If you have to pay for the gas you hate this increased cost. If you do not, and just own ETHER you’ll love this because consumption of ETHER because it cuts supply and this eventually will drive the price. The problem is there is too much ETHER in the market now to drive huge price gains, but this is going to change over time and makes ETHER look like a great play ten years out in the way I view the market.  Since ETH 2.0 just started in the last 6 months, gas is giving people sticker shock, but if you when you realize there are 37 billion money transactions already in DeFi projects you’ll begin to understand why this situation is something to pay attention to and understand clearly.

When you want to compute something on the blockchain, you have to pay for that privilege. That action can take the form of sending tokens from one ledger to another, or it can be the execution of a smart contract. That cost replaces the subtracted middlemen. This payment happens in something called Gas = ETHER. And Gas comes from ETH tokens. So any project on the ETH blockchain needs ETH to run. It burns Gas. Gas comes from ETH tokens. Every project on the ETH blockchain creates a demand for Gas, which creates a demand for ETH tokens. And this increase in demand leads to a higher token price.  This is driving ETHER price movement now.  This begs the question, if ETHER IS going to move, then what crypto assets are fueling this momentum?

UMA = the VIX

The Chicago Board of exchange (Cboe) Volatility Index, or VIX, is a real-time market index representing the market’s expectations for volatility over the coming 30 days. Investors use the VIX to measure the level of risk, fear, or stress in the market when making investment decisions.

For those of you who do not know what UMA does……it is the VIX of crypto. The VIX of crypto right now just got off the ground in the DeFi space.  It controls 60% of DeFi swaps in this space as of today.

Professional traders use volatility data to make informed decisions and be on the right side of trade. Therefore, the CBOE Volatility Index, known as the VIX, is popular with equity traders.

Bitcoin is known for its high volatility and Universal Market Access (UMA) plans to offer traders an opportunity to trade volatility in a decentralized way. I think this coin has huge potential. For that, the protocol plans to launch a uVol-BTC product that will be settled at the end of the month. Traders could use the token to speculate on the increase or decrease in volatility, or hedge their Bitcoin positions they do not want to sell during sharp corrections. Today on Feb 5, 2021 options expired on BTC and the price is moving. I expect the derivative market for BTC to skyrocket over the next ten years. If the product turns out to be successful, a uVOL-ETH token is also planned in the future.

Other than the regular synthetic tokens that track the price of an asset, traders keep looking for new opportunities that do not give institutions a direct edge. In order to cater to this demand, UMA plans to launch a new synthetic token called ‘uSTONKS’ that will be based on the ten most commented stocks on the r/wallstreetbets Reddit forum. This is another reason I am bullish on UMA. The new uSTONKS token offers retail traders a unique way to benefit from the movement of the most popularly discussed stocks on the forum.

Early discussions are also in progress to create a “Big Mac Synth” based on the index invented by The Economist back in 1986. Launching innovative tokens attracts new traders. New traders = Metcalfe effect for the entire DeFI space. Another reason that could have added to the short-term demand for UMA was the negative 15.5% annualized yield for depositing Ether as collateral to borrow USDC.

UMA has soared from an intraday low at $11.234 on Feb.2 to an intraday high at $43.998 today, a 291% gain within three days. I began buying it in December 2020.

The first batch of tokens to be listed is uSTONKS-MAR21 with 10 stocks: GEM, AMC, NOK, BB, SLV, TSLA, PLTR, SNDL, AAPL, and SPCE. UMA is launching the index in collaboration with YamFinance which is one of the most popular farming DeFi projects.

UMA price could surge even higher according to various metrics
It’s important to note that despite the recent price surge, the number of whales holding between 100,000 and 1,000,000 coins has increased by seven since January 28. Similarly, other large holders with 10,000 to 100,000 coins have also joined the network in the past week which indicates investors believe the digital asset has the potential to rise higher.

WHAT ELSE? 

Aave is a digital finance app on ETH 2.0 that is building a digital trust score which is analogous to an Equifax credit score in the finance world. Aave is a money market that is attempting to establish the time value of digital assets by paying interest on the movement of things with value on Blockchains. It does not have to be just money or coins. It can also be a property that is tokenized. It is the world’s first true digital lending market in my opinion.

For example in Sept 2020, UniSwap exceeded the crypto exchange CoinBase in terms of exchange of value as a Decentralized market. That got my attention last year and I decided to look at all the players that were just beginning on the ETHER chain. How Uniswap made money was more shocking to me.

On Coinbase exchange the exchange owner gets the transaction fees from trading volumes. They also had the risk of building and funding the exchange. What Uniswap was, as if you owned their token you would share in the transaction fees directly with coin ownership because the Dapp called Uniswap would cut out the middle which in this case was Coinbase. Once I understood this I began building a position for all these companies collecting fees in swaps. Uni, UMA, AAve, Market, YFI are right now my favorite ways to play this DeFi trend. Owning them is a bet on future commerce in the DeFI space. I will say not all of them will succeed long term.  Some will go to ZERO.  Be aware of this.  Another way I think about this speculative play is that one of these companies might become the Amazon or Goldman Sachs of the DeFi space. That excites me and I think this space might offer more upside than BTC will.  But it filled with execution risks.

The person who holds the coins is getting paid as transactions go up by the value of the coin going up. In reality, it is like being paid a dividend yield. It is a new way to own a bank without the equity risk. This group of coins is actually building the Yield curve for the DeFI world. In the centralized world, these companies are worth a fortune. Right now you can buy these coins very cheaply.

The problem is knowing which one is winning the battle of supremacy. I follow the money flows to make a decision and I add to those positions. I am fully aware that 90% of these names might go to zero but I have faith that one will become the 300-pound gorilla of the DeFi space.

The biggest development I think is each one of the companies makes money every time someone buys BTC and decided to get a yield on it. Many people. like, me, are doing this. If you view BTC as pristine collateral that is growing 200% why in the hell wouldn’t the market want another 6-10% of BTC yield as the BTC sits in a cold storage vault run by YFI, as you wait for BTC to go to 1 million a coin? The way I think about it, if I want this so will a lot of others. Therefore, I want to own some of these coins.

This is a market that has no need for venture capital when you really understand it. The market is self-funding. That means this space is going to eliminate the VC in the analog market. How much is that worth?
In 2019, North America had the highest value of VC deal funding globally, with approximately 113 billion U.S. dollars in financing. Right now these companies market cap on crypto exchanges is only 15 billion dollars. That tells me they are worth a ton more.

Can this space be used to create easy free profit via arbitrage? What is arbitrage?

Have you noticed BTC or ETH have different priceson different exchanges at the same time when you’re buying? This is how you arbitrage the price.

Arbitrage is already profitable in DeFi.
Arbitrage traders are an essential component of the Uniswap ecosystem. These are traders that specialize in finding price discrepancies across multiple exchanges and use them to secure a profit. For example, if bitcoin was trading on Kraken for $35,500 and Binance at $35,450, you could buy bitcoin on Binance and sell it on Kraken to secure an easy profit. If done with large volumes it’s possible to bank a considerable profit with relatively low risk. Uniswap and Aave do this now.

How does this actually work?

Getting started with Uniswap is relatively straightforward, however, you will need to make sure you already have an ERC-20 supported wallet setup such as MetaMask, WalletConnect, Coinbase wallet, Portis, or Fortmatic.

Once you have one of those wallets, you need to add ether to it in order to trade on Uniswap and pay for gas – this is what Ethereum transaction fees are called. Gas payments vary in price depending on how many people are using the network. Most ERC-20 compatible wallet services give you three choices when making a payment over the Ethereum blockchain: slow, medium, or fast.

Slow is the cheapest option, fast is the most expensive and medium is somewhere in between. This determines how quickly your transaction is processed by Ethereum network miners. Right now the gas fees on ETH 2.0 are high. That is great for ETHER owners because it uses ETH supply up to lower the supply and this makes ETHER less centralized the more it is used by DeFi application. So in essence I am saying these decentralized apps and tokens are what is driving ETHER real value right now.  It is not ETHER itself.   It is a giant feedback loop being built in the DeFi space.  The more Aave, UNI, UMA, and MAKER money they move, the better it is for ETHER price.  

If my thesis is correct over the next 4 years we should see ETHER price moves move away from BTC moves and it should happen after these DeFi apps keep driving capital across the DeFi ecosystem.

Now that I understand this space well I think each one of these DeFi apps is fully composable onto many other businesses that will get built on ETH 2.0.  I personally think banks are going to favor ETH 2.0 because they believe it is a centralized platform they can control. DeFi apps are going to make ETH 2.0 more decentralized.  So I see Aave, UMA, YFI, Maker, as the main competition for banks in the next few years.  They have a huge advantage because the yields they are paying on crypto exchanges cannot be matched in conventional banking.  Banks however, know when interest rates go negative money will flow out of their bank into something else.  They will adopt blockchain and hope their clients use their payment rails into the world of crypto.  I think they are nuts to think this way.  DeFi is the best way to unbank and this is why I love these coins over the next 5 years.   These coins compete with one another, but unlike banks, they fit together like lego blocks in the DeFi system and there is no longer a financial problem of Bank of America connecting with JP Morgan in this financial world. I think that is a really valuable that legacy banks won’t understand how to adapt too.  I think Avanti bank in Wyoming is going to disrupt them in a big way.  If you do not follow Caitlin Long you should.  She is a Wall St. veteran who is now going fully digital with Avanti.  She has deep ties to Kraken and to Senate banking committee via Senator Lummis.

My Take

  • Senator Cynthia Lummis has been assigned to the Senate Banking Committee.
  • Lummis has been vocally pro-digital assets in both her candidacy and since taking office.
  • Lummis said she plans on forming a Financial Innovation Caucus to educate her fellow senators on emerging financial technologies.  She was key in changing Wyoming laws for the benefit of Kraken and Avanti who are both based in Wyoming.  She is going to be a big player in the Senate for Bitcoin.

The Office of the Comptroller of the Currency (OCC) granted another crypto-focused firm conditional approval to operate as a national bank.

Protego will join Anchorage as a banking editor with approval from the federal government, according to a new announcement from the U.S. banking regulator.

Protego & Anchorage aim to serve institutional clients interested in digital assets. The Seattle-based firm plans on being a “vertically integrated and fully regulated bank built on blockchain.” Now, as a nationally chartered trust bank, it can hold, trade, lend and issue digital assets to clients. These will be its four primary services, according to the bank.

However, Protego is still in the organizational phase of development, according to the OCC’s announcement. It will have 18 months to meet the terms of its conditional approval. It will be able to convert to a national trust bank when it begins to operate. Currently, it’s a Washington State-chartered trust company.

I am not sure which lego block DeFi app is the most valuable yet, so I decided to spread my bets across a bunch of them.

This video lays out why the leaders of ETH 2.0 cannot be trusted.

Tolerance of ambiguity is a necessary condition for creativity for wealth and health creation.

Tread carefully with your bets on DeFi.