Reflections on Bitcoin Miami
What price does bitcoin go to come the next bull market?
Last week I went to the bitcoin conference in Miami, probably the most important bitcoin conference in the world (though there are many in Prague who would disagree).
I heard figures bandied about from $100k to $500k to $1m. Those kinds of numbers might sound ridiculous, but there were rational arguments for all of them. $26,000, where bitcoin sits today, would have sounded similarly implausible a few years ago. One thing this space is not short of is ambition.
Nor is it short of talent. What’s more, most of the talent is young. That’s what makes mo so excited about the possibilities. Owning bitcoin is like owning shares in the combined talent, intellect and ambition of the sector.
I had a great time. Miami Beach is a splendid part of the world, and I met so many different people. I had dinner with Michael Saylor, drinks with Robert Kennedy Jnr, played football with Saifedean Ammous and Kieron Gibbs, bantered with Eric Weinstein, philosophised with Robert Breedlove and, perhaps best of all, hung out with Jean-Claude Juncker’s former secretary (who shall not be named) He told me that, during the Brexit negotiations, he would often walk into Juncker’s office in the afternoon, to find Juncker, drunk from lunch, watching 17 Million Eff Offs of YouTube while muttering and cursing incomprehensibly at his screen. That made me smile.
I took quite a few notes during the conference - I must have heard at least fifty presentations, fireside chats, panels and so on - and I thought it would be valuable to write them up, and share them with you today. Perhaps of greatest interest are some of the things Robert Kennedy Jnr said to me over drinks on the second evening.
I’ve been to many conferences in the past and seen talks that have blown me away. Except perhaps the speech by Robert Kennedy Jnr (more on that in a moment), no single speech did that to me here . That might be a function of my age though - I have heard it all before. If I was new to the story, I might feel differently.
It is the accumulation of everything is that was so impressive.
First up, attendance. I gather numbers were down 30-40% on the previous year. Certainly, the Thursday and the Saturday felt sparsely attended. The Friday was fuller. That’s a classic bear market symptom, and bitcoin is not yet back in bull market mode. It’s still in one of its frustrating consolidations.
The extraordinary ambition of the space
At 53, I felt like one of the oldest guys there. I go to a lot of investment conferences, especially around commodities, and there is nothing like the dynamism. There are just so many young people in that 18-40 age bracket in bitcoin: whether its computer scientists and coders, lawyers, entrepreneurs, financiers, philosophers, artists and plain old merchants. They are, almost without exception, ambitious: bright and desperate to make something of themselves. They want to learn, they want to talk, they want to network. They all want the widespread adoption of bitcoin. They want the bitcoin price higher. They want their businesses to do well. They all want to be millionaires and billionaires. Most of them will succeed. Many already have.
It can get a bit religious at times, as author Michael Lewis observed in his fireside chat with Arthur Hayes, but that belief and zeal is essential. If nobody believed in it with such passion, bitcoin would not be what it is. (I loved listening to Michael Lewis, by the way. He is a writer, who has learnt to keep his opinions out of his stories. “It doesn’t matter what I think,” he said. He also caused great mirth when he admitted that his bitcoins are with FTX, the fraud about which he was writing).
You might have seen my piece the other day, in which I argue that, because citizens cannot withhold taxes and because they are not armed, There Will Not Be A Revolution. An out-and-out bitcoiner would tell bitcoin is the revolution, and it is peaceful. You disarm the state when you stop using its money.
If you’ve read Bitcoin: the Future of Money?, you’ll know how much of the book I spend on the origins of bitcoin and the identity of its creator, Satoshi Nakamoto. I had one great conversation over dinner, in which the chap I was speaking with suggested that some kind of extra-terrestrial being, god or alien, released and developed the code, in order to save humanity. I found myself nodding in partial agreement. Don’t scoff. Such is the supreme genius, but also the specificity of knowledge required to put something like bitcoin together, it seemed as plausible explanation as any one individual having done it.
I went to one party in an expensive hotel and it was just so glamorous: just as you imagine a Miami party to be. You’d be talking financiers one minute, lawyers the next, coders the next, film producers the next, models the next.
I then went to another party on a rooftop with an outdoor cinema and they played a video of some of the great Bitcoin memes: so irreverent and so funny. You don’t need me to tell you about the power of comedy. They ruthlessly mock ideological enemies, especially central bankers, but they are also highly educative. Way more people have learnt about fiat money and its evils thanks to bitcoin than they have thanks to gold.
As I say, owning bitcoin is like owning shares in all of this.
Bitcoin ownership is increasing all the time
Adam Back, who devised hashcash, one of the technological breakthroughs on which bitcoin is based, pointed out a stat to me that I thought was important. There are now 1 million wholecoiners. That is one million people who, by hook or by crook, now own one whole bitcoin or more. That is a 20% increase on last tear
There are also thought to be over 400 million people worldwide who own some bitcoin. Over 70% of them are under the age of 34.
Given that there are 19m bitcoins in circulation, but probably only around 15 million in use (the others have been lost), that one million figure probably can’t get much bigger. As more and more people aim to own one bitcoin, that has to put upwards pressure on the price. “10 million people trying to get to the one bitcoin level would push the price a lot higher,” Adam argued. “Especially as many current hodlers are not selling.” That’s the beauty of having a money in finite supply.
There was a great deal of excitement about the Lightning Network, which enables faster and lower-cost transactions than the main bitcoin network. One chat between David Marcus and Elizabeth Stark spoke about the convergence of global systems around lightning, as it could prove the basis for so many different alternate digital currencies from the mpesa to airmiles.
This is something Michael Saylor also spoke about trying to build: let’s say you buy a book on Amazon. If you then rate that book, you might get a tiny lightning reward of some sats. That reward would increase, if you then wrote a review. If lots of people read that review, the reward might increase again. If the review lead to book sales, you might even be rewarded with some kind of share. This is not that difficult to do on lightning. The barriers are mostly regulatory because, whoever administers this becomes some kind of custodian or banker.
Alex Gladstein, chief strategy officer at the Human Rights Foundation, was one of the most impressive of the speakers I heard. (It’s often the way when you have just written a book on something - you are right on top of your subject). His book is Hidden Repression: How the IMF and World Bank Sell Exploitation as Development, and he described how IMF debt, default and devaluation have replaced old school colonialism with financial colonisation, impoverishing millions in the process. The alternate system that is bitcoin is, of course, the solution. This is something Jack Mallers then touched on, as he described how his app, Strike, now reaches some 3 billion people worldwide. There is a real bottom up campaign to get people in the developing world, especially the unbanked (of which there are still at least 1.4 billion), using bitcoin and lightning, instead of fiat.
But bitcoin has plenty of opponents. In Washington, they are led by Elizabeth Warren, and their main line of attack is on environmental grounds, never mind that bitcoin makes energy use more efficient and reduces waste. Perianne Boring, of the US Digital Chamber of Commerce, kept stressing, however, how much better organised and how more articulate the pro-bitcoin factions at Washington are.
Which brings me to the talk that probably had greatest impact on me, that of Robert Kennedy Jr.
There is hope yet
I did not know much about Kennedy before the conference, but I never thought I would hear such pro-bitcoin and anti-fiat rhetoric from someone who appears to have a genuine chance of becoming US President. He will have had some help writing the speech from someone who knows their onions, but Kennedy sounded like someone who’d been using bitcoin for years. You can watch his talk in full here, but let me summarise the main points.
Free money is as important to freedom as free expression, he declared, citing, first, the example of being only to shop in certain parts of China within five miles of your home, then the Canadian trucker protestors and those that supported them being were frozen out of the banking system, despite not being proven guilty of anything.
He expressed concerns about the way both technology and public health concerns have enabled the overreach of government, especially since Covid. “Bitcoin is a bulwark against all of this, a rock against the state,” he said. “As president I will make sure our right to hold and use bitcoin as inviolable”.
Biden’s 30% energy tax on bitcoin miners sets a terrible precedent, because it enables government to monitor and control how people use electricity.
He pledged to reverse government hostility to the bitcoin industry. “Bitcoin is not a security and should not be regulated as such. It is an asset in itself”.
He also pledged to investigate the possibility of giving Ross Ulbricht, who was arrested for his involvement in the darknet site, the Silk Road, a pardon.
He suggested that the environmental arguments against bitcoin are just a smoke screen for suppressing it. For example, capturing waste methane is surely beneficial to the environment, and he will encourage the industry to find ways of consuming energy more efficiently.
“Totalitarians hate anything they can’t control.” Great line.
He is not pro or anti bitcoin versus other currencies. But what he thinks does not matter. It is the job of the market, not the president of the US, to decide what is good money.
Bitcoin is a major generator of the innovation the US now needs. It embodies transparency and trust. It is a neutral currency. Unlike fiat, it cannot be used to perpetrate war and or to make rich richer
His campaign will be the first campaign in presidential history to accept bitcoin donations (through lightning network).
Bitcoin is important to democracy. There is a link between bitcoin and democracy and freedom. It carries a promise to guarantee those virtues. We need to be fortifying our democratic institutions and building new ones at a faster rate than totalitarian ones are being built. The biggest one on the horizon is bitcoin, because it can’t be manipulated. He expressed concern about AI. Support of bitcoin puts you in the same framework as those who founded the constitution. “You are the modern manifestation of that impulse”.
Later that evening I went to a party on Michael Saylor’s boat. Kennedy was there to give a speech, a speech that I found even more extraordinary than the one above. It was given extemporé and without notes, so nobody wrote this one for him, and shortly afterwards, I got talking to him.
In this speech, Kennedy, sounding like the heir to Ron Paul, made no bones about the relationship between fiat money and war. He took the boot to the US military-industrial complex, the influence of which he blames for keeping the America in perpetual war: it is their business model. He spoke at some length about his uncle, JFK’s struggle with it too.
On the subject of the Ukraine War, he felt the same complex is trying to keep that war going in perpetuity. While the initial reaction to the invasion might have been right, something has changed, he said, to turn it into a war of attrition. The aim is to bleed Russia dry with the end result of regime change. But Russia has a long history of starting wars badly, before going on to win.
Meanwhile, thousands are losing their lives. He cited ratio of 7:1 - for every Russian that loses his or her life, 7 Ukranians are losing theirs. He also cited many statistics about the money that is being created out of nowhere to spend on that war, while at home there are some 500,000 homeless in the US and many more on food stamps, who are receiving tiny amounts of government largesse by comparison. The aim is the enrichment of the military industrial complex.
I am not quite sure what to make of Kennedy chances in US politics. On the one hand, I gather he is the Democrat candidate Republicans would least like to face. Polls show him beating Trump, where Biden only draws. On the other hand, it would be highly unusual for a party to stand an incumbent president down.
Moreover, Kennedy is fast making an enemy of the US military industrial complex, which will, I’ve little doubt, use its extraordinary influence to upset his chances. He has also been highly critical of vaccine policy. That too will make him an enemy of the state.
To me, this means Kennedy’s most likely destiny is to end up exiled to Ron Paul Land, on the ineffectual sidelines. Some Americans I speak to say that is the most likely outcome. Others say say he could win. And he does have that surname …
I must say, he did not sound like the typical establishment democrat. Should he stand, I can see him winning the vote of many Republicans of a libertarian bent - the kind of people that might support Ron or Rand Paul.
Thank you very much for reading this. Please like, share and all that stuff, if you enjoyed it. If you don’t already own some bitcoin, I urge you to and my guide to getting started is here:
Disclaimer: This letter is not regulated by the FCA or any other body as a financial advisor, so anything you read above does not constitute regulated financial advice. It is an expression of opinion only. Please do your own due diligence and if in any doubt consult with a financial advisor. Markets go down as well as up. We do not know your personal financial circumstances, only you do, but never speculate with money you can’t afford to lose.