Month: March 2021

DLT thoughts

Thoughts… Some price related :

Bitcoin is currently a game of chicken. At some point its going to plunge and drag everything into a crypto winter. Some air is still left in the bubble but we don’t know how much… About 10 million $1400 checks I suppose … Bitcoin is purely a bubble, it is a successful experiment and Proof of Concept far outgrown its capabilities. It has no underlying value, only underlying cost in electricity. There is no significant innovation happening with bitcoin. Its current bubble value is made possible mostly because it cannot be priced because it has no underlying value.

But so much investment tied up in Bitcoin creates huge inertia preventing significant moves to other currencies. Market still views DLT as entirely speculative and therefore does not yet price in innovation, adoption, and actual real world use.

HBAR price has climbed in BTC but still bound to speculative bubble. This means Hbar "moon" won’t happen until after bitcoin bubble bursts, and a new pricing paradigm matures that looks at underlying use cases.

After next crypto winter BTC will be much smaller but retain an antique collectible value which may be significant.

Hbar may benefit directly from BTC bubble burst if big money moves directly into most promising Alt-coins. But likely trend will be broad sell off, including hbar. So there will be another buying opportunity in the 10 cent range.

Hedera hodlers and developers should keep close eye on Ethereum which is where almost all the on-chain innovation is happening right now and successful experimental projects there will point towards future directions, especially in on-chain use cases. Chainlink will continue to be important, MakerDao and other DeFi platforms will see continued innovation (and some flaws to be taken as cautionary). Other "serious" chains worth watching like Algorand, AVA, ADA, Cardano, polkadot, and probably a few others. Ripple XRP strikes me as being at the end of its life cycle, but may pull off a self-save with some actual innovation rather than complaining about SEC action.

Regulation will shape industry in significant ways. For US Howey Test remains central until a DLT-specific model is composed. Ripple case will be interesting for regulatory trajectory.

US central bank digital currency is unlikely. US dollar is trusted and distributed electronically (and via various monetary tricks) in a trusted manner. It doesn’t benefit directly from digitization. US will likely create regulations to encourage private sector payments innovation that will use DLT as they see fit. USD inflation may happen, and will probably benefit crypto holdings as well as durable assets. (buy property).

China’s digital currency is partly an effort to replace dollar as international currency, but that is secondary and depends more on politics and financial transparency than tech. China’s interest here is mainly internal, to gain more direct surveillance of economy and individuals and to gain less leverage over Fintech like Alibaba and Tencent who they see as too powerful and too risky in case of financial crisis.