I guess the Satoshi NFT does exist, its called Bitcoin. So to the extent that crypto is the future, more and more people will want to own the historical NFT that started it all. Its tech might not be groundbreaking anymore, but its good enough to be a trusted ledger so its good enough for people to want to own this piece of crypto history. And it has lower volatility to boot
I'm getting convinced that the collectible model is the correct model to understand a lot of what happens in crypto, vs the currency model. On the currency model, DOGE doesnt make any sense nor does HEX or alot of other things (Bitcoin Gold, etc), on the collectible model, it makes perfect sense There are NBA top shots, Pokemon cards, stamps etc. These things have value to people/markets even though they are not exclusive. Hundreds or thousands of people own the same exact thing (NBA top shots are fungible tokens, not non-fungible) yet, these things have value and some collectibles, the value has endured for centuries (like in the case of rare vases, notes, etc) So, people like owning scarce things, even if they are not exclusive, even if thousands of others have the same exact thing. So, its not about exclusivity, its about scarcity. But that scarcity, needs to be measured relative to the potential market for that item. If I create 1 million monster cards but my market is entirely inside one school of children, these cards would have very little value. But if the market are 20% of the children on earth (Pokemon), the cards can all the sudden be very valuable. So its scarity vs the total target market Under this model, what is DOGE? Its basically its digital scarcity for people that like dogs and memes. How many people like dogs and memes? I dont know, but probably half of the planet, at least. HEX is digital scarcity that pay people "interest", the more they hoard it and punish them if they dont hoard it (so, it transfer value to hoarders from less hoarders). This is not to say that there aren't flaws on those collectibles, I think there are. DOGE is too divisible, its too easy to own a bunch of DOGE and be able to say 'lol, I own DOGE to da moon' because it costs so little and its so divisible. The cost of getting the rights to joke around and brag are too small, so people are not encouraged to buy more and more. It started with too big of a supply and it has no cap. So in the long-term, it will turn into the 1M monster cards to one school of children issue. Also, NFTs of dogs will compete with it so long-term, I have seen hilarious dog NFTs. Long-term DOGE will have serious problems Shiba Inu, is much worse (and probably close to worthless) because it came way later and its basically a copy cat. Markets see through that. You get a credit and benefit from being the first. I can create my 10,000 Punk collection with better art and economics today but it will never be LarvaLabs Crypto Punks. No one can recreate something with historical significance
Analyzing crypto kitties I saw that cats that have little to no value (Generation 1+) DO have value if they were born on Day1 of crypto kitties. They are called Day 1s and no one can make more of them https://kitty.news/markets/day1 These cats would be worth $5-6 on the open market if they were born another day (unless they had a rare trait, which the odds are against it), but because they are Day1s, they are worth over $3,000 From understanding collectible dudes like Gary Vee, this looks like it happens in real world collectibles as well. Historical events have value due to their scarcity (Superman comic #1, etc) This is pretty much why now I think BTC I dont think will ever be "displaced" by another crypto. In the sense that people will just leave it, sell and not value it anymore. The supply is small and capped, the price is high, the historical significance is enormeous. The beauty of the Satoshi saga is also irreplaceable. He announced the coin before he started to mine, collectible markets value more things that reflect good traits of human nature. This is like the Superman #1 of crypto, except, most of the earth is now the potential target market, unlike just people that like comics. This is not to say that ETH wont beat it in price, I think it will but I dont think it can be destroyed by another coin, even if they are way better. I used to worry about that, but under the collectible model, I no longer do
So getting the supply (float) right is crucial in order to have the perfect balance between variables that maximize market price. DOGE supply is over 100B, too much, too easy to be part of the whole movement without paying a lot. BTC is very scarce with a 21M limit. Different from nerdy programmers, real humans dont feel like true owners having tiny fractions so BTC is not divisible in that sense and that leads to hoarding and people wanting to buy more full units (or "stack sats") or to hoard more units (like stamp collectors want more rare stamps). And where ETH fits into this? Thats where the genius of the people behind comes in, these people are so smart, they knew about this all along and they came up with Minimum Viable Issuance and ETH burning. Which is basically saying 'instead of a fixed or unlimited float, we will let the market determine the float', which is fucking genius. This basically will let the market find the perfect amount to maximize the market value of the protocol. Satoshi picked his number out of thin air and it could easily not be the right number, how many people are pissed because BTC is "so expensive?". ETH will dynamically find the correct float that will maximize value and adoption. Its like the Pokemon company having a computer dynamically add or remove rare cards from the market to maximize the value of those cards Companies dont do that of course, they rather dillute everyone and make more money but ETH is doing that because the people that designed it own a bunch of ETH and they want to see it rise
When some Bitcoin people say 'maybe we need to change what we call Bitcoin, maybe 0.1 BTC should be called Bitcoin' 'maybe we should quote the price in Satoshis'. They are essentially trying to fix BTC's float problem. They are aware it hurts adoption to be quoting this giant price for a full unit, most of the world cannot afford that and they dont feel like owners of bitcoin having 0.007 But if they do change how they quote the price, it could easily lead to problems. It would be a huge mistake to quote things in Satoshis, it would essentially turn Bitcoin into something like DOGE. It would be too easy to be part of the movement (and I suspect people would ignore the Satoshi counters and focus on the historical 1 BTC) But what Bitcoin needs is essentially what ETH is doing, allowing the market to determine the float A lot of what is wrong with Bitcoin can be found on Vitalik's blog in an article somewhere with ideas of a solution. But they dont listen
This collectible model also helps me understand why Curio Cards and Kitties have drastically underperformed Punks. Curio actually came even before Punks and Kitties had a huge impact in terms of innovation (they invented ERC 721) and popularizing NFTs. Punks got the float right. There were 10,000 units all unique. No two punks are the same. Whereas Curio had 30 cards of which there were dozens of the same and some cards even more than 1,000. It doesn't feel special to own them right now, its such a big club that lots can come in. Same thing with Kitties, of which there is a float that is even bigger. 50K Gen 0 punks plus other special ones. It doesnt feel special at all. BUT That is all relative to the size of the market. Right now, its not special because NFTs are still a small niche inside of the crypto community. If they get big as I think they will, all of the sudden we will be taking about 100M people trying to buy NFTs. These historical projects all of the sudden will become a very exclusive club. If 1B people come into NFTs, then forget it, these things will be worth a crapload. And it will be a status thing to say you own Curio No X or premium kitties, just like its a status thing to say you own Punks That is what "backs" collectibles, its the status/foresight/bragging rights that you gain from owning them. People that own them usually talk about them because they are proud of what they own. They want other people to know, just like they want people to know they drive a Ferrari. There is no intrinsic value in owning a vase found in the Pyramids, except there is, the value is social, it sets you apart from other people, you are part of history, it makes you feel special and people like that a lot Similarly, owning Bitcoin (specially, lots of Bitcoin) gives you that status, that feeling that you were special and intelligent to realize that this was a breakthough technology and you were there before others were. That's the intrinsic value of it. I used to think it was the payment system, now I see that it was wrong, the payment system is a nice bonus, its part of the thesis but its the status that you get. The backing is being able to say "I was part of the ledger with lots of coins before others knew, I was part of history. I saw that crypto was a breakthrough tech, I was smarter than others. I got rich". No wonder crypto people spend so much time bragging, telling others to have fun staying poor, etc. The backing is social, so much so that the #bitcoin thing immediatly puts the Bitcoin symbol on twitter, Jack seems to know this And that's the downfall of it, in the case of BTC. Its kinda like Punks, its too exclusive and expensive, most people cannot participate so they rather hate on it and find alternatives. BTC is also too expensive, owning a tiny piece wont get you that status, at least not when people want to know how much you own. Its more like a collectible for the elites, which is great but it wont get as wide adoption as it could get if it got the float right But 21M was picked out of thin air, there was not much thinking behind it
When Taleb says 'with gold at least you can use it as jewlery'. If gold ever lost its market value (say because Musk is mining in asteroids and destroying the market value), wearing gold jewlery would have no social status. It would be the same as wearing iron jewlery. No one would think you are rich and special, you would not feel superior to other people. Any bum on the street would be able to go out and buy a gold ring for $10 and do the same. Effectively, it would inflation to the social status, diminishing its power. Women would feel insulted if proposed with gold rings "I rather have silver, everybody can have a gold ring" Its the market value that gives the status to the jewlery and that use case to gold And when he complains about bitcoiners harrasing him because of his papers, thats where he is missing out on the backing of Bitcoin. Its about people saying and writing things, you can't display your bitcoin (well, you can wear shirts and people do that all the time), its about the social status of saying 'i said Taleb was wrong being bearish at $44,000 and now BTC is at $200,000, I got rich, he didnt hahah" 'I saw that this was a valuable technology and he didn't, Im better than him'. People need to talk about their collectible, otherwise others wont know they own it, that they had the foresight, that they are smart, etc
This social backing is probably the unconcious reason why I decided to write this journal in the first place. I guess I wanted to show others that I had the foresight to see that this was a breakthrough technology and a great investing opportunity. I wanted the credit for calling it, and everybody that wants that credit, has to buy and hold BTC, then talk about it, so you get the credit for owning. Its rare to find people that own it and say nothing. In collectibles, if nobody knows you own it, whats the point of owning? (I suppose you could hold to sell for a profit one day, but most likely you will be selling to someone that will be telling others about their purchase) Usually they use every opportunity to mention that they own, that they are part of the club that saw it, before it happened in a big way I wanted to say "hey, I'm part of this breakthrough technology, and this is a piece of history"
So what backs and gives enduring value to Bitcoin, NFTs, rare comics, Dogecoin, old letters, stamps, Rai stones, old ceremics? To me the backing is very simple: the desire to be loved, admired and feel that you are special The is so valuable to people that it can lead them to pay fortunes to get peoples attention, invest huge amounts of time to gain the love of someone, fight other people, commit suicide, run for office, go to war, buy a gun etc, etc
Of course, eventually everything will go to $0. Stocks, bonds, gold, bitcoin, ETH, Rai stones, Superman #1 etc. Because one day the human race will be extinct either because we destroyed out planet (or planets) or because the Sun will explode or because the Universe has cooled down as its energy run out (and thats a certainty in Physics). But when the critics think 'better technology will displace bitcoin and it will be worthless', I think they are operating under the wrong model, like the tech model ("Bitcoin is the best crypto tech")or the currency model ("Bitcoin is a great currency for people"). That wrong model does not explain the behavior of people in crypto. The collectible model explains it, and explains a lot of other similar situations (like Rai stones and old stamps). It also enables me to make predictions, which historically would have been pretty accurate and I believe will be more accurate in the future than any other model Now, I'm not saying the Bitcoiners think like this, I dont think they do, they really think Bitcoin is the best tech and will always be the best tech. That one day it will be currency and everybody will do business in Bitcoin. So they probably operate under a tech model or a currency model but their behavior is of someone that treats Bitcoin as a collectible, like rare stamps. And I care a lot about people's behavior. To me, it says a lot more than anything else. So, yes, Bitcoin will go to $0 just like everything that is valuable in the human race when we go extinct but as a long as the internet exists, this large crypto collectible called Bitcoin will be valuable and more and more people will try to be on this ledger with as many coins as possible because they want to feel special, be loved, admired and respected to have been part of the breakthrough tech. Just like they would if they could own any other big piece of history