In One Statistic, Why I'm Insanely Bullish On Bitcoin and Litecoin in 2023
2022's "Naked and Afraid" bear market will be seen as necessary in retrospect - painfully necessary. Exchanges like FTX were selling imaginary bitcoin, a cardinal sin in the crypto industry.
SBF’s biggest sin weren’t his outsized political donations, his beanbag chair nap ethos, nor his company’s alleged tweaker polyamory orgy culture — the company essentially being run from a series of penthouses and apartments in the Bahamas, all socially daisy chained together, with employees regularly sleeping together… including presumably with the boss, SBF.
The nights that nasty beanbag chair has probably seen.
Lol.
FTX and its founder’s biggest sin isn’t all that though, it’s that he was killing the crypto market — bleeding it dry — if it’s true his company routinely sold “paper bitcoin,” that is, a bitcoin that appeared on a FTX user’s screen, yet had no corresponding pair of private keys or real life blockspace.
Users buying other currencies on FTX, such as litecoin and ether, likely experienced some version of the same black hole.
This depresses the price in the worst way possible: someone sees an FTX ad on TV, creates an account, buys some bitcoin — but instead of the price seeing that input, no actual buy occurs, and at some point the deposited user money is shuttled off to cover SBF’s girlfriend’s losses at sister firm Alameda Research.
If other exchanges are doing similarly disgusting stuff, they should be exposed by authorities, they should collapse.
With Fidelity offering $0 commission trades on Bitcoin and Ethereum, and other large outfits like the Robinhood App and PayPal offering access to major cryptos, these exchanges have an uphill battle anyway — even if they are completely honest and always operating on a 1:1 basis with user deposits.
Anyway, here’s the part that excites me. See that graphic above.
Despite a heavily tarnished crypto industry reputation in 2022, people have short memories. Things can and do resurrect: for ex., Jesus, the resurrection plant, tardigrades, and the career of Robert Downey Jr., just to name a few.
Crypto has always been a numbers game.
Satoshi threw something provably rare on the table, and provable rarity has never really existed in a standardized digital form. It’s a powerful innovation on its own.
If the whole world wants it, very valuable.
If the whole world doesn’t want it or finds something better, maybe not valuable.
The chart above from Bloomberg suggests, to me at least, in my view, that we are winning the numbers game. Crooked fallen mercenaries like SBF won’t be remembered as much more than footnotes in crypto’s overall history.
900 million people have used a crypto directly or indirectly at this point. I find that number staggering.
The corporate media FUDs crypto so regularly and severely lately, I think because their frail masters tell them they have to. The dam is absolutely going to break one of these days on fractional reserve banking run by incompetent pizzaheads, and when it does, there are only a few monetary blockchains that have a combination of longevity, well-supported open source developer communities, ATM networks, and point of sale processor support.
Bitcoin has the most of those things, and Litecoin appears to have the second — being the second crypto to launch after Bitcoin itself.
I hold some of both.
Changing regulatory winds could challenge the popularity of more complex blockchain projects, but “commodity” blockchains like Bitcoin and Litecoin, at least in the view of some experts, will likely avoid the coming legal maelstrom.
900 million people. That number should echo and rattle around in your head from now on if you’re a crypto fan.
-DS
p.s. this is my last Substack post of the year! I’ve been posting here for a year now, although it only feels like a few months to be honest. If you enjoy my opinions and want to dive deeper, consider paying for the full membership & research newsletter here. Or send a hearty end of year appreciation tip here. See you all in 2023!
Merry Christmas, David! Thank you for all you do. On to 2023!