Cryptocurrency

In a surprising turn of events, it turns out that 95% of NFTs are worthless. I’m shocked. To make things even worse, all of these dead NFTs are consuming energy just by being maintained on the blockchain. That energy adds carbon to the atmosphere to the equivalent of “2,048 US homes, 3,541 US automobiles, or 4,061 passengers flying from London, UK, to Wellington, NZ” per year. NFTs were fun when we were all locked down, but can we move on and put a stake through the heart of this vampire?

When you’re right, you’re right: The amount of utopian bullshit and fake promises on a technology that doesn’t really work as anything but a speculative bubble and money laundering device should be a big red flag. Crypto is a movement based on the theory that the existing nation-state is a system rigged by billionaires, and the right response is to create a different and more corrupt order rigged by different billionaires, money launderers, and dictators.

The final results of the January Fantasy Trading Challenge were pretty ugly. Down 26.12%. The average trader did a little worse (-6.83%) than the S&P 500 (-5.54%). I’m considering doing the same thing in February. I only wish that I could put it all on Dogecoin however the rules will only let you go 20% into each asset. At some point the number go up. Maybe next month my ship will come in and I can get a fancy monkey to go along with it.

For kicks, I joined the Wealthbase January Fantasy Trading Challenge. I’ve done it in the past and it’s a fun way to try really dumb trading strategies to see what happens. In this case, I created my All-Crypto Superstars Fund on January 3rd that consisted of the following: Ticker Amount Price Total LTC 5.242 148.42 779.19 BTC 0.429 46532.53 20015.06 BITQ 934 21.38 19968.92 MSTR 35 555.52 19443.20 COIN 78 253.

Tim O’Reilly has a very thoughtful piece on web3. Since he is a guy who got many things right about web 2.0, I’m inclined to give his ideas some weight and I think he gets an essential truth about web3 right now: it’s too tied up in get-rich-quick thinking and not enough on the real value to be delivered. There will be value delivered by some of the new thinking in web3, but it’s really not clear what.

I’ve been doing some reading about web3 recently to understand what it is and what it might mean. There is plenty of skepticism about web3. The thing that bothers me the most is the premature annointing of these specific technologies as being the 3rd iteration of the web. The first (html) and second (web service, JavaScript, etc.) weren’t named until well after they had demonstrated their usefulness in practice. Maybe this specific assortment of tech will create a new decentralized web that empowers regular users.

I’ve recently subscribed to an email newsletter by Matthew Levine that I’m really enjoying. It’s mostly inside baseball stuff about finance which is tedious at times but the writing is very good. I love this quote from a recent article: One rough model that you could have for modern corporate finance is that most senior corporate executives are mostly in the business of maximizing cash flows for shareholders, because that is what they were trained to do, but lots of shareholders are actually interested in something else.

China has started to ban cryptocurrency and now it looks like the EU is following suit. The Chinese seem to be preparing the ground for the Digital Yuan and want to get rid of competition while the EU is targeting money laundering in their efforts. Although there are plenty of other ways to launder money, cryptocurrency is very useful for ransomware. Making it harder to use cryptocurrency anonymously might help make ransomware less lucrative (or at least more difficult to turn into hard currency).

I just love this quote from a Bloomburg article: Just imagine traveling 10 years back in time and trying to explain this to someone; just imagine what an idiot you’d feel like. “There’s going to be this online currency that people think is a form of digital gold, and then there’s going to be a different online currency that is a parody of the first one based on a meme about a talking Shiba Inu, and that one will have a market capitalization bigger than 80% of the companies in the S&P 500, and its value will fluctuate based on things like who is hosting ‘Saturday Night Live’ and whether people tweet a hashtag about it on the pot-joke holiday, and Bloomberg will write articles and banks will write research notes about those sorts of catalysts, and it will remain a perfectly ridiculous content-free parody even as people properly take it completely seriously because there are billions of dollars at stake.