Understanding the Cryptocurrency Boom: A Ground-Level Assessment

I recently came across a December 1996 San Jose Mercury News article on tech pioneers' attempts to carry the pre-browser Internet's bulletin board community vibe over to the new-fangled World Wide Web.

In effect, the article is talking about social media a decade before MySpace and Facebook and 15 years before the maturation of social media.

(Apple was $25 per share in December 1996. Adjusted for splits, that's about the cost of a cup of coffee.)

So what's the point of digging up this ancient tech history?

  1. Technology changes in ways that are difficult to predict, even to visionaries who understand present-day technologies.
  2. The sources of great future fortunes are only visible in a rearview mirror.

Many of the tech and biotech companies listed in the financial pages of December 1996 no longer exist. Their industries changed, and they vanished or were bought up, often for pennies on the dollar of their heyday valuations.

Which brings us to cryptocurrencies, which entered the world with bitcoin in early 2009.

Now there are hundreds of cryptocurrencies, and a speculative boom has pushed bitcoin from around $600 a year ago to $2600 and Ethereum, another leading cryptocurrency, from around $10 last year to $370.

Where are cryptocurrencies in the evolution from new technology to speculative boom to maturation? Judging by valuation leaps from $10 to $370, the technology is clearly in the speculative boom phase.

If recent tech history is any guide, speculative boom phases are often poor guides to future valuations and the maturation trajectory of a new sector.

Anyone remember “push" technologies circa 1997? This was the hottest thing going, and valuations of early companies went ballistic. Then the fad passed and some new innovation became The Next Big Thing.

All of which is to say: nobody can predict the future course of cryptocurrencies, other than to say that speculative booms eventually end and technologies mature into forms that solve real business problems in uniquely cheap and robust ways no other technology can match.

So while we can't predict the future forms of cryptocurrencies that will dominate the mature marketplace, we can predict that markets will sort the wheat from the chaff by a winnowing the entries down to those that solve real business problems (i.e. address scarcities) in ways that are cheap and robust and that cannot be solved by other technologies.

The 'Anything Goes' Speculative Boom

Technologies with potentially mass applications often spark speculative booms. The advent of radio generated a speculative boom just as heady as any recent tech frenzy.

Many people decry the current speculative frenzy in cryptocurrencies, and others warn the whole thing is a Ponzi scheme, a fad, and a bubble in which the gullible sheep are being led to slaughter.

Meanwhile, tribalism is running hot in the cryptocurrencies space, with promoters and detractors of the various cryptocurrencies doing battle in online forums: bitcoin is doomed by FUD (fear, uncertainty and doubt) about its warring camps, or it's the gold standard; Ethereum is either fundamentally flawed or the platform destined to dominate, and so on.

The technological issues are thorny and obtuse to non-programmers, and the eventual utility of the many cryptocurrencies is still an open question/in development.

It's difficult for non-experts to sort out all these claims. What's steak and what's sizzle? We can't be sure a new entrant is actually a blockchain or if its promoters are using blockchain as the selling buzzword.

Even more confusing are the debates over decentralization. One of the key advances of the bitcoin blockchain technology is its decentralized mode of operation: the blockchain is distributed on servers all over the planet, and those paying for the electricity to run those servers are paid for this service with bitcoin that is “mined" by the process of maintaining the blockchain. No central committee organizes this process.

Critics have noted that the mining of bitcoin is now dominated by large companies in China, who act as an informal “central committee" in that they can block any changes to the protocols governing the blockchain.

Others claim that competing cryptocurrencies such as Ethereum are centrally managed, despite defenders' claims to the contrary.

Meanwhile, fortunes are being made as speculators jump from one cryptocurrency to the next as ICOs (initial coin offerings) proliferate. Since the new coins must typically be purchased with existing cryptocurrencies, this demand has been one driver of soaring prices for Ethereum.

As if all this wasn't confusing enough, the many differences between various cryptocurrencies are difficult to understand and assess.

While bitcoin was designed to be a currency, and nothing but a currency, other cryptocurrencies such as Ethereum are not just currencies, they are platforms for other uses of blockchain technologies, for example, the much-touted smart contracts. This potential for applications beyond currencies is the reason why the big corporations have formed the Enterprise Ethereum Alliance (https://entethalliance.org/).

Despite the impressive credentials of the Alliance, real-world applications that are available to ordinary consumers and small enterprises using these blockchain technologies are still in development: there's lots of sizzle but no steak yet.

Who Will The Winner(s) Be?

How can non-experts sort out what sizzle will fizzle and what sizzle will become dominant? The short answer is: we can't. An experienced programmer who has actually worked on the bitcoin blockchain, Ethereum and Dash (to name three leading cryptocurrencies) would be well-placed to explain the trade-offs in each (and yes, there are always trade-offs), but precious few such qualified folks are available for unbiased commentary as tribalism has snared many developers into biases that are not always advertised upfront.

So what's a non-expert to make of this swirl of speculation, skepticism, tribalism, confusing technological claims and counterclaims and the unavoidable uncertainties of the exhilarating but dangerously speculative boom phase?

There is no way to predict the course of specific cryptocurrencies, or the potential emergence of a new cryptocurrency that leaves all the existing versions in the dust, or governments' future actions to endorse or criminalize cryptocurrencies. But what we can do -- now, in the present -- is analyze present-day cryptocurrencies through the filters of scarcity and utility.

In Part 2: The Value Drivers Of Cryptocurrency, we analyze the necessary success requirements a cryptocurrency will need to excel on in order to become adopted at a mass, mainstream level. Once this happens (which increasingly looks like a matter of "when" not "if"), the resultant price increase of the winning coin(s) will highly likely be geometric and meteoric.

Sadly, the most probable catalyst for this will be a collapse of the current global fiat currency regime -- something that increasingly looks more and more inevitable. This will destroy a staggering amount of the (paper) wealth currently held by today's households. Which makes developing a fully-informed understanding of the cryptocurrency landscape now -- today -- an extremely important requirement for any prudent investor.

Click here to read the report (free executive summary, enrollment required for full access)

Editor's Note: The above is a guest post by Charles Hugh Smith with PeakProsperity.com.

Americans are losing faith in our justice system and the idea that legal consequences are applied equally — even to powerful elites in office.

Rep. Devin Nunes (R-CA) joined Glenn Beck on the radio program to detail what he believes will come next with the Durham investigation, which hopefully will provide answers to the Obama FBI's alleged attempts to sabotage former President Donald Trump and his campaign years ago.

Rep. Nunes and Glenn assert that we know Trump did NOT collude with Russia, and that several members of the FBI possibly committed huge abuses of power. So, when will we see justice?

Watch the video clip below:


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The corporate media is doing everything it can to protect Dr. Anthony Fauci after Sen. Rand Paul (R-Ky.) roasted him for allegedly lying to Congress about funding gain-of-function research in Wuhan, China.

During an extremely heated exchange at a Senate hearing on Tuesday, Sen. Paul challenged Dr. Fauci — who, as the director of the National Institute of Allergies and Infectious Diseases, oversees research programs at the National Institute of Health — on whether the NIH funded dangerous gain-of-function research at the Wuhan Institute of Virology.

Dr. Fauci denied the claims, but as Sen. Paul knows, there are documents that prove Dr. Fauci's NIH was funding gain-of-function research in the Wuhan biolab before COVID-19 broke out in China.

On "The Glenn Beck Program," Glenn and Producer Stu Burguiere presented the proof, because Dr. Fauci's shifting defenses don't change the truth.

Watch the video clip below:

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Critical race theory: A special brand of evil

wal_172619/Pixabay

Part of what makes it hard for us to challenge the left is that their beliefs are complicated. We don't mean complicated in a positive way. They aren't complicated the way love is complicated. They're complicated because there's no good explanation for them, no basis in reality.

The left cannot pull their heads out of the clouds. They are stuck on romantic ideas, abstract ideas, universal ideas. They talk in theories. They see the world through ideologies. They cannot divorce themselves from their own academic fixations. And — contrary to what they believe and how they act — it's not because leftists are smarter than the rest of us. And studies have repeatedly shown that leftists are the least happy people in the country. Marx was no different. The Communist Manifesto talks about how the rise of cities "rescued a considerable part of the population from the idiocy of rural life."

Studies have repeatedly shown that leftists are the least happy people in the country.

Instead of admitting that they're pathological hypocrites, they tell us that we're dumb and tell us to educate ourselves. Okay, so we educate ourselves; we return with a coherent argument. Then they say, "Well, you can't actually understand what you just said unless you understand the work of this other obscure Marxist writer. So educate yourselves more."

It's basically the "No True Scotsman" fallacy, the idea that when you point out a flaw in someone's argument, they say, "Well, that's a bad example."

After a while, it becomes obvious that there is no final destination for their bread-crumb trail. Everything they say is based on something that somebody else said, which is based on something somebody else said.

Take critical race theory. We're sure you've noticed by now that it is not evidence-based — at all. It is not, as academics say, a quantitative method. It doesn't use objective facts and data to arrive at conclusions. Probably because most of those conclusions don't have any basis in reality.

Critical race theory is based on feelings. These feelings are based on theories that are also based on feelings.

We wanted to trace the history of critical race theory back to the point where its special brand of evil began. What allowed it to become the toxic, racist monster that it is today?

Later, we'll tell you about some of the snobs who created critical theory, which laid the groundwork for CRT. But if you follow the bread-crumb trail from their ideas, you wind up with Marxism.

For years, the staff has devoted a lot of time to researching Marxism. We have read a lot of Marx and Marxist writing. It's part of our promise to you to be as informed as possible, so that you know where to go for answers; so that you know what to say when your back is up against the wall. What happens when we take the bread-crumb trail back farther, past Marxism? What is it based on?

This is the point where Marxism became Marxism and not just extra-angry socialism.

It's actually based on the work of one of the most important philosophers in human history, a 19th-century German philosopher named Georg Wilhelm Friedrich Hegel.

This is the point where Marxism became Marxism and not just extra-angry socialism. And, as you'll see in just a bit, if we look at Hegel's actual ideas, it's obvious that Marx completely misrepresented them in order to confirm his own fantasies.

So, in a way, that's where the bread-crumb trail ends: With Marx's misrepresentation of an incredibly important, incredibly useful philosophy, a philosophy that's actually pretty conservative.

This post is part of a series on critical race theory. Read the full series here.

We've heard a lot about critical race theory lately, and for good reason: It's a racist ideology designed to corrupt our children and undermine our American values. But most of what we see are the results of a process that has been underway for decades. And that's not something the mainstream media, the Democrat Party, and even teachers unions want you to know. They're doing everything in their power to try and convince you that it's no big deal. They want to sweep everything under the rug and keep you in the dark. To fight it, we need to understand what fuels it.

On his Wednesday night special this week, Glenn Beck exposes the deep-seated Marxist origins of CRT and debunks the claims that it's just a harmless term for a school of legal scholarship. Newsweek opinion editor Josh Hammer joins to argue why we must ban critical race theory from our schools if we want to save a very divided nation.

Watch the full "Glenn TV" episode below:

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