The Wolf Den #673 - The Biology of Bitcoin
The Wolf Den #673 - The Biology of Bitcoin
There's life in every block.
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In This Issue:
The Biology of Bitcoin
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
DCG, Genesis, and Gemini Are Making Progress
Crypto’s Contagion Reaches ATM Business
Cointelegraph’s Heros and Villains of Crypto
Dubai Regulators Continue To Lead
The Biology of Bitcoin
Biology is a subject that elicits strong reactions from people. Some love it, while others hate it. But everyone was forced to study it in school. Regardless of which group you belong to, this intro is for you, as we aim to redeem the subject and make it interesting.
Biology is the essence of life. It is what makes you and I structurally similar, yet unique at the same time. Now let me take a bit of a leap - a Bitcoin block can be conceptually compared to a cell in biology. A block, like a cell, contains all the essential elements that make up the structure and function of a larger organism (in this case, the Bitcoin network).
When studying cell structure, the nucleus is always the starting point. This is the command center of a cell, where the genetic material is housed. Similarly, the private key in Bitcoin can be thought of as the nucleus. It is a secret code that gives a user access to their Bitcoin and allows them to perform transactions. Just like the nucleus controls a cell's actions, the private key controls a user's Bitcoin transactions.
The public key, on the other hand, is like a cell's identifier. It is a name tag that is visible to the public and allows others to send Bitcoin to a specific address. The public and private keys work together to ensure the security and functionality of the Bitcoin network.
Now, let's talk about the Bitcoin block size. Like cells, Bitcoin blocks have a limited size, similar to how cells have a defined volume. Currently, the maximum block size in the Bitcoin network is 1 MB. This means that each block can only hold a limited number of transactions, much like how a cell can only process a certain amount of material at a time.
Here's where it gets interesting.
The network's nodes verify transactions within a block. Once a block is full, it is added to the blockchain and a new block is created. This creates a chain of blocks, with each block referring to the previous block in the chain. This is similar to how cells are organized into tissues, organs, and eventually a whole organism.
This is where I am really going to blow your mind.
Here is a visual.
Block ---> blockchain ---> network of nodes ---> global monetary system
Cell ---> tissues ---> organs ---> humans
Finally, let's talk about procreation, everyone’s favorite subject in biology. Consider mining to be the equivalent of cell procreation in the body. New blocks are added to the blockchain through mining, just as new cells are created in the body. Miners compete to solve a complex mathematical problem and the first one to do so adds a new block to the blockchain. This process helps secure the network, just as new cells are created to ensure the continued functioning of the organism. If the process is not perfect, both the chain and the continuation of life will suffer.
The structure of a cell is delicate and harmonious, and the same can be said about the structure of Bitcoin.
The following quote captures the essence of this topic. Although it wasn't written with Bitcoin in mind, it perfectly encapsulates the analogy we've made between the biology of a cell and the structure of Bitcoin.
“Our world is built on biology and once we begin to understand it, it then becomes a technology.” - Ryan Bethencourt
Bitcoin Thoughts And Analysis
RSI has managed to go from massively overbought to almost oversold without price changing at all.
Quite a feat, and a sign of bullishness.
When indicators reset without a price drop, bears are generally in trouble.
For now, Bitcoin remains sideways, but the fact that we have seen no major dips is encouraging.
Altcoin Charts
The AI hype created by ChatGPT has carried over massively to crypto, with any coin even related to AI making huge moves.
GRT is one of them, and is actually a legitimate project that could continue to rise if the market remains hot.
On yesterday’s live stream, we charted this coin and I came up with the blue idea, which has already almost played out. The retest is yet to happen, but we did see the drop.
As you can see in the circle, a golden cross between the 50 and 200 MAs is imminent on the daily chart, which is a lagging indicator but still considered a sign of bullishness.
There are two paths I would consider here - a retest of former resistance as support at .1582, or a drop to the key red zone that I have highlighted. The latter would require more patience but would be a “better” entry for less risk hungry traders.
My slight concern is that RSI remains overbought, but that has not been an issue for these coins as of yet.
On the flip side, notice the massive volume spike on the break of resistance.
The first target is a 2x, around 30 cents.
I do NOT own any GRT.
Legacy Markets
Stocks rose globally as investors analyzed earnings reports and awaited data on US jobless claims. US contracts signaled a rebound from Wednesday's equity losses with Walt Disney and Robinhood Markets seeing increases while Mattel saw a decrease. European equities gained with Siemens and AstraZeneca posting better-than-expected results, but Credit Suisse declined after warning of a substantial loss this year. An index of Asian shares increased with Chinese and Hong Kong stocks leading the gains. Investors will be closely watching US data for clues on policy as Federal Reserve officials have been reiterating the need for rising interest rates to curb inflation. Meanwhile, earnings season is also in focus with share buybacks being a highlight. Fed-funds futures markets are pricing in higher rates with some options traders betting the US policy benchmark will reach 6%. Standard Chartered rose after rumors of a potential offer from First Abu Dhabi Bank while Adani Enterprises fell after being reviewed by MSCI. The yield on 10-year Treasuries declined and the dollar weakened. Oil steadied after rallying 7% over the previous three sessions.
Key events:
US initial jobless claims, Thursday
ECB President Christine Lagarde participates in EU leaders summit, Thursday
Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday
US University of Michigan consumer sentiment, Friday
Fed’s Christopher Waller and Patrick Harker speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 1.1% as of 10:23 a.m. London time
S&P 500 futures rose 0.8%
Nasdaq 100 futures rose 1.2%
Futures on the Dow Jones Industrial Average rose 0.7%
The MSCI Asia Pacific Index rose 0.5%
The MSCI Emerging Markets Index rose 0.5%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.5% to $1.0764
The Japanese yen rose 0.4% to 130.85 per dollar
The offshore yuan rose 0.2% to 6.7826 per dollar
The British pound rose 0.6% to $1.2143
Cryptocurrencies
Bitcoin fell 1% to $22,722.76
Ether fell 1.1% to $1,634.45
Bonds
The yield on 10-year Treasuries declined two basis points to 3.59%
Germany’s 10-year yield declined seven basis points to 2.29%
Britain’s 10-year yield declined five basis points to 3.26%
Commodities
Brent crude rose 0.2% to $85.28 a barrel
Spot gold rose 0.3% to $1,881.66 an ounce
DCG, Genesis, and Gemini Are Making Progress
The original hope for creditors in the DCG disaster - those affected by the Genesis bankruptcy and the Gemini Earn withdrawal suspension - was to receive a dollar claim on assets. Although no one expected the return to be a dollar-for-dollar match, the recent introduction of a new plan falls far short of expectations. Under the restructuring and refinancing of Genesis's loans to DCG, creditors will now receive "convertible preferred stock," which most would consider a disappointment. Speaking on behalf of many of the creditors, it's safe to say that "nobody wants this." Furthermore, while Gemini's contribution of $100 million is appreciated, it's not enough to make up for the $900 million that was frozen when withdrawals were paused. More damage control is needed to rectify the situation.
Crypto’s Contagion Reaches ATM Business
Coin Cloud has officially filed for Chapter 11 bankruptcy after experiencing rapid growth last year. Its largest creditor is Genesis Global Trading, a subsidiary of DCG and another blow to Barry Silbert's declining empire. The now bankrupt teller company owes over $100 million to Genesis and has liabilities totaling up to $500 million, according to court filings. Coin Cloud's collapse will create a significant void in the ATM market, as it was second in terms of the number of machines in the US.
Cointelegraph’s Heros and Villains of Crypto
This year's list of "Crypto Influencers" from Cointelegraph is taking a different approach. Instead of being chosen by the staff, the community has now been given a voice, resulting in a list that features both "heroes" and "villains."
The names will be disclosed gradually, along with predictions on how these influencers will affect the crypto world in 2023. Some of the notable names on the list so far include Alex Mashninsky (classified as a villain), Su Zhu (classified as a villain), and Arthur Hayes (once a villain, now turned educator).
Dubai Regulators Continue To Lead
Dubai's Virtual Assets Regulatory Authority (VARA) has published its 2023 rulebook for regulating cryptocurrency. Any entity that issues virtual assets in the Emirate must follow the rules and apply for a license to operate in Dubai. The new rules aim to attract crypto businesses, protect digital asset dealers and investors, and curb illegal practices, with the goal of establishing Dubai as a hub for virtual assets. Dubai has made progress in the blockchain space since 2019, with several companies including Binance, Coinbase, Huobi, and Kraken obtaining licenses to operate within the Emirate. The VARA license can be revoked for a variety of reasons including violation of laws and regulations and the new anti-money laundering regulations prohibit insider trading and market manipulation.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.