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Scarcity Drives Price?

I’m gonna temporarily veer away from blabbing on about cancer and sickness and death. For this post, since I know I have a handful of Bitcoin (BTC) readers, I’m going to write about an exciting development in the Bitcoin space. I hope my fellow “sat stackers” will correct me if I’m factually wrong in what I say below.

The Rise Of PlanB

Ever since the $20K peak in BTC price in 2017, the Bitcoin space has been pretty much boring and uneventful. However, in March of last year, an unknown, soft-spoken, humble, dutch financial quant, whose handle on Twitter is PlanB@100trillionUSD, released an innovative paper titled “Modeling Bitcoin Value with Scarcity“.

Ever since its release, the paper has been gaining more and more traction in the BTC community and PlanB is being slowly elevated to celebrity status. His genius is that he pursued a novel approach to modelling Bitcoin’s price action over the last decade. His open, rigorously scrutable model is based on quantifying Bitcoin’s price in terms of its scarcity. Monthly price data from the first 11 years of Bitcoin’s existence fits PlanB’s simple, but elegant, model nicely.

The reason for all the increasing buzz in the Bitcoin community is that the first version of PlanB’s model (S2F) predicts a price of around $55K within the next four years. The second version of the model (S2FX) updates that prediction to $288K!

Lots of smart people have been trying to tear down the model but no one can (as far as I can tell) mathematically disprove his theory and analysis. Mind you, PlanB has said many times himself, it’s just a model, and as George Box once said: “All models are wrong. Some, however, are useful”. PlanB cautions that even though the real price data from 2009->2019 fits his model closely, the model could breakdown and fail at future predictions.

The Data And The Model

The figure below shows the real bitcoin monthly price data as a time series (colored dots) superimposed on what PlanB’s S2FX model (disjoint white line) predicts. Note that the Y axis is logarithmic in order to cover the large range in price appreciation over the years.

Of huge importance to PlanB’s scarcity model are the Bitcoin “halving” events that occur by design approximately every 4 years. During each abrupt discontinuity, the “flow” of BTC rewards to the miners that keep the BTC network secure is cut in half, thereby increasing Bitcoin’s Stock(pile)-To-Flow (S2F) ratio by a factor of 2. The hypothesis underlying the model is that the higher the S2F ratio of any commodity, the higher its price.

Stocks, Flows, And Producers

In my next post, health willing, I will try to understand and explain stock(piles), flows, commodity pricing (gold, silver, copper, oil, pork bellies, etc), and the quantification of perhaps Bitcoin’s greatest price-driving attribute: scarcity.

Categories: bitcoin

Tah dah!

December 17, 2019 6 comments

Wow, I just saw that my last post on this preposterous blog was published on my birthday, October 10. So, in case you were wondering….. Tah dah! I’m still alive. LOL! I’m working on another post titled “How Will They Know?“. Double-LOL!

The good news is that two of the big four of my cancer complications, dizziness and “head-ringing“, have subsided to the point where I’m not aware that they’re constantly lurking in the background and chomping at the bit to muscle their way into the forefront of my consciousness. The bad news is that the other two complications, right-leg-numbness and, especially, “Feet on Fire” (FoF), have gotten worse.

In order to keep up with the deterioration in my poor feet, I kept upping my dosage of gabapentin to combat the worsening pain until I hit the ceiling of 600 mg X 3 per day. The drug didn’t seem to be working anymore so I decided (with doctor approval) to start backing down on the dosage to see if my FoF would get worse again. The rationale was that I’d rather not be taking a drug if it’s not working. Of course, when I cut the dose in half, my FoF did get worse. I was pretty much dead in the water for a week because of the foot pain. This most recent “flare up” has subsided a bit, but the progression is at the point where there now is always some fire-like pain in both of my feet. Tis what it is.

The next thing I’m going to try in my fight against seemingly worsening FoF is alpha lipoic acid. It’s an over-the-counter supplement recommended by one of my cancer group therapy friends. I got the Ok from my pain management doctor and I’ve been taking 650 mg per day for about a week now. So far, sigh, I haven’t noticed any improvement.

As the graphic below shows, the progression from taken-for-granted,”normal“, feet to the FoF state is an additive process. You may not believe this, but as I write this my feet are numb, tingly, and painful all at once. I don’t know if I can do anything to permanently regress back to the numbness + tingling state but I’ll keep trying new meds/supplements/topicals as I become aware of them.

On the bright side, I met a new internet friend, Kiara Bickers. Kiara stumbled upon this irreverent blog while searching for information on “systems thinking“, which is a fascinating subject near-and-dear to my heart. Kiara sent me a hard copy of her upcoming book, “Bitcoin Clarity“.  I haven’t finished it yet but I can tell you that Kiara’s writing style is very endearing. It feels like you know her personally and she’s sitting right next to you trying to painstakingly and patiently explain an almost inexplicable topic to newbies – Bitcoin.  Go pre-order your kindle copy now. 🙂

 

 

Categories: bitcoin, Cancer

Rocket Ship To The Moon!

June 24, 2019 4 comments

Since I probably don’t have too much time left on earth and since I own some Bitcoin and since it just recently re-crossed the $10k threshold, I decided to reward myself with some new Bitcoin swag.

So, off I went to Etsy.com to browse the 10 bazillion pages they have with Bitcoin stuff on them. Lo and behold, I found a genuine replica of the Bitcoin rocket ship to the moon. All aboard!

If you want to get one of these innovative and creative products, go visit Emma and Josh at GeekySexToys on Etsy. They’re Aussies, so by definition they’re really nice.

Oh, and if after seeing the rocket ship you “can’t” buy one for some reason, you could be more discrete and get one of these instead….

Or yet again, you could get a commemorative “wine bottle cork” 😉

Categories: bitcoin

Uplifting Reading Material

Look at the uplifting reading material that I was given when I recently visited a pain management doctor…

Whoo hoo! My favorite pamphlet is the middle one because of what it says at the top, and the fact that all the people are smiling: “Let’s talk about the impending doom that will soon be upon you”.

Community-wide End-of-Life/Palliative Care Initiative

Yikes!

On a more “uplifting” but unrelated note, check out the new Bitcoin hat I bought from Etsy.com…

It’s much nicer than my older hat (see below) because, as one of my dear radar-nerd friends says: “It’s got more vertical aperture“. I hate hats that are so lacking in vertical aperture that you can’t see what it says when you put it on your head. 🙂

Categories: bitcoin, Cancer

An Unlikely Duo

August 30, 2018 Leave a comment

In a pseudo-creative twist on my “Wardrobe Addition” post, I decided to reposition the faux jewelry I wear on my wrists to illustrate what two topics are of utmost importance to me these days.

I can picture people who see this for the first time saying to themselves….

Damn, that bloke has some bitcoin AND cancer? I hope he’s still around when bitcoin hits $100,000/BTC.

Oh, in case you were wondering what the hell the Fitbit is doing in the picture, it was there already and I was too lazy to take it off.

Categories: bitcoin, Cancer

Unprecedented

November 29, 2017 Leave a comment

In one year, Bitcoin has risen 10X. An incredible, unprecedented event in the history of investment. A substantial price pullback seems in the cards, but the world has never seen a financial innovation like Bitcoin.

Categories: bitcoin

The State Of Bitcoin

May 23, 2017 2 comments

Well, that’s all fine and dandy for us bitcoiners. What most people that have recently “seen the light” don’t know is that the brutal scaling war going on behind the scenes can tear the price in half (at least) in the near future.

Categories: bitcoin

Bitcoin Echo Chambers

Categories: bitcoin

The Satoshi Personal Development Process

April 15, 2017 1 comment

A System Of Layers

The ability of the human mind to grasp and understand large, software-intensive, systems is severely constrained by the level of complexity that can be held within its boundaries at once.

One way of reasoning about a large system is to conceptually view it as a layered stack of increasingly abstract, reasonably distinct, entities.

“Each system level provides the context for the level(s) below.” – Unknown

At the top of the stack, we have the System layer: The set of interrelated capabilities and functions that capture the abstract ideas, wants, needs, and expectations for what we want the system to do for us.

The next layer down is the Architecture:  the patterns of structures and behaviors of the set of interconnected elements that comprise the system. Every system has an architecture, whether it is widely known or not.

The third layer down is the Design: the patterns of structures and behaviors of the set of interconnected modules within each architectural element.  Like at the system level, every architecture has a design, whether it is widely known or not.

Finally, at the bottom, where all is scrutably visible, we have the Implementation: the concrete, messy, raw materials (the source code and the hardware) which we create and mold over time to develop, build, integrate, and test, the system. In C++ implementations of a system, the source code is comprised of nested namespaces, classes, functions, and imperative statements stored on files that are compiled and linked together into a set of libraries and executable images deployed on the hardware that ultimately runs the software.

“It’s better to have a partial view of the whole than a complete view of the parts.” – Dave Snowden

When the system switch is flipped on, all the inter and intra connected layers begin an intricate shake-bake dance from which dynamic behaviors emerge to provide perceived value to (at least) some subset of its stakeholders (users, owners, builders, etc).

A System Of Systems

No system exists in a vacuum. Many four layer SADI systems are often inter-connected to provide more value to existing and newly added users. Take the Bitcoin eco-system, for example:

Many L2 systems like the Lightening and Liquid products are under development as we speak. L3 systems – who knows?

A large system can development can start unintentionally from the bottom up, intentionally from the top down, or semi-intentionally from both ends at once via an unknown, creative, iterative, schizophrenic, thinking process.

The Fused Satoshi Layers

If you read Satoshi Nakamoto’s writings, you can get some insight into the thought process he used to birth one of the potentially greatest man-made systems of all time, Bitcoin.

As Satoshi’s quote implies, instead of a neatly stacked, modular, four layer SADI system with crisply defined boundaries and interfaces, he thought about the top 3 “fused” layers for 2 years before hatching the first C++ implementation that ignited a movement intended to crush the existent, corrupt, world-wide banking system.

Other than his groundbreaking white paper, Bitcoin: A Peer-to-Peer Electronic Cash System, it is unknown if he captured/recorded any of his architectural and/or design ideas in writings and drawings like Leonardo daVinci.

Perhaps there seems to be no a-priori diagrams/notes avalailable for the world to marvel at because he kept obsessively massaging, molding, and simulating the top three SAD system layers deep inside his brilliant mind before writing/releasing the first version of the Bitcoin C++ implementation as an open source project for all to see:

Somewhat paradoxically, Satoshi also said that he wrote all the code before hatching the white paper:

So, Satoshi’s personal development process for Bitcoin seems to have been:

  1. Intense, iterative, simulative, thinking at the SAD layers of abstraction for over 2 years (like all brilliantly obsessed innovators do?)
  2. Intensive, iterative, detailed C++ coding at the Implementation level for an unknown period of time.
  3. Writing the white paper after the code was “done“.

Like life, system development is damn messy. Whether you start developing a system to implement a grand vision of yours rigorously from the top down, or haphazardly from the bottom up, you’re likely to get something working. However, you never know what you’re gonna git: 1) an elegant, highly maintainable code base, 2) a kludgy house of cards, or, most likely, 3) a semi-maintainable psuedo-mess in between those two extremes.

So, what’s the point of this post? Hell I don’t know. I just felt like writing it. Since I had no “grand vision” for what I wanted from this post, I started haphazardly from the bottom up and then bounced back and forth between bottom-up writing and top-down thinking until I decided it was “done“. In my day job, where I write C++ software, I always start from the top-down first (unless I’m trying trying to understand/localize/fix a bug in my or a peer’s sprawling code – which is, sadly, most of the time).

How about you? Do you start a new project with “Hello World” coding and pray for guidance from the good lord above to lead you to the promised land, or do you start rustling up and leading those billions of brain cells in your head that are just chomping at the bit to guide you to the holy grail of self-realization?

“The entire system also must have conceptual integrity, and that requires a system architect to design it all, from the top down.” – Fred Brooks

Sloppy Coding II

April 11, 2017 4 comments

Introduction

In the prequel to this post, “Sloppy Coding“, I showed some rather trivial, small-scoped, examples of  antiquated C++ coding style currently present in a hugely successful, widely deployed, open source code base. In this follow up post, I’ll do the same, but at the higher, class level scope.

Hey, I troll often, and this is what trollers do. 🙂

The Class Definition Under Assault

If you’re a young, advancing, C++ programmer, you may want to think about avoiding the bad design decisions that I rag about in the following class definition:

Where Are The Private Members?

After scanning through the class definition for the first time, the most blatantly obvious faux pax I noticed right off the bat was the “everything is public!” violation of the golden rule of encapsulation. If the intent was for CBlockHeader to be a user-defined type with no need to establish and preserve any invariant conditions, then it should have been declared as a less verbose struct .

I know, I know, that’s another nitpick. But there’s more to it than meets the eye. Notice the last three CBlockHeader class member functions are declared const. Since users can directly reach into a skinless CBlockHeader object to mutate its internal state at will, nice users can be unsafely stomped on by cheaters (Jihan Wu? 🙂 ) in between calls.

The cheater gets the 50, and the nice guy gets the goose egg.

Where Are The Initializers?

Notice that the CBlockHeader class constructor does not contain an initialization list – all initialization is performed in the constructor body via a call to SetNull().

An initialization explicitly states that initialization, rather than assignment, is done and can be more elegant and efficient (CppCoreGuidelines). It also prevents “use before set” errors. For a slight performance bump upon each CBlockHeader object instantiation and good C++ style, the struct implementation of the CBlockHeader constructor should look like this, no?

Nasty Pre-processor Hackros, Turtles All The Way Down

Ugh, I don’t even know what to say about the dangerous 1980’s C pre-processor macro bombs planted in the class definition: ADD_SERIAL_METHODS, NCONST_PTR (nested within ADD_SERIAL_METHODS) , and READWRITE. Compared  to the design flaws pointed out previously, these abominations make the class uncomfortably uninhabitable for a large population of otherwise competent C++ programmers.

Bjarne Stroustrup is the creator of C++ and a long time hero of mine. He’s been passionately evolving the language (C With Classes, C++, C++98, C++11, C++14, C++17) and a leading force in the community since the 80s.  Mr. Stroustrup has this to say about Hacros:

A safer, more maintainable, alternative to the current Hack-Horiffic design would be to wrap the required inline functionality in class templates and have CBlockHeader publicly extend those classes. The details are left to the aspiring student.

Fini

Ok, ok. EVERYONE on social media knows that trolls beget trolls. So, troll away at this post. Rip me to shreds. I deserve payback.

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