⚡ StackSats Saturdays | 2021 Week#5

🎲 Crypto for online betting and gambling, 🕸 Decentralized domain names, 🗯 Is Bitcoin a bubble?

🤔 How can I use cryptocurrency for online betting and gambling?

Online gambling can be exciting and the prospect of winning big is tempting for all. However, the hype is only worth it if players can be guaranteed that the system is fair and that they stand a reasonable chance of winning each time. With crypto for example, we could create systems that are more random than centralized counterparts.

As the crypto ecosystem grows, there are now consumer applications for crypto betting for sports, making bets in prediction markets etc. Here are some of them:

One of the most critical challenges of traditional online gambling is to gain the trust of players by ensuring them that the system is not being manipulated by the casino operator, to generate one sided bet outcomes. After all, the players cannot physically view the playing card deck being shuffled in front of them or the distribution of cards on a poker table before each round. For most players, the only choice is to rely on the reputation of the online casino website and trust in the system to generate fair payouts in each round. When gambling online with live dealers, you receive instantaneous visual feedback of the fairness at work, right there in front of your eyes, reassuring you of honest operations, however a majority of online casino game operations (at least where ‘true randomness’ in mathematical calculations is required) are handled by software and algorithms. With growing concerns about online casino malicious activities, so called ‘arbitrary’ digital results are no longer seen as fair.

🤔 What is a decentralized domain name?

True decentralization means no official singular Foundation, Committee, Corporation, or entities in permanent unitary control of the protocol. The internet is arranged in layers, to decentralize the internet, we need to start at the lowest layers of the stack. Secure naming ensures user agents are talking to the right endpoints.

Blockchain domains are owned not rented. Buy the domain with a one time registration fee and never worry about renewals again. The domain is stored in your wallet, just like a cryptocurrency. No one can move it around other than you. Examples are:

You’ve been paying companies that own domain extensions like .com and .net just for the right to rent their domains. Meanwhile, even popular apps like TikTok are increasingly blocked around the world. It’s time to place ownership of the Internet into the hands of people, not corporations or governments.

🤔 Is Bitcoin a bubble?

Maybe bitcoin is a bubble…a bubble that never pops.

The only constant in markets is volatility. No one says “Gold isn’t a good store of value (SoV) because the price fluctuates” but we hear that all the time with Bitcoin. Above is the price of gold over the last 100 years. Look how “stable” that 4,000 year old SoV is!

Volatility is to be expected because cartels are manipulating the price.

Critics often point to bitcoin’s volatility as a “store-of-value deal breaker.” Why would anyone want to store value in an asset with such dramatic swings in its day to day price?

While distracting naysayers from assessing its role as a store of value, bitcoin’s volatility actually highlights the credibility of its monetary policy. The Impossible Trinity, a macroeconomic policy trilemma, explains why. As illustrated below, the trilemma postulates that, when formulating monetary goals, policymakers can satisfy two out of three objectives, not all three, as the third will contradict one of the first two.

Each side of the trilemma triangle is mutually exclusive to the others. A monetary authority choosing to fix exchange rates and allow the free flow of capital, for example, cannot control growth in the supply of money. Likewise, a monetary authority choosing to fix exchange rates and control money cannot accommodate the free flow of capital, and one choosing to accommodate the free flow of capital and control the supply of money cannot fix exchange rates.

Based on the trilemma, we can understand why volatility is a natural consequence of Bitcoin’s monetary policy. In contrast to modern central banking, it does not prioritize exchange rate stability. Instead, based on a quantity rule of money, Bitcoin limits the growth of money supply and allows the free flow of capital, forgoing a stable exchange rate. As a result, bitcoin’s price is a function of demand relative to its supply. Its volatility should come as no surprise.

Although it is still a volatile asset, Bitcoin's volatility is falling. As the institutions come in and as they buy bigger amounts, they're damping the volatility

It really depends on your streategy. If you're long Bitcoin because you believe in transformative potential, holding it for a hundred years. .

Crypto trades 168 hours a week. Every other asset trades, 35 hours a week at best and sometimes less on holidays. Bitcoin is literally the most magical, hardest working security in the history of the world. It's remarkably non volatile in that regard.

The monetization of Bitcoin occurs in a series of Gartner hype cycles. Volatility is lowest during the plateau phase of the hype cycle, while it is highest during the peak and crash phases of the cycle. Each hype cycle has lower volatility than the previous ones because the liquidity of the market has increased.

👀 Highlights of the week:

  • After Elon Musk Changes Twitter Bio To “#Bitcoin,” BTC Price Surges. (Bitcoin Magazine)

  • Skybridge Capital Cofounder Says Gamestop Activity Is ‘More Proof That Bitcoin Will Work’. (Bitcoin.com)

  • Governments Host Bitcoin Whitepaper in Defiance to Craig Wright’s Orders. (BTC Manager)

  • Dalio Expects to Soon Offer Alt-Cash Fund, Says ‘Bitcoin Won’t Escape Our Scrutiny’. (CoinDesk)

  • Ripple demands to know why Ether isn't a security as XRP defense gets desperate. (Cointelegraph)

  • After GME I finally understand Bitcoin. (r/Bitcoin)

  • Recurring Buys And Why You Should Start Doing It With Your Crypto Investing Now. (Bitcoinist)

  • Robinhood Halts Crypto Trading as Bitcoin, Dogecoin Surge. (CryptoBriefing)

  • MicroStrategy CEO to release the world’s first Bitcoin ‘playbook’ for corporations. (Cryptoslate)

  • Crypto Exchanges: Slow Shift to Classic Financial Industry Regulations? (NewsBTC)

PS - Joined our community on Quora yet? A bunch of Bitcoin ₿elievers sharing, learning and looking out for each other.

Not financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.