⚡ StackSats Saturdays | 2021 Week#7

🏋 How to tell if a cryptocurrency has strong community ⚖️ Bitcoin stability ⁉ Likeliness of bitcoin failing

🤔 How likely is it that Bitcoin will fail?

Can Bitcoin ever fail? It has survived overa decade but let us take a hypothetical case where it does fail. I think I can see two ways it might happen. The first is if there is some kind of unexpected technological crisis, such as if it turns out to be simpler than planned to "attack" it. The second is whether the governments of the world unite and outlaw Bitcoin and aggressively enforce their bans. I don't know how likely they are, but they seem to be technically probable at least. Yet governments seem unlikely to unite and stamp out Bitcoin, and technology has held up thus far, so these seem to be distant possibilities.

Bitcoin has one more thing to do as a financial asset—really it's hard to get it out of the market. A stock can be de-listed if you push the price down far enough. A business could go bankrupt. Houses could burn down. The government could fall. Yet Bitcoin and its protocol are still going to be around. If people somehow lost interest in Bitcoin and walked away and the price plummeted to near 0, they will still still be there, waiting for enthusiasm to increase again and people to pick it up again. To kill Bitcoin, essentially, I think you'd have to get governments around and somehow confiscate everyone's wallets. So the near-un-killability of Bitcoin seems like something that adds to its fundamental worth.


🤔 How can I tell if a cryptocurrency has a strong community behind it?

To be a crypto investor is to be a crypto evangelist. Like the Bitcoin maximalists, who thinks Bitcoin is something amazing to want to defend its integrity completely.

Entrepreneurs see in distributed currencies an opportunity to shake up the global payments business and land a few blows on the duopoly of Visa and MasterCard. Transferring money across a peer-to-peer computer network costs a fraction of what those giant money movers charge.

For crypto projects, a potential new business model is working directly with users. This creates a strong relationship that exists between founders and their communities. In open source projects with crowdfunding mechanisms, users are benefiting the builder by essentially fundraising for the builder.The onus is on the builder. To make that product valuable for the consumers. This feedback loop results in less noise, more signal since everyone has skin in the game.

Today, there are many cryptocurrencies, the temptation of making a fast buck repeatedly proves irresistible. A key sign of true ownership is whether the community HODLs. Engaging in pump and dump, speculations aren’t exactly the behaviors of true builders aint it?

It's better to take a 100 year view, to remove the noise and clarify things, which forces one to determine personal values. As Warren Buffet once said "the preferred holding period for a stock is forever".

Media is full of fear, uncertainty, and doubt (FUD). In the case of Bitcoin, someone will always write a report every couple of days to say it is going down, how many times do we need to have orbituaries for BTC?

In the Freehold community of HODLers, members do work on behalf of these protocols and get rewarded for their contributions to impactful things. Once trust is earned within the community, future work can be completed at much faster pace. Permissionless collaboration between engineering teams and content creators will be a trend within the crypto space.


🤔 Will Bitcoin become stable, to be a unit of account and medium of exchange, considered its current money supply formula? What conditions would be necessary?

Money has 3 properties: Store of Value, Medium of Exchange and Unit of Account.

For example, in Argentina, while the peso was used as a medium of exchange — for daily purchases — no one used it as a store of value or unit of account. Keeping savings in the peso was equivalent to throwing away money. So people exchanged any pesos they wanted to save for dollars, which kept their value better than the peso. Because the peso was so volatile, people usually remembered prices in dollars, which provided a more reliable unit of measure over time.

Usually properties of money progress in that order: Store of Value ---> Medium of Exchange ---> Unit of Account.

When people say "unit of account", they seem to want something that will reliably measure wealth somehow, or that things can be priced in without having to be constantly updated. Although bitcoin is not widely used as unit of account, it sure has the potential since it is already seen as a great store of value at this time of writing. In the crypto landscape, bitcoin certainly is the preferred unit of account alongside stablecoins.

A bitcoin is divisible by 8 decimals, so if someone sends us 1 BTC it can be expressed in 1.00000000 BTC.

Bitcoin has the right properties for the world’s money, and the more the world comes to terms with this, the more stable it will become.


👀 Highlights of the week:

  • Jack Dorsey, Jay-Z Launch Bitcoin Development Endowment. (Bitcoin Magazine)

  • Apple Pay Taps BitPay, Adds Bitcoin Payments. (CryptoBriefing)

  • Blue Ridge Bank Becomes First Commercial Bank to Allow Direct Bitcoin Purchase via It’s 19 ATMs. (CoinGape)

  • SEC Commissioner Peirce Says Market Is Ready for a Bitcoin ETP. (CoinDesk)

  • JPMorgan will get into Bitcoin ‘at some point,’ says co-president. (Cointelegraph)

  • Bitcoin is growing up fast... (r/Bitcoin)

  • 7 Reasons Why it is the Right Time to Invest in Bitcoin. (Coinmonks)

  • Wall Street Banks Gradually Being Open Towards Bitcoin. (BTC Manager)

  • America’s oldest bank BNY Mellon follows suit by introducing Bitcoin custodial services. (Cryptoslate)

  • Andrew Yang says he’d make New York City a ‘hub’ for bitcoin if elected mayor. (The Block)

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.