1. Quick recap of The North American Bitcoin Conference Miami
I had the pleasure to discuss all things decentralized in the lovely confines of Miami Beach this past weekend. The conference had a bit of everything: a rare attendee dressed in full suit and tie (but accented with multiple face tattoos), a Robot-Bitcoin Jesus sighting and a beleaguered CEO rolling with a personal security contingent. The rhetoric against fractional reserve banking got a bit tiring to listen to after a while, but there were lots of interesting people to meet and a few great presentations. Below are three to highlight:
So the clock has just begun on Bitcoin’s acceptance more broadly. Crash or no crash, we should expect a significant increase in the level of institutional adoption this year. Specifically, a large number of companies will put together groups focused on what Bitcoin means to them — and as early as next year we’ll start to hear people ask “What’s your Bitcoin strategy?” in much the same way people asked “What’s your social media strategy?”
Clever though it is, the system has weaknesses. One is rapid consolidation…As the bitcoin price continues to fall, consolidation could become more of a problem: some miners are giving up because the rewards of mining no longer cover the costs. Some worry that mining will become concentrated in a few countries where electricity is cheap, such as China, allowing a hostile government to seize control of bitcoin. Others predict that mining will end up as a monopoly—the exact opposite of the decentralised system that Mr Nakamoto set out to create.
5. R3 Advisor Tim Swanson delves into bitcoin transaction data
Tim has posted two fascinating articles. The most recent is a deep dive into the supposed growth of bitcoin transaction volume. And this shorter post on payment processors lays out very clearly the need for wider bitcoin adoption to relieve price pressure:
The current supply pressure on a daily basis: aside from a couple firms such as BitFury (which according to some sources has around a ~$180 total cost of production), miners as a whole end up having to sell the majority of coins each day (~2,000 – 3,000+ coins) and as a whole, merchants process about 5,000 – 6,000 coins a day. So this means 10,000 coins x 365 days or 3,650,000 coins. Thus, to maintain a $300 price with that sell pressure the market needs to have ~$1 billion a year in capital come into this space. And to maintain a $1,200 price with the same merchant/miner behavior the market would need to have ~$4.4 billion.
Q: Are you excited about the potential of Bitcoin in systems like these as a way to keep fees low and have the system work robustly in the global sense?
A: There’s a lot that Bitcoin or Ripple and variants can do to make moving money between countries easier and getting fees down pretty dramatically. But Bitcoin won’t be the dominant system. When you talk about a domestic economy, [you must have] the idea of attributed transactions, where if you sent it to the wrong person you can actually get the transaction reversed. [And a traditional system] doesn’t have this huge fluctuation where the value of your account is going up and down by a factor of two. We need things that draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.
An amazing profile on the true honky-tonk hustler who has been keeping the beat and the peace for Willie Nelson for decades:
As Willie explained to an associate who’d wondered why he kept an a—– like Paul on the payroll, especially when he couldn’t keep time as a drummer: “He’s saved my life.” More than once. Besides, as the singer Delbert McClinton has observed, “Everyone in this business needs an a——.”