It's coming back to me now. I didn't finish the point about the "Bitcoin yield" that some of the Ai/Bitcoin ramps are claiming -
Smarter Web Company claims this today -
"The Company has achieved a Year-to-Date BTC Yield of 31,263% on its treasury"
This is pure lies. Googling it shows that these type of scam companies "controversially" express the total growth in their Bitcoin holdings as a "yield", which of course is totally untrue & highly misleading.
They're actually expressing the increase in their gross Bitcoin holdings, which includes new ones they've purchased with new funds raised from placings! So it's not a yield at all. In my eyes these people are all crooks.
There are no yields with crypto but they are foolish additions to holdings, unrealised gains to prospective fools, realised gains on sale to greater fools, and an unyielding insistence that just like Yazz with Crypto the only way is up!
Indeed, thanks OB. Other factors which are historical echoes of previous speculative mania, which absolutely tick the boxes for Crypto include -
1. New technology, where unknown growth means that absurd over-valuations cannot be factually disproven (yet) - similar to 1920s tech (radio, etc) boom which drove the boom in stocks, culminating in the 1929 crash & great depression, or the 1998-2000 tech boom/bust driven by the creation of the internet and Y2K, fuelling an almighty boom & bust.
2. "a pervasive sense of confidence and optimism and conviction that ordinary people were meant to be rich" (Galbraith: The Great Crash 1929)
3. "A feeling of trust is essential for a boom"
Critics of the new technology and associated speculation are ridiculed as being dinosaurs or fools, and eventually are silenced (or even switch sides and join the speculators in late stage booms).
4. Memories of previous price crashes wear off over time, so bubbles can reflate.
5. "When people are least sure, they are often the most dogmatic"
6. The 1929 crash was preceded by "exceptional number of promoters, grafters, swindlers, imposters, and frauds" - this is surely vividly in evidence again, right now in the Crypto area!
7. 1920s also saw a proliferation of investment trusts, and holding companies, owning the booming assets, sometimes in leveraged ways (again, similar to the recent creation of "Bitcoin treasury strategy" shell companies, valued at multiples of their underlying assets, in the expectation of further growth.
8. I love this quote from Galbraith too (all the above are Galbraith quotes) - "Very specific and personal misfortune awaits those who presume to believe that the future is revealed to them..."
9. "A wild boom makes a collapse inevitable".
10. "When the market fall... margin calls force further sales and insure that the liquidation will go through continuing spasms."
11. "A rising market can still bring the reality of riches. This in turn can draw more and more people to participate" - surely very true of both crypto, and US stock markets, where "buy the dip" is now so strongly entrenched (and has proven so highly lucrative) that it feels to me we're very much in a situation of multiple speculative booms happening right now.
12. More and more convoluted, even absurd reasons are provided to justify excessive valuations - eg the bitcoin treasury ramps now, where brokers say shares have upside because the premium to NAV will drop from 650% to 400% on the next equity fundraise!
13. Good availability of credit fuels speculative booms.
14. Inept Govt policy, or unregulated areas can exacerbate booms.
15. Fear of missing out, where others are making outsized profits, can lead to investors suspending disbelief in booms.
16. A general belief that everyone thinks either that the boom will last forever, or that they will be able to sell before any crash.
"The Great Crash 1929" by Kenneth Galbraith is one of my favourite finance books - it's very concise, funny, and packed full of wisdom. All the quotes above come from that little book. I'm re-reading it now, and it absolutely all applies to the Crypto boom going on right now, it's uncanny. But human nature never changes, hence why these boom & bust mania keep happening.
Yes I read that book at University so a while ago. You've piqued my interest to want to re-read it, thank you.
I recently wrote an article on Saylor and his (Micro)Strategy company that factually illustrates the madness of so-called Bitcoin Treasury. To my knowledge no outlaw Sheriff has yet pinched my article!
Anyway I mention it because a reader comment was very, very illustative of the problem: "Great article. But I don't really think anyone buying MSTR cares about its financial reports."
Isn't that the nub of the problem too?
That the complexity of the world is so great that people do not understand what they are buying - and ignore what they would see as "boring techno waffle". So instead they resort to human nature, herd instinct, do what their mates are doing, and it's my understanding that the populism of crypto is partly that it was extensively marketed via sports and sport clubs (here and abroad). Genius approach of course. "The pervasive feeling of trust" as Galbraith put it.
I also wrote an article last year looking at the supply of Bitcoin: i.e. Mining. The supply - and use - of bitcoin relies on a continuing supply of greater fools. So what happens when that ceases? Even if there are infinite greater fools what happens when every bitcoin is mined? Who provides the infrastructure for Bitcoin's continuing operation?
Anyway my approach is to observe the madness. I do have some picks and shovels ideas that indirectly deal with Crypto (on ramp/off ramp of Crypto like AUGM via its Volt and Gemini holdings, or GROW/INOV's Revolut holding) but remain resolutely of the view - like yourself - that Bitcoin will end in tears.
Great stuff, thanks OB! I'll read your article now, thanks for posting.
The only question is *when* the bubble bursts, not that it is actually a bubble. We'll probably continue looking like clueless dinosaurs for a while I suspect! Bubbles can and often do continue for much longer than anyone thought possible ;-)
Listening back to today's podcast, I mis-spoke several times on minor details, sorry about that.
It's challenging to talk off the cuff, unscripted, whilst reading, and thinking at the same time! Sometimes the wrong word comes out, but you can usually tell from the context what I meant.
Don't fret, Paul. It's great to hear you giving honest opinions, warts and all. We all misspeak every now and then and it's part of your charm. I wouldn't want to hear your podcasts 'polished up', so please don't ever think you need an editor.
As long as the French translation for ChatGPT is correct then that's all that matters, hilarious...another insightful and entertaining podcast as always, thanks Paul
In French, the pronunciation of "ChatGPT" sounds similar to "chat, j'ai pété," which translates to "cat, I farted". This is because "chat" means "cat" and "j'ai pété" sounds like the letters GPT when spoken quickly, according to TikTok users.
It's coming back to me now. I didn't finish the point about the "Bitcoin yield" that some of the Ai/Bitcoin ramps are claiming -
Smarter Web Company claims this today -
"The Company has achieved a Year-to-Date BTC Yield of 31,263% on its treasury"
This is pure lies. Googling it shows that these type of scam companies "controversially" express the total growth in their Bitcoin holdings as a "yield", which of course is totally untrue & highly misleading.
They're actually expressing the increase in their gross Bitcoin holdings, which includes new ones they've purchased with new funds raised from placings! So it's not a yield at all. In my eyes these people are all crooks.
There are no yields with crypto but they are foolish additions to holdings, unrealised gains to prospective fools, realised gains on sale to greater fools, and an unyielding insistence that just like Yazz with Crypto the only way is up!
Indeed, thanks OB. Other factors which are historical echoes of previous speculative mania, which absolutely tick the boxes for Crypto include -
1. New technology, where unknown growth means that absurd over-valuations cannot be factually disproven (yet) - similar to 1920s tech (radio, etc) boom which drove the boom in stocks, culminating in the 1929 crash & great depression, or the 1998-2000 tech boom/bust driven by the creation of the internet and Y2K, fuelling an almighty boom & bust.
2. "a pervasive sense of confidence and optimism and conviction that ordinary people were meant to be rich" (Galbraith: The Great Crash 1929)
3. "A feeling of trust is essential for a boom"
Critics of the new technology and associated speculation are ridiculed as being dinosaurs or fools, and eventually are silenced (or even switch sides and join the speculators in late stage booms).
4. Memories of previous price crashes wear off over time, so bubbles can reflate.
5. "When people are least sure, they are often the most dogmatic"
6. The 1929 crash was preceded by "exceptional number of promoters, grafters, swindlers, imposters, and frauds" - this is surely vividly in evidence again, right now in the Crypto area!
7. 1920s also saw a proliferation of investment trusts, and holding companies, owning the booming assets, sometimes in leveraged ways (again, similar to the recent creation of "Bitcoin treasury strategy" shell companies, valued at multiples of their underlying assets, in the expectation of further growth.
8. I love this quote from Galbraith too (all the above are Galbraith quotes) - "Very specific and personal misfortune awaits those who presume to believe that the future is revealed to them..."
9. "A wild boom makes a collapse inevitable".
10. "When the market fall... margin calls force further sales and insure that the liquidation will go through continuing spasms."
11. "A rising market can still bring the reality of riches. This in turn can draw more and more people to participate" - surely very true of both crypto, and US stock markets, where "buy the dip" is now so strongly entrenched (and has proven so highly lucrative) that it feels to me we're very much in a situation of multiple speculative booms happening right now.
12. More and more convoluted, even absurd reasons are provided to justify excessive valuations - eg the bitcoin treasury ramps now, where brokers say shares have upside because the premium to NAV will drop from 650% to 400% on the next equity fundraise!
13. Good availability of credit fuels speculative booms.
14. Inept Govt policy, or unregulated areas can exacerbate booms.
15. Fear of missing out, where others are making outsized profits, can lead to investors suspending disbelief in booms.
16. A general belief that everyone thinks either that the boom will last forever, or that they will be able to sell before any crash.
"The Great Crash 1929" by Kenneth Galbraith is one of my favourite finance books - it's very concise, funny, and packed full of wisdom. All the quotes above come from that little book. I'm re-reading it now, and it absolutely all applies to the Crypto boom going on right now, it's uncanny. But human nature never changes, hence why these boom & bust mania keep happening.
Hi Mr Scott,
Yes I read that book at University so a while ago. You've piqued my interest to want to re-read it, thank you.
I recently wrote an article on Saylor and his (Micro)Strategy company that factually illustrates the madness of so-called Bitcoin Treasury. To my knowledge no outlaw Sheriff has yet pinched my article!
(https://theoakbloke.substack.com/p/dont-clown-with-crypto-treasury-management)
Anyway I mention it because a reader comment was very, very illustative of the problem: "Great article. But I don't really think anyone buying MSTR cares about its financial reports."
Isn't that the nub of the problem too?
That the complexity of the world is so great that people do not understand what they are buying - and ignore what they would see as "boring techno waffle". So instead they resort to human nature, herd instinct, do what their mates are doing, and it's my understanding that the populism of crypto is partly that it was extensively marketed via sports and sport clubs (here and abroad). Genius approach of course. "The pervasive feeling of trust" as Galbraith put it.
I also wrote an article last year looking at the supply of Bitcoin: i.e. Mining. The supply - and use - of bitcoin relies on a continuing supply of greater fools. So what happens when that ceases? Even if there are infinite greater fools what happens when every bitcoin is mined? Who provides the infrastructure for Bitcoin's continuing operation?
(https://theoakbloke.substack.com/p/crypto-assets-or-liabilities)
Anyway my approach is to observe the madness. I do have some picks and shovels ideas that indirectly deal with Crypto (on ramp/off ramp of Crypto like AUGM via its Volt and Gemini holdings, or GROW/INOV's Revolut holding) but remain resolutely of the view - like yourself - that Bitcoin will end in tears.
OB
Great stuff, thanks OB! I'll read your article now, thanks for posting.
The only question is *when* the bubble bursts, not that it is actually a bubble. We'll probably continue looking like clueless dinosaurs for a while I suspect! Bubbles can and often do continue for much longer than anyone thought possible ;-)
Listening back to today's podcast, I mis-spoke several times on minor details, sorry about that.
It's challenging to talk off the cuff, unscripted, whilst reading, and thinking at the same time! Sometimes the wrong word comes out, but you can usually tell from the context what I meant.
Don't fret, Paul. It's great to hear you giving honest opinions, warts and all. We all misspeak every now and then and it's part of your charm. I wouldn't want to hear your podcasts 'polished up', so please don't ever think you need an editor.
That's kind, thanks!
I think the most glaring error was that I got muddled up about the name changes for Vinanz which recently became London BTC Company.
I wrongly said that TAO Alpha was previously Vinanz, which it wasn't, it's going to change its name to Satsuma.
Sorry for muddling up the names! But of course the key point is that they're all absolutely huge steaming turds still!! ;-)
As long as the French translation for ChatGPT is correct then that's all that matters, hilarious...another insightful and entertaining podcast as always, thanks Paul
AI Overview
In French, the pronunciation of "ChatGPT" sounds similar to "chat, j'ai pété," which translates to "cat, I farted". This is because "chat" means "cat" and "j'ai pété" sounds like the letters GPT when spoken quickly, according to TikTok users.