How do you actually calculate the price of Bitcoin tokens?
We have heard a lot of superficial price speculation concerning Bitcoin in the past few years. Most of it came from people who have no education or expertise in the field of price analytics though.
That is why we caught up with equity analyst John Pitts to talk about Bitcoin, theory of money, price valuation of tokens and more.
Hi, John! Kindly introduce yourself and tell us how you became involved in Bitcoin SV.
Hi Michael! First, I just want to say I like your series. My favorite is your interview with Ryan X. Charles, which had a lot of stimulating information for a single interview.
I like to say BitCoin Satoshi Vision is the gold medal Olympic event I’ve been training for my whole life. It satisfies a culmination of everything I’ve done in my life to date, so when I discovered it I finally understood the concept which clergymen have named “the calling.”
The culmination, to which I’m referring, involves three things mainly: technology, game theory, and business.
My technology background started in school with writing BASIC into a Tandy TR-80 in about 1979 as well as entering math competitions from childhood through high school. I got hooked on science in about 4th grade when I was able to solve a problem on an International Mathematics League contest that my math-professor mother couldn’t solve right away. She was an amazing teacher, but it was a bit of a trick question which was best solved without doing math at all! The question was: if 5 people each shake each other’s hands just once, how many total handshakes will there be? It changed how I think about problems forever, from then on I savored the alternative take on things, and sought the toughest challenges. That led to Math & Physics degrees at college, and a five year stint in the nuclear submarine Navy as a nuclear reactor engineer. But tech and science wasn’t my only love—I’ve wavered to and fro.
Whereas the game theory background has been a life-long affair with games which started with Board games like Monopoly, blackjack & poker and continues today via analyzing business strategies. When I was stationed in Idaho at a nuclear prototype, we made road trips to small Nevada gaming towns after reading a book on how to count cards in 21. As a math guy I was super skeptical at first, but it worked. I only did small potatoes amounts, but found it amusing later when that story about the MIT blackjack players got popular—they added an important strategic wrinkle to card-counting which allowed them to make millions instead of hundreds by leveraging personality and sociology.
You can see how that has implications towards the foundation of BitCoin—multiple fields of study give you an edge over the one-dimensionals. It was not lost on me, but 21 led to poker, and then to business which is far more intricate and therefore interesting.
I say “back” to business, because that itch began being scratched as early as 5th grade with a pen fixing company, which I’ll never forget was capitalized with $2.50 in coins amongst some 11-year-old “partners”, LOL, and continues today as an equity research-based portfolio manager. When I handed in my dolphins (the submarine pin equivalent to “wings” for pilots) I settled on making a career of professional “stock picking,” or equity analysis/research. I specialized in looking for the best companies in the world with a 5-20 year investment horizon. 20 years of research, especially forays into financial payments companies like Paypal, Neteller, Alibaba, and Square, and that dose of alternative thinking from my childhood experience, always kept me interested in looking for a solution to what I’ve called “the #1 problem in the world”: the silent taxation of money printing. Until early 2019, I thought the ONLY solution to that problem was a return to the gold standard, but now I think it’s very possible I’ve been wrong.
Money printing began in earnest in the early 1970s with Nixon leaving the gold standard permanently, and the world’s nations have roughly been using no-asset currencies for 50 years now. Alternative money systems piqued my interest starting in 1999 starting with eGold and GoldMoney. On an interesting side note, in 1999 I also found some interesting blurbs which piqued my interest, from a Canadian company called Zero Knowledge which was making routing software that was a precursor to Tor. But every system which shirked the U.S. dollar, I found flaws. My historical research which goes back practically to the discovery of electrum in Crete, confirmed for me that all money MUST be backed by an asset or it’s doomed to catastrophic collapse. Prediction: BTC and ETH and all the others WILL go to zero over time; I’ll put that out right now in print.
In parallel with this money problem which began ironically when I (and Craig Wright, we are the same age) was born, my dives into internet and technology companies kept me a long study of how computation evolves and where it’s going. I was born at the perfect time to watch green screen mainframes turn into personal computing with the Apple II and Windows, to a server-clients architecture, to distributed clients like Napster & Kazaa, to the internet and then cloud computing. I thought it was game-over with Amazon Web Services, Google Cloud, and Apple iCloud, and again I’m finding I’m wrong! But I’ve been wrong TOO many times to ever stop looking for what’s next; plus, I’m a futurist at heart.
As for BitCoin, it came onto my radar in late 2010 or early 2011. Some say it was “bitcoin pizza” which led to bitcoin’s coming out of the closet, but I say it was Mt. Gox. Mt. Gox gave it a fluctuating price like it was frozen orange juice futures or porkbellies, and some way-off-the-radar blogs I used to read sometimes had a write-up about it. All I remember was someone calling it “nerd money,” and it was described as being used by coders to pay other coders for small jobs. I dismissed it. Then I had a partner at my New York City investment fund who came in one day asking me (the tech analyst) about bitcoin and I sheepishly had to admit I hadn’t put any real research work into it. He happened to have met Roger Ver in his jiu jitsu gym, and Roger gave everyone 1 BTC during his visit to New York. My partner at the time didn’t know anything about Roger, to him it was just “some guy” until he figured it out later when Roger got the title “Bitcoin Jesus.”
In 2011 I started paying attention, but I didn’t take bitcoin seriously due to what I’d call an investing “exclusion principle.” My exclusion principle for anything attempting to imitate money is very simple, and that criteria is described fully in the “What is Money?” article I published on Medium and CoinGeek—or the “wampum article” as my family calls it.
Exclusion is an investment method I use to maximize efficiency in finding the needles in haystacks which are amazing 10-25 year investments with ginormous returns. It means I look for easy ways to DISMISS ideas, so that I can focus on what remains. When I took iOS programming course at the exclusive Lambda School last year, I learned binary trees (which are part of Bitcoin’s scaling methodology as “Merkle Trees”), and if you’re familiar with those my exclusion principle is similar if not more drastic. In binary trees you eliminate the bad half, and do that over and over ‘til you find “the one”. My exclusion is more like: find a rule which eliminates 95% noise and then search the 5% for the answer.
The MONEY exclusion principle:
Money is ALWAYS backed by an asset, else it’s simply not a candidate for being money.
Turns out from 2010 to 2019 I didn’t dig deep enough into Bitcoin itself. I had looked at Litecoin when it came out—excluded it. Looked at the new wave in 2016, I think I focused on Steemit as an interesting concept since I was into writing, and dismissed it. I still like Steemit’s platform for writing, but I recognized in mid 2017 its undoing was going to be the messed-up money-tech it was using. To me it was a classic Ponzi scheme, and it really had me dismissing everything in crypto at that point. I should have known there was a needle in that almost trillion dollar haystack, but the collapse in 2018 of cryptocrap convinced me my exclusion principle was saving me LOTS of time and money. There was one last itch to scratch which led me to BSV, the love of games led me down the path.
Who is Satoshi Nakamoto?
It’s this kind of puzzle which entertains me greatly—a conundrum to solve. It’s very hard to hide in this world, but this Satoshi was pretty good. I used to read anything that had to do with that topic, even after I determined cryptocurrencies were Ponzi schemes. In late 2018, I came across a tweet stating that the Andrew O’Hagan article is a good read but maybe for the reverse intent of the author. The article had the opposite effect on me, and this Craig Wright guy seemed to possess every characteristic with which I’d grown familiar meeting and studying the great business stories from my career as a tech company analyst. I began reading and watching everything he wrote or produced.
Each article or interview made it more obvious to me he was Satoshi, and after a couple months I was convinced 100% it was him. YET, I still didn’t think of his BSV spinoff, nor its mongreloid cousins BTC nor BCH as anything but Ponzi money. But he was the only person making any coherent sense on the topic of bitcoin, and I had read all the material put out by the Antonopolouses of the world. They all just sounded like coders speaking in gobbledy-goop nerd terms, making themselves sound smart but not backing up anything logically. I knew from my dotcom era days how to spot what I call “overspeak” as a technique to deceive Wall Streeters who don’t know their tech. Financial types routinely fooled Silicon Valley geniuses in the area of finance, the Google IPO was a perfect example of this. But Silicon Valley was also able to fool Wall Streeters via the same method, taking advantage of the other side’s ignorance. I liked to play the fool on both sides, and see what they’d say. So when I read all these supposed BitCoin “experts” it sounded like tech double-speak. GOOD tech is explainable to layman; bad tech isn’t—but can be made to sound the part. Doctor Wright was different, his articles had logic, and math you could verify yourself.
What really tipped me over, was Craig’s write-ups on both selfish mining and BitCoin Turing complete. Selfish mining was easier for me, because I could read the nonsense Rizun and others were using to discredit CSW. They used a basic probability-101 argument to make it seem like Craig didn’t know the first thing about math. I couldn’t verify Craig’s math, not my specialty area as I’m an algebra & calculus guy, but I knew enough to understand the boundary conditions of the problem. Rizun et al didn’t. Craig’s answer, just like his answer to Szabo (who for a short time I thought was Satoshi, until I read his California seashells blog and realized Szabo didn’t understand money) on Turing Completeness was VERY exact and described the boundary conditions of the actual problem PRECISELY. I’ve got news for Rizun, he lost that bet, and he probably knows it at this point.
But all of this was of zero consequence to me, in the realm of digital money solving the money printing problem, until Easter Sunday 2019 when I was listening to a YouTube of Dr. Wright and he hinted BitCoin was a commodity and backed by information. I’m pretty sure it was CSW who defined the difference between data and information to me. Data is stuff, and information is stuff but with a value. Random sentences clipped from a book is data, but listening to Carl Icahn specify which company he was going to acquire next week and why—that would be information, right? Anyway, on Easter Sunday I had an “a-ha moment” stemming from how computation would back the money. Chills ran down my spine, and I realized Wright might have it, the first version of money which can compete with gold and silver in 3,000 years.
I began telling everyone I could, both Wall Street and retail level, to get themselves a heap of BSV. I did a quick analysis of the best stocks of my lifetime, and determined BSV was never going to go lower than it was then $50-60. I can show that analysis in a future article, it’s interesting. Now BitCoin is interesting because every time you say “I totally get it now, I understand 100% everything BitCoin does and can be”, you realize there’s another patch you don’t understand. Brendan Lee and Satoshi himself got me over to the first one at the CoinGeek Seoul conference. Brendan Lee explained how Nodes will be able to set fee prices dynamically, in about a paragraph of talking. Craig explained it in one sentence! I was floored, but I got it immediately. Just a couple months after CoinGeek Seoul, what Craig explained in one sentence happened exactly as he described: the WeatherSV & Mempool (Node or “Miner”) deal which lowered fees from 1 satoshi/Byte to 0.2 satoshis/Byte. In Physics this would be like hearing Einstein describe gravitational waves theoretically, and just a couple months later an experiment proved him (W)right. (Einstein’s relativity was completed by 1915 and it took 100 years until LIGO project proved gravitational waves in 2016!)
My favorite human being in history is Thomas Edison, with the Josephson biography as my favorite book, and I realized there was a modern equivalent walking around and no one seemed to know it. My next article describes this phenomena with historical precedent (a favorite mechanism I use in business), it’s an article about the Wright Brothers I wrote immediately after “What is Money?” but I’m still editing it in my spare time. It’s long, but almost done. Just shaking his hand was a great honor, as I consider him someone who tackled and solved a Herculean feat of intellectual achievement.
CSW is obviously a very busy guy, but you can get quick gems out of him occasionally.
The son of a gun did it to me again earlier this year as he answered my toughest BitCoin question about data-on-chain and how it would work beyond OP_FALSE OP_RETURN (which devs used in 2019 and still use today). This time he didn’t waste a full sentence, but answered in ONE WORD! OP_PUSHDATA. I spent 6 months researching that word to death, and the result is my “What is BitCoin?” article.
I average making about $5 per month from writing in 2020, I don’t know how you do it Michael!? But the work put into an article like that, isn’t for the $5 per month, and it’s more than just a labor of love too. It’s research I’m going to implement in SLictionary and Hilarist, the apps I’ve been developing with partners since the CoinGeek Seoul conference. Understanding BitCoin’s secrets is the key to being able to create a great business model that withstands the legions of competition I think is coming in the next 12 months. Do you know Game of Thrones? I’m not much for fantasy, but I can assure you “The Whitewalkers are Coming” while everyone is running around discussing who is Satoshi in the small BSV community of Westeros! LOL.
Posted this the day before my “a-HAH” moment that BitCoin was an actual commodity and therefore had real value. Immediately began recommending 1-10% position in BSV which back then was $50-60. CSW’s videos & articles were instrumental.
I’m now over 1.5 years into heavy research into BitCoin, the original protocol, and I STILL have a nagging “big question” on my mind. Like clockwork, I think I understand BitCoin 100% and there’s another layer to the onion to unravel. Lately I’m tackling the dust limit and pruning. You can read in the last third of my article what I’m thinking, and it’s crucial to me and my partners for how we will design our apps so we can easily kick dirt at the “White Walker” Johnny-come-latelies. (Never underestimate a dim but determined opponent).
I’m climbing the chain with my questions again, asking the best minds I know in BitCoin—been conversing with Brendan Lee, Xioahui Liu, unwriter, Shishido, and others. I suspect this time CSW might be a little more coy, as he’s got patents to protect as well as products like TeraNode and Metanet protocol to unleash to the world. He remains a secretive nut to crack, the bugger! Again, perhaps I can describe this nature in the Wright Brothers article? As a writer you’re never sure if the reader is receiving what you’re transmitting, you know what I mean, Michael?
The more I learn about BitCoin SV the more convinced I am that it’s one of the greatest inventions of my lifetime. Because of that opinion, I’m devoting the rest of my working life to doing as much as I can in the BitCoin ecosystem.
You are not only researching and thinking about Bitcoin SV, but you already build on it with your project “SLictionary”. Tell us about that, and have you got anything else in the work concerning BSV?
SLictionary is going to be the world’s best dictionary, by leveraging micropayments to get rid of uneconomical advertising clutter and using money as an incentive to make the most efficient word/vocabulary ecosystem ever built.
The SL stands for Self Learning as well as Structured Language, but really the whole strategy is designed from incentivizing people. We tap the fervor for words amongst a certain type of literary geek—such as myself and partner John DiFelice. He is a data / back-end expert & full stack developer but also a Renaissance Man in the Satoshi mold. John came within a thesis defense of his doctorate in chemistry (long story), then began a life of coding and has that great quality I look for in anyone, the ‘Can Do Spirit’. Things which would take me a month to do, he can conquer in a day. He learned React in a couple weeks, enough to get version one of SLictionary off the ground and running with Money Button which sort of required React. What’s under the hood at SLictionary is REALLY exciting.
I’m more of the surface guy and I’ve attempted to hint at how much lies beneath our simple start page by incorporating our smooth moving but perplexing motif which I call the “Tom Baker Alphabits vortex” (after my favorite Doctor Who doctor and an old 1980s-era cereal)
Here’s a short list of what SLictionary will do at scale:
- LEARN: Provide the best most efficient definitions which help people learn faster.
- EARN: Like BitCoin in 2009, we rely on others having the vision of what we will be, and chose to start SLictionary with just ONE definition, call it our genesis block– “SLictionary”. It’s our community of “Word$miths” who will earn 70% of the revenues, similar to the App Store.
- BURN: When a user has that light-bulb turn on above his head, from looking at the definition a creative Word$mith created, she can vote and pay that helpful Word$mith for the proof-of-work.
That’s base camp for us, there’s SOOOO much more to this story, and I can’t wait to reveal each and every piece as it comes out. We think we have a chance at becoming a top 10 internet site, with a valuation in the trillions in 25 years. Our vision really is that long, so that’s why it’s important to me to really research every nook and cranny of BitCoin to make sure we’re making full use of it.
We think many others will copy our business model over time, but in different areas. This is why I don’t mind being as open as possible. Even if someone copied us and out-spent us to a lead (think Facebook vs say Snapchat) I have a lot of pivots and nuances I can add to stay ahead for a very, very long time. In business, it’s a fine line between overbuilding or overtweaking the thing you’ve built that works for people, and adding new things which enhance the experience and take it to a higher level.
We are working out the last of the bugs with the base dictionary layer, but you can help us by playing around with SLictionary AS we build it. We don’t believe in hiding, so we release our warts too along with new features. Although the commercial dictionary has been around since Webster in 1806, we consider this a green-field opportunity because the big 10 dictionaries haven’t innovated much in a very long time.
“Word Bounty” is one of our business processes and game-theory innovations, and I think it makes us a word-complete dictionary. I like to say we’re the slowest dictionary on average, but get faster every day with each new definition on a highway to becoming the FASTEST dictionary on average. While we’re slow NOW, we’re actually the MOST word-complete dictionary ever invented, and that’s the power of Word Bounty. Word Bounty allows us to say we have every word defined, and every FUTURE word defined as well. If you can type it into our search engine, we will EVENTUALLY define it. By ‘we’ I mean our Word$miths. Word Bounty will also be of special interest to anyone wishing to make money, paid in BSV, for doing small but important tasks. Recently we’ve been able to onboard people to BSV for the first time without using a bank account or on-ramp, with the help of Word Bounty.
Let me make another prediction now. SLictionary won’t be done, until “Art” is one of the most searched words in our dictionary. Art? My 4 year old knows what art means; I bet you’ve never looked up “art” in a dictionary in your entire life.
How will we do it? We’ll get a great artist like Banksy to submit an original digital artwork under the definition of “art” or “masterpiece” and we’ll put it immutably on-chain, timestamped and authentic as the original piece (with a future product we call Word$mith Guaranty which uses OP_PUSHDATA and my findings with pruning/dust-limit). Why would a great artist do it?
We’re a “Gallery of Words”. We think people won’t just search SLictionary to get the difference between “affect” and “effect”, we think they’ll come for the CREATIVITY. As I tell overly coder-monkey types, or “Spoks” as I call anyone who thinks too logically… “Don’t hate me because I’m beautiful”. That’s an old bit from a 1980 ad from my childhood:
SLictionary aims to be beautiful as well as highly technical and instructional.
We think an artist like Banksy could “get LIT” from lightbulb fees, forked from our 5,000 satoshi (1 penny) search fee. The math is something like: 100 million people come to see Banksy’s exclusive digital art piece under “art” for 1 penny per viddy, and Banksy makes $1mm per year, or $10mm every 10 years. SLictionary will be the world’s CHEAPEST art gallery. A “Gallery of Words” indeed.
Did you ever hear of a locally famous burger joint called “In N Out” in California? Their “hidden menu” (Try ordering ‘Animal Style’ if you don’t eat buns!) is our inspiration for SLictionary’s naughty side– which we hide from the kids using several methods.
SLictionary is our substrate, we have a much bigger market to tackle once we have it at a self-reliant ecosystem of the curious Knowledge Seekers and the beautiful creators known to us as Word$miths. (On “seekers”, we are going to change “Enter a word to search” on our main page to “Seek and you shall Find”) What’s coming next will lead to our eventual tagline:
“If BitCoin is Data Island (Manhattan, Hong Kong, Singapore, Bahrain, Great Britain, Japan), SL Corp is an Information City built atop it”
I haven’t been able to talk about my other project, an iOS comedy app for iPhone called Hilarist which precedes SLictionary. It’s had some very tough hills to climb because it’s so unique. We’re trailblazing with this one, because Apple has some tight requirements surrounding “cryptocurrencies” and has only allowed wallets as of WWDC 2019. If you remember, HandCash was a Test Flight-only app for a long time, and they had the advantage of being a wallet which Apple accepts. We’ve had to build our own wallet because there isn’t a lot of support in the BSV community for iOS apps yet, and my partner Joshua Kaunert hacked BitCoin SV to make one for us.
What’s the #1 joke in the world by revenue? We’ll soon find out! By allowing people to enter old jokes, Hilarist will also reverse-solve comedic copyright which doesn’t even exist yet!
What we’re trying to build with Hilarist we think Apple will love, once they get their head out of their ass and realize Craig is Satoshi, and BSV is BitCoin. You probably can’t tell from that statement, but that’s love of Apple which gets me hot under the collar, not derision (I’m from Philly, where Santa gets pelted with snowballs LOVINGLY at football games). Apple’s like that parent you love dearly who’s being stubborn on a RARE instance you know is right (Love you Mom!), but isn’t budging yet. When Apple comes around, she’s gonna be much richer for what we and many other BSV apps will have to offer them. We’re going to be great for Apple’s App Store, they just don’t see it yet.
Once Hilarist is released for all of you to test, we think another long journey can begin. My partner in that project is yet another “can do” guy. Josh is out of Chicago—a fellow Lambda-Schooler who broke through a < 5% acceptance rate and an even steeper course-completion rate—which I won’t discuss in deference to Lambda School. Let’s just say, Josh was a top student among a handful of hard-chargers who dodged a lot of weeding-out to become a great coder. Once you get a taste of our Test Flight release, you can hit me back for more on what Hilarist will change in the world. If we execute, we will create a brand new micro-industry that really didn’t exist before, and use it as a substrate to a much richer business edifice which will compete with the likes of Comedy Central.
In one word: COMPUTATION.
I think that’s the best word for it, and I was happy to see Craig use that exact word in his wonderful Theory of Bitcoin series with Ryan X. Charles. But what I mean by computation has a slight bit of depth to it. We can break it down a little bit, but I think it’ll be broken down much more by the Node community, starting with TeraNode and services I think TAAL is going to release in concert with the brilliant minds at nChain such as Donnelly, Shadders, and many others. (There isn’t one person at nChain or CoinGeek/Ayre I’ve conversed with who isn’t just a fantastic mind—going to CoinGeek Bitcoin Association conferences to me is like attending Church– a wonderful respite)
This is just files on-chain, and the OP_PUSHDATA opcode (in the BitCoin scripting language) is center stage here. Think of Bitcoin tokens as lockets, and with OP_PUSHDATA4, for instance, you can store 4 GB of data at a clip inside the “locket” known as a bit or satoshi. I don’t think we’ll be using 1 bit satoshis YET, but I think we’ll be using smaller and smaller UTXO sets (above a lowering dust-limit set by the Node marketplace) as time progresses and the BSV money deflates as it should.
Valuable data is information, and that information can have a value well, well above the value of the bitcoin UTXO set into which it’s stored. This is the bit in my article about buildings on top of land. Open land in Manhattan has value, and an income-generating 100-story office building ALSO has a value—a BIGGER one than pure land. You can also think of container shipping industry. Those huge boxy metal containers are somewhat expensive, yes? Someone told me an empty one can be in the tens of thousands, and during huge demand>supply fluctuations in the market, even higher! The price of empty containers, which fluctuates with supply-demand, is what the BitCoin price IS. What’s INSIDE a container, it could be loaded with 5 carat diamonds and worth billions, or it could be Don’t Touch the Charmin toilet paper but typically the value of the goods INSIDE is worth more than the empty container price, yes?
If a container was loaded with old “ET” games for the 1970s-era Atari game consoles of my youth, they’d be worth less than feces. That game was trash. The container would be worth more EMPTY. The ET games are just “data”, not “information”. You empty it and hope the plastic doesn’t cost you environmental credits to dump into a volcano, and you sell the container to a shipping company for market price! In my article What is BitCoin, this is my “Little Old Lady in the Shoe” house example. Empty the land of it’s rat infested house, and erect a 100-story skyscraper in its place which hosts members of the billion-dollar Yankees. Going back to SLictionary, if Banksy were to put an original digital art piece into the definition of “Art”, we’d host it inside a UTXO (coin), and THAT coin would be worth more than a fungible BitCoin token, right? Keep doing that over and over, and the remaining empty fungible tokens of BitCoin rise in value just like Manhattan open-land prices rise with the stories of the skyscrapers around it!
If you have information and data and empty containers, you need transactions too. These have a cost, thus Node or Mining Fees. It’s my rail network example from the “What is Money?” article.
BitCoin SV is valuable because it stores original one-of-a-kind Banksy’s on SLictionary or Larry David’s latest one-liner in Hilarist UTXO sets, but you want to access those things and that takes transactions. Those transactions can be complex, or “smart contracts” as people have called them, written in either Forth-like BitCoin scripting language, or Xiaohui’s excellent Scrypt higher level coding language (or Shadders’s new template presented at the recent first BSVDevs conference.) Going back to the rail network bit or the definition of “monetas” from the article, transactions represent the value of the NETWORK. Money derives a value from the actual gold and silver, but it ALSO derives value from the mint which controls it.
That picture of Julius Caesar on the Solidus and Denarius doesn’t get there on its own, and neither does the monetary system which allows everyone to accept the money and trade with it. That’s the BitCoin network, and it’s created out of thin air by node providers such as TAAL, Mempool and others. Their “proofs of work” puzzles are similar to the ornate “Grand Central Station” of the NY Central Railroad or “Penn Station” of Pennsylvania Railroad. Heroic beautiful symbols of excess profits. I hope to live long enough to see TAAL Tower rise above the CN Tower, and it’ll be built with Bitcoin SV.
This is a taste of the complexity, enough for 99% of people, but it’ll be more complex as time goes. If you want to see more of the complexity coming, I suggest you simply look up Amazon Web Services or Google Cloud’s price menus. There’s a lot going on and many different prices for different services. You can expect BSV to be just as complicated if not more.
It also sheds some light on a fraud coin like Ethereum. Storing data on it is fruitless, you’re better off with Oracle or IBM or AWS. Transacting is even MORE absurd, it’s costly! Why would anyone choose it? The only applications on BTC and ETH are trader-focused, and that’s for a reason. It’s all ETH and BTC can do! To have REAL money, nodes must get big, and for nodes to get big and not suffer nasty sell-offs which ruin the network, the network must have big blocks and UTILITY.
In a way I feel bad for the owners of a half trillion worth of cryptocrap, they’ve been misled by greedy spruikers (inSLic) into thinking that digital nonsense does what BSV does. They’re going to lose 100% of their investment if they HODL (inSLic). But I don’t feel too bad, because they’ve been warned, and if anyone wants to do the work to verify CSW = Satoshi and BSV = BitCoin there’s SO much information out there at this point. It’s utter stubbornness which prevents anyone who can read or listen from learning its elegant truth.
As an equity analyst, you are busy predicting the future. What is your prediction concerning Bitcoin SV’s future in general?
BitCoin SV has a super strong chance to be human money in the future, but it doesn’t have to be. BitCoin is a commodity called Information, or Computation, and that’s enough to ensure its existence despite any type of governmental challenges. Craig built BitCoin to last from day one, by not hiding it or making it anti-government.
Dr Wright ultimately solved the problem many coders before him did not via:
#1 Economics: Adam Smith-ian incentives
#2 Law: Abiding by all local laws
#1 solves Byzantine Generals problem, doubleSpend, scale, speed, security etc
#2 solves gov't shutdown, demise of predecessors pic.twitter.com/8IWwlv1iHy
— John Pitts (@EquityDiamonds) July 18, 2020
BSV is the opposite, it’s open, and inspires GOOD government. BitCoin will be like a magnet to any nation who embraces it and understands its power. I suspect certain leaders will ban BitCoin just like the United States made gold illegal in 1933 (yeah, THAT happened). This will be very bad for a nation who does this in the future, just as it would be terrible if any leader banned electricity. I’m assuming the reader isn’t Amish (love those guys, they rebuilt my wife’s horse barn and it’s amazing now—if I had another life I’d join them as I’m an old soul), and progress is considered good. For this reason, BSV will survive turmoil.
This is the most important thing I have to say on the topic of BSV’s future. Quite simply, BSV is deflationary money and will go up with usage. If you want to understand BitCoin fundamentals, follow block size, average transactions per block, and read my future articles which will occasionally talk about REAL fundamental valuation techniques for BSV’s price. I don’t believe charting works, it sometimes SEEMS like it does for short periods, but eventually chartists lose it all due to what the surfer in me calls “rogue waves”. Resonance is my favorite Physics. When you get north of two-body motion in simple Newtonian Physics, really really strange cycles emerge which are imperceptible to 80-year human life. BSV has actual business fundamentals, and I touched on one of the fundamental ways you can value BSV yourself, by adjusting the assumptions, inputs and predictions of BSV’s growth parameters. Block size matters. If your cryptocurrency isn’t growing block size and transactions/second, it will die. Promise.
As for the BSV ecosystem, WOW! I’m already impressed. I don’t remember joining Money Button, but I’m firstname.lastname@example.org and it was over a year ago, and I felt like I was the LAST guy in BSV. You’ve got guys like Steve Shadders and Ryan X. Charles and many others who started off in BTC and then switched to the correct fork every time, hats off! But I just onboarded a guy last night and he’s email@example.com. Hence, growth yr/yr is north of 500% and some metrics are much higher than that!
But CAN you do better? Than Ryan X. Charles here? Having the Word$mith’s handle publicly shown presents one of SLictionary’s most interesting dynamics—much different from a typical dictionary. Humans aren’t all SERIOUS nor all FUN and neither is their language.
Let me assure you, in business it’s VERY rare to find growth that high. You might not think there’s been big growth in the last year, but that’s what the early part of an exponential curve looks like. Compared to the “hockey stick” [as we called it on Wall Street before “S-Curve” became the hot replacement lingo (NOTINslic)] the 2020/2019 growth will look like nothing. So don’t get comfortable. Again, the Whitewalkers are coming for BSV and it’ll have a 1999-style growth at some point in the future.
I also have another article written you can preview on Bit.sv about the TIME aspect of BSV’s valuation. I think BSV price growth will seem PAINSTAKINGLY slow to many who want “Lambo”. I’m planning on releasing the article with a picture of a geezer laying in his bathing suit on his Lambo, and I’m going to change the title to “BitCoin SV: The Get-Rich-SLOW Scheme”. It’s my story of how great wonderful companies grow; always slower than frauds.
Frauds have the liberty to lie (like you wrote about in your Vitalik Buterin article) and there’s no cost, right? Vitalik is a little greedy man who can at zero cost lie in public about how caring and wonderful he is. But name something he’s actually done other than copy BitCoin, and insert some Solidity code into it while screwing up the protocol so it doesn’t scale. Vitalik, Adam Back and 1-Meg Greg are “Get Rich Quick” schemers. I lived through 1999, I was shorting everything that moved that year, and it was VERY painful. It took almost no work to uncover the thinly veiled frauds, which is why it’s so easy for me to see right through fake-intellectuals like Vitalik (have you listened to some of his interviews, pure nonsense), and he’s the BEST of “the others”.
The rest, like the Lee family hucksters, are pure money-grabbing carnival barkers just like Audiohighway, Bids.com, and PurchasePro from the dotcom days. Ever hear of them? Actually it’s worse, because the cruddy dotcoms had to at least BUILD from scratch. Think about Litecoin with respect to when you first learned what plagiarism was in school. I had a non-caring teacher once in English, and kids were copying the summary of Hardy Boys books, on page 1, and handing it in. They’d change maybe a half dozen words and think that exonerated them from plagiarism! This is funny, but when grown-ups do it in public, not as funny. Unfortunately this is what “open-source” has caused. I’m all for the open-source movement for certain purposes, but it doesn’t exist to allow a blatant copy, change a number by 10%, and call it your own creation. Charlie Lee sold it as “digital silver” to suckers, unloaded all his pre-mine cryptocrap at the top, and now he’s a “respected” entity? This is a current flaw in our world culture—many people don’t care HOW you made your money. If making money was the only goal, I would’ve become a Televangelist. 1-800-SEN-$2ME. Praise Be!
No. 20 years from now, I know it’s hard to believe, but Vitalie Byutes will just be a cartoon character that very few oldsters remember. If you’re 29 now, come talk to me when you’re 49, and we’ll see if you remember these names. I fought the CEO of a company called PurchasePro like Daniel fought Lions, and I don’t even remember the guy’s name. I remember Reed Hastings, Rich Barton and Jeff Boyd tho.
Here’s the thing about that slowness of the price rise in great companies or investments: Apple and Google and other great stock stories unfold over a couple of decades, and they seem boring by comparison to high-flyers of each year; BUT over time, they generate massive alpha in the 30-50% per annum range—simply unbeatable! That’s what you hope for BSV if you actually believe in it. If you’re hoping for $19,000 BSV in 2021 like BTC hit $19,000 in late 2017, I think you’re going to be disappointed and probably lose money. If you consider BSV an investment for Lambos, I suggest you think of it as education-fund money for your kids or grandkids instead. I’ve got 3 wonderful children, so i can say that’s not a bad outcome. (The absurd price of college, and the emerging technologically-inspired solutions like SLictionary, is an article for another day)
Since the digital asset sphere was mainly driven by superficial price speculation in the past years – instead of building applications and use cases—we are happy to be able to talk with you about price speculation in a more serious way. As an equity analyst, how do you try to find out the true value of the Bitcoin tokens?
I don’t spend too much time worrying about TRUE value, but I have more than one method of playing with fundamental metrics to build a price RANGE of value for BitCoin. If you read a Medium piece I wrote called “Pittsenburg Uncertainty Principle” I talk about how volatility plays into great investments.
Volatility is brutal, to make it short, but you take that volatility if you have strong conviction and you’ve done your valuation work to understand both your downside risk as well as your upside. Let me give you an example.
I recommended a HUGE position in Snapchat in Q3 2017 at around $12-13, with a long term 5-8 year price target in the $100-200 range and a worst-case downside of $3 to $4. Guess what happened? First Snapchat went up 50% and I thought I had really nailed the timing. Then Evan Spiegel changed his popular app too fast and lost momentum which wasn’t regained for a full year.
That stock went to $4 in December 2018, ouch! You have to plan ahead to take that punishment. But take it you must, because the alternative is the instance like Netflix in late 2012 during what I call the “Red Envelope” collapse. Reed Hastings made the right decision (much like Snapchat did in early 2018 but led to $20 to fall to $4 in < 1 year) in ditching red envelopes for streaming content. Wall Street HATED this move. I waited to buy that stock at around $60 using my experience for how far down in price great companies could fall during negative sentiment periods. And it was happening, Netflix fell to $80 quickly.
But I missed it. While I was waiting with baited breath for $65, Carl Icahn’s son bought every share that traded in the $80s and then Netflix became the fastest rising stock of my investment career. I’d made a mistake, one I won’t make again. You HAVE to be able to take downside risk. In this case of Netflix, the downside risk didn’t happen, Icahn’s fund was thrilled! He probably sold it too low, but it was one of the greatest purchases of all time, and much better than buying Netflix years before at even lower prices!
Netflix suffered “Red Envelope” reformation massacre in Fall 2012 and it was a generational buying opportunity if you were using the PROPER risk-reward model (and purchasing at $80-100 pre 10:1 split) rather than waiting for a certain price ($60s).
But these are advanced techniques, and I’ve had to pay for them. I’ve got a list of mistakes which shape my investing style which are far bigger than the success methods I write in my articles. I mold myself a bit like Edison, I’m not afraid to make mistakes in pursuit of becoming the best at something. I’m “over my skis” as they say on Wall Street quite often. My articles are ironically about atoning for those mistakes; they’re letters to my children. I don’t care so much if people read them, but I care if my kids do. It would break my heart to have my kids make the same mistakes I’ve made, and it’s a way I can be a good Dad by writing the stories in public, much like BSV’s blockchain is public and therefore held to a high standard by onlooking society. I think in my “What is Money?” article I mention gold rings as proof of work in marriage, but the marriage ITSELF is a public display, it’s meant to have witnesses to ensure the participants stay honorable. This is in fact the same with BitCoin’s immutable ledger, it’s public for attestation.
Latest Medium article:
Why it's been so easy to miss BitCoinhttps://t.co/xB8k2Rp7n2
Money is BitCoin
BitCoin is Computation
Computation is Proof of Work
Proof of Work is Time
& Time …well
…"Time is Money" pic.twitter.com/FpFpVxQBEV
— John Pitts (@EquityDiamonds) January 23, 2020
That’s really what my writing is, even though it can sometimes sound like an annoying teacher or braggart. Love the Bible, actually, for this reason. It contains great hand-me-down stories written by wise men, but that doesn’t mean I don’t criticize parts of it, or challenge it. But most of it is a history of the mistakes and triumphs of our forefathers. I think the next step in convincing my kids to read my stories is to take myself out of the stories, and make them pseudonymous. But I’m a young writer and have much to learn!
Recently you wrote another great article about Bitcoin, where you state:
“(…) financial types, who commonly complain they don’t know how to calculate what price BitCoin’s should trade. While many have used the market capitalization of the US Dollar or all the fiat currencies to estimate a high-side destination for BitCoin price, that’s the weaker side of valuation work. The stronger side is understanding how to calculate the RISK → what LOW price could BitCoin achieve during these early innings of expected high price volatility.”
And you go on with this:
“It’s far safer and more conservative to value BitCoin as a data network similar to Amazon Web Services, or Apple iCloud. Using this method we can get the more important number: the risk.”
Very interesting! What low price could Bitcoin SV achieve at the moment then? What is your calculated risk?
Oh boy, you had to ask a question where people are going to really hate me afterwards. LOW is my short answer, quite LOW. That said, I think I mentioned already it will take an act of God to get BSV below $50, so that’s a consolation to you? Perhaps?
Consult Ari Kuqi! He likes to be reviled (NOTINslic), ha ha, and he says $5.00! I disagree, as markets are smart and aren’t completely lacking in vision especially if the upside is so large.
But seriously, read “Pittsenburg UP”, and expect LOTS of volatility. I told people to buy at $50-60 because my experience and historical calculations told me that was the basement floor. This is something I’ve spent a LOT of time attempting to perfect. Fundamentally though? It can go below $50, sorry. At around $100 ($2.1 bn valuation) it’s a bargain and like my Netflix mistake I wouldn’t wait to buy it below that price.
The upside in BSV is very large over time. Be patient, and don’t be consumed with BSV prices. If you glanced at the price once per quarter, it’s enough.
What you SHOULD be doing is researching applications and companies within the BSV community, that’s what I’ve done since mid-2019. I helped my best friend get into a very well-known seed-round in the BSV community as of Q4 2019, and a few after that. It’s my hope he “tons it” in those investments. If you surround yourself with “rich” people, you shall be rich. Isn’t that a proverb somewhere? Be great to your friends and neighbors, don’t try to sell them BSV just because you own it. Do BETTER for them, help them buy it LOWER than you did. A happy wife is a happy life. I think Hugh Hefner said that didn’t he?
If you buy BSV, even at $250 or $500, just allow for it to really travel down after that, you never know. Have some bullets left to trickle into more. If you feel universal HATE for BSV around you, and your research still says it’s great long term, buy. If you feel universal LOVE for BSV around you, and the shoeshine guy is telling you to double down at $2,500 per BSV because it’s going to $25,000, sell some! As my Dad said, spend less than you earn and you’ll have lots of options in life others won’t. You’ll be able to buy weakness when it comes.
Allow me to quote you again, because this really is great:
“Since BitCoin is deflationary money, you should choose something responsible which allows the value of the empty token to climb to relevance and compete with the value of your information stored inside. This FORCES good decision-making”
Kindly explain this for us!
Oh boy, I edited most of that “What is BitCoin?” article with a fine-toothed comb except the last 20% or so, and I feel like I did a really did a poor job of describing my vision for the GOODNESS of pruning, the dust limit, and why they can be the best thing to ever happen to BSV.
Perhaps I didn’t draw the correlation hard enough with the ratty Little Old Lady in the Shoe house? A great city is made not by open spaces, but by utilizing EVERY inch of land. I don’t know what the smallest-ever land parcel was in the history of Manhattan, but whatever it was, it’s the same as BSV’s bit or satoshi token. What can you build on it?
Here’s a game I used to play with my wife when we were dating in NYC. I’d walk down a street where a building’s developer was forced by “city planning” to have open space, so they’d erect a tall black fence with spikes over it and there’d be some “park” grass. Typically it wasn’t lit well at night, and it was a creepy street, you felt unsafe instinctually because some creep could jump out of the shadows. I knew why it was a creepy street from living there so long, but I’d quiz her.
“Good street or bad street?” BAD she’d say. Then I’d walk down a street where all the buildings were older, and zero alleyways because one builder would literally lean his building up against the two beside it—you could almost smell the efficiency of greed. The building invaded every inch up to the public sidewalk.
“Good street or bad?” I’d ask. GREAT she’d say. She knew it INSTINCTUALLY what the city planner didn’t. Great city life is built on the chaos of filling every inch of it with value—not open space for the sake of open space. If a park is valuable, someone will preserve it with money. The Central Park Conservancy does this, and you can see the absolutely STRIKING picture I’ve used in the article is a demonstration of the power of a great society. Manhattaners, typically rich ones, have saved Central Park from being paved over like the Bush family allowed in Florida Everglades during the Real Estate boom.
Now I don’t think BitCoin SV “park-land” is going to be a thing, I’m just saying that the more BSV is UTILIZED, the better the buildings of “Information City” on the BSV land, the higher the value for us all. So why shouldn’t we prune the bad data? Is every Twetch valuable? Hell no! Are some Twetches 1,000x more valuable than the price the author received, hell yes! Save the good, out with the bad.
I think we’re seeing that develop in the community already, and when I wrote the article PowPing wasn’t out and there really was no champion for OFF-chain data. I think we learn from unwriter’s on/off-chain-data view which is on full display—all of us. The up and down motions of our apps and business valuations will arbite the best from the rest. But remember, it’s not zero sum either, so don’t be trying to pigeonhole me as pro-thisApp or anti-thisApp, life is about trying things and seeing what sticks to the wall, and then adjusting. For everything other than the BSV protocol that is!
But let me finish by saying, if you don’t think BSV rises with time thanks to the increasing value of information and its transactions, albeit slowly in my opinion, then why is it any better than the fiat we already have?
Visa and MC could lower fees from 30 cents or 10 cents to 1 cent and get more competitive. Now, there’s nuances to that statement concerning the immutable ledger difference, but my point is BSV is in fact great because it’s deflationary and rises with time. It’s MUCH more like a city than the electricity example I used in my first article. So let’s plan on this deflation, it’s not a huge leap of faith if you understand BitCoin.
Plan on the city improving, and then you don’t mind so much the threatening pruning Lin Zheming hints, or the dust-limit talk of some future Nodes vs Tokenizers debate. The market will decide these things, that’s what I THINK but also HOPE occurs. Ask Craig, not me. I think he’s holding back! LOL. Go bark up nChain’s tree about the future of OP_FALSE OP_RETURN (which I kinda hate actually and hope it fully goes away) and see what they say. I think of nChain as practically a holy organization of altruism, but i think we’ll find out in the coming years they are profit-minded like all of us, and why shouldn’t they be?!
There is kind of a controversy in the “BSV community” concerning the fact that transaction processors are able to be paid in fiat money instead of Bitcoin tokens to process transactions (“miner fees”). Kindly walk us through this a little. If transaction processors are paid in fiat for processing transactions, does that mean the Bitcoin tokens are not a necessity to “run Bitcoin”?
I don’t know enough to care about this. It’s not on my radar, and I’m just as curious as you as to why people care about it. Due to lack of knowledge on this, and you can quote me on this, I’ll just mimic whatever Ryan X. Charles said on this topic. It’s not even something I plan on researching, so excuse me on this one.
As far as I understand it, fiat will compete as money with the Bitcoin tokens in the Bitcoin network. As an equity analyst, would this way of thinking in any way change your prediction of the price of Bitcoin tokens in the future?
I think I’ll save talk on this for AFTER BSV has its first run-in with the law. Let me just say I think Jimmy Nguyen and Craig Wright are your best friends. To those from the BCH community who still don’t like Craig’s philosophy or the law-abiding nature of BitCoin, I say: You simply don’t know BitCoin and have more to learn.
Maybe there’s a quote from Sun Tzu which applies to being humble on the battlefield, but I agree with nChain and the Bitcoin Association that BSV will do WONDERS for fiat currencies, and save them a TON of money. I hope someday we know the HORROR STORIES of how much money was stolen via unkempt methodologies with paper and digital currencies. I’m sure those are highly guarded secrets, but ones which nChain and BSV might uncover and solve as relics of the past.
Smart ambassadors for BitCoin push its power for GOOD, because that’s why it was built in the first place.
Craig did all this work for us already, before he even released the white paper. He figured out that you can’t be BCH, that’s why we had the split. BCH fails because they are acting like criminals. If you support that, it’s time to grow up. Real leaders face their enemy face to face, they don’t fight from behind. In fact, if you study enough about fighting, most of the time simply facing your enemies means you never have to fight at all. This is the message of BitCoin, it’s open. If you want to be a criminal, go somewhere else and hawk your Snake Oil. But BSV is where you go to prove you’re running clean. That’s a wonderful invention isn’t it? I think I’ve said before, BitCoin is the best invention of my lifetime, and you have to go back to the transistor to find something as important. Hate Craig? Call him a plagiarist? How about THANK Craig?! Thank Calvin for saving BitCoin. If you want me to lose my cool quickly, criticize CSW or Ayre Group, they’re more above-board than anything I’ve followed in business.
I fully agree with Craig, what a shame the first thing people conjured when they saw BitCoin was Silk Road. Ross Ulbricht was dim. When you invent splitting the atom, your first thought shouldn’t be “We can slaughter entire CITIES of people in one press of a button!” It turns out splitting the atom for energy hasn’t been so economical either (Nukes don’t buy disaster insurance like their competitors), but at least they are trying to do good not bad. Every great invention has a downside, maybe smartphones are giving us brain cancer who knows? But we love them for the UPSIDE. BSV is the same. Grow up and learn that Craig and Jimmy and Calvin are great dudes fighting for the right to use BitCoin for amazing wonderful outcomes we can’t even imagine. Dislike their personality? Who cares?
Where will you share your future insights and how does one get in touch with you?
I’m trying to upgrade my $5 per month writing skills to something more where I can maybe buy my lady a nice dinner! You can find my articles in unfinished raw form on Bit.Sv for the moment, and then typically Medium for the longer formats or things unrelated to BSV, but CoinGeek for BSV-centric material. When I have time to write.
Twetch: u/462 and u/13328 for SLictionary updates (exciting stuff coming!)
BAEmail & Money Button: firstname.lastname@example.org
Twitter (yuck): @EquityDiamonds (future article coming about Twitter soon, hint: not good)
Streamanity: Diamonds in the Rough (podcast)
Medium: @EquityDiamonds or “John Pitts”
Oh, and I’ve been working on an investing podcast for several weeks with an experienced entrepreneur named Len Mazur from Texas. We will standardize on Streamanity—only when we release the first video which we just got done the initial edit. It will also be on Apple podcasts under “Diamonds in the Rough” after a buffer period on Streamanity. Here’s the link to our first episode which is about Len journeying from BTC to BSV:
Thank you very much for your efforts and your time!
Looking forward to READING your next articles Michael, rather than being the subject. Much easier. See you in New York in October I hope?
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