49 Comments

Another phenomenal article by Lord Satoshi's VP of fiat banking affairs. Arthur's posts are the most insightful of ANY financial analyst in the market today - he has a supremely unique ability to mix the horrifying fiat complexity and dread with the hope of a Lord Satoshi/crypto future in comical and educational terms that entertain throughout. I cannot recommend reading multiple times to truly absorb it all.

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Another Arthur Hayes face-ripping tour de force. HODL.

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My guess is the Alt is Filecoin, Hayes got me onto Token Terminal after saying check the protocols that are making money/revenue and Filecoin is top 3 in revenue generated on token terminal & Arthur would see that daily. Plus with Filecoin releasing FVM & lilypad tech for AI & compute over data it has to up there on his list. Plus his family office is based in Singapore and Filecoin is all over the Asian markets...

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Hi Art, the best indicator is the ISM for the next bull run, it is forecast to peak in Feb 2025 with a 6 month tail into Sept/October, we are currently in recovery/growth phrase, when it gets above 50 the game is on!!. http://uk.investing.com/economic-calendar/ism-manufacturing-pmi-173

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Bear in mind though, that FOMO delusion may be losing some of its effect with each cycle. Filecoin’s oligarchy may be paying themselves the fees to create an illusion of adoption, analogous to ICOs that buy their token (over and over again as EOS ostensibly did with their numerous ICO auctions, HEX etc) from themselves creating an illusion of massive investment.

Filecoin is just another in a long succession of shitcoins like Ethereum and pretty much everything that’s not Bitcoin.

https://anonymint1.substack.com/p/decentralized-data-storage-and-delivery

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Hi Art, it really is hard to tell, it really is just a hunch. But I just checked Token Terminal & Filecoin made $20 million in fees in the last 180 days to put that in perspective ICP made $150k. I just remember Hayes saying follow the money and that he checked Token Terminal every morning to see what was making money, it always amazed me no one was talking about the revenue FIL was generating. Plus it is down 99% from its all time high, the network is still growing & building. The dev team is one of the best in business. I’m just trying to take in all probabilities, they have the data & storage space, they are building the compute over data element and thats what AI really needs. I also really like AKT but can’t see it being that. He’s doing a keynote at Token 2049 in Singapore on the 13-14 Sept and he is going to talk about it there so we will find out soon enough. Good Luck Pete

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I think it’s Filecoin too Pete.

The vast majority of share in the decentralised data storage space, the compute on that data will be critical when AI comes in so there’s a catalyst that will drive utility and adoption.

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Peter, you ever evaluate TAO (Bittensor)?

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Never heard of it Chip, do you have a links to the whitepaper or website?

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Bittensor.com

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Chip I’ve had a very quick look, it looks very similar to Akash & Render networks. If it was me I think I’d look at Akash & Render and my reasoning is you’re going to get more bang for your buck. The supply is a lot lower in Bittensor but I reckon it would be hard to get a 10x on it. Where I can see Akash & Render doing 10x both in the next bullrun. I hope this helps in some way.

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Cheers let me have a look.

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Peter, I just checked and I don't see that Filecoin has anywhere near that amount in fees over last 180 days - am I missing something?

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30 day sum of $1M?

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Hi Chip, you need to click on revenue fees and you should see it, if I could attach a screenshot to help I would but that doesn’t look like substack allows it. Plus Token Terminal everything used to be free but they have but a lot of it behind a paywall recently. In the protocol’s lifespan it has Filecoin has amassed $1.5 billion in revenue & Eth is $8.7 billion.

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Hi Chip that sounds about right, I’ve just sent you the screenshot via @ X/twitter mention :)

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Thanks, appreciated

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Wtf is this shitcoin you speak of Lad?!

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Don't tell me it's $ASTO!

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Filecoin is just another in a long succession of shitcoins like Ethereum and pretty everything that’s not Bitcoin.

https://anonymint1.substack.com/p/decentralized-data-storage-and-delivery

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Two horses one ass... fuckin' classic

Dying to know the AI shitcoin... my guess is still AKT and the 99% comment is a bit of misdirection.

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Luke Gromen use that term a lot, you should check out his work!

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Guy above says Filecoin. Looks to be down 98.5% from it's 2021 highs...

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Interesting you should quote Dr. Charles Calomiris on fiscal dominance. He's also saying BTC will go to zero within a decade :)

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Not like his plan will succeed or he knows what the f*ck he is doing. Find my very detailed comment posted today.

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He knows what he is doing. Wouldn't be reading it otherwise. That said I look at all perspectives and Dr. Charles his view that stablecoins will capture all the utility and make BTC tumble was conveniently left out of the equation by Mr. Hayes :)

That said Mr. Hayes has shared his opinion that he believes BTC will capture utility in that IOT/AI will need hard decentralized currency so BTC.

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I was referring to Dr.Charles not knowing what he is doing. You can never do just one thing, that is what these sophists always forget to incorporate in their model. Have you read my detailed comment yet?

https://open.substack.com/pub/cryptohayes/p/kite-or-board?comments=true&commentId=41383074

Regarding your added detail, Dr. Charles may be correct about stablecoins capturing all the value for the consumer. But firstly that would be the stupidest assertion that a peg to the dollar would provide any utility for the wealthy who want a hedge against the dollar. And for the consumer/user they may be algorithmic stablecoins which are entirely decentralized, especially when these can be a decentralized way to never pay any tax on capital gains on the appreciation of the underlying asset. There are many variables in play and I seriously doubt Dr. Charles is fully knowledgeable about all the technology.

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Why do you seriously doubt he doesn't know enough on Bitcoin, he's not some congress dude taking bribes. Mr. Hayes respects him enough to quote him.

You can hear Dr. Charles his opinion around this time https://youtu.be/aQ2Sth40Lvk?feature=shared&t=1216

The elite don't want a hedge against the dollar, they want to keep the dollar dominance right where it is. They're happy to get free money while normal plebs get inflated away. It's the informed non-elite (and countries that saved up all US debt & now realize the US is about to stimmy their own economy at their expense) that need to hedge. Hence they're reluctant to buy up bonds now.

BTC also still doesn't have a solution to the end of the mining incentives to maintain the decentralized network?

Mr. Hayes also mentioned the extra debt isn't a guarantee assets, like BTC, will go up.

"Just because a government borrows doesn’t mean the money supply will increase and subsequently drive inflation. The debt burden only boosts the money supply if there are no natural buyers.'"

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Thank you for your points and thoughtful discussion. My reactions.

The 10% wealthy are not the 0.1% elite (c.f. blog for my comment https://open.substack.com/pub/cryptohayes/p/fungible?comments=true&commentId=41390187). The wealthy are increasingly aware that the world is mired in inescapable deglobalization and financial repression (https://open.substack.com/pub/cryptohayes/p/double-happiness?comments=true&commentId=41381042). Thus they need a hedge against the demise of the U.S. dollar as the world’s reserve currency by ~2028-2033ish (after the dollar strengthens into the WWIII Thucydides trap ~2027ish) and moreover against the unavoidable, more totalitarian forms of financial repression looming such as capital controls and Hotel California-esque CDBCs. So while the elite may not want the 10% wealthy to diversify, they will not be able to entirely stop them from doing so, although the authorities will try and probably first with more subtle forms of financial repression such as directing them towards ETFs of hard assets (e.g. Bitcoin) wherein those fools will not control their private keys. Hayes explains that these wealthy have numerous OTC options for averting capital controls. Also Hayes corrects points out that the status of the U.S. dollar as the reserve currency limits the capital controls that can be effectively put on the U.S. dollar. So if TPTB elite are forced to go hardcore totalitarianism on the U.S. dollar (e.g. canceling cash, etc) then they have sealed the fate of the loss of its reserve currency status which will transfer to Bitcoin because no other entity (not even China as a regional power) is capable of reigniting the globalization model that erected the U.S. dollar as the world’s reserve currency.

One solution to the end of the programmed mining reward (wherein models of transaction fees seem to imply incentives incompatibility to mine the longest chain, although this is disputed) is by that time TPTB who I think launched Bitcoin (as I wrote they’ve been announcing it on a 10 year cycle since the 1988 Economist Magazine cover story) will surreptitiously control 51% of the mining. Bitcoin fanatics like Hayes ostensibly do not (at least publicly) appreciate how diabolical Bitcoin is in the long-run.[1] Akin to death and taxes, the power-law distribution of wealth and fungible resources is undefeated. I have for nearly a decade been publicly positing that Bitcoin is TPTB’s plan to implement the final stages of Biblical Revelation where all the control and wealth will be controlled on the proverbial Seven Hills (of metaphorically Rome or Jerusalem).

Hayes’ entire correct thesis in his blogs is that there will not be enough natural buyers of sovereign debt. That is a given because Europe hit the ZIRP bound and more saliently because government debt-to-GDP ratios are beyond the level where they could sustainably pay a positive real interest rate. Thus the only buyers are some form of financially repressed. I believe this is inarguable. I am wondering if you have even comprehended his blogs when you quote that out-of-context under the pretense of there being any hope in Hades of natural buyers for sovereign debt. The only natural buyers will be short-term speculators of a pending recession.

Hayes quotes him only w.r.t. to their plan for financial repression, not Bitcoin expertise. The first words out of Dr. Charles’ ignorant mouth at your linked timestamp are strong evidence that he is totally ignorant of Bitcoin. Satoshi obviously didn’t design Bitcoin to be a transacting medium, when he intentionally set the block size to 1 MiB and then disappeared (with the Wikileaks excuse conveniently provided to him by Rothschild) when he was being pressured to increase it or justify the hard limit. Bitcoin was designed to kick off all the plebs and be a global reserve currency asset with only 7 transactions per second for the entire world. You really should wrap your mind around my comments about how the 2017 soft-fork will be destroyed by a poison-pill (“anyone can spend” of pay-to-script-hash) that Satoshi put in Bitcoin.

Dr. Charles can only think of currency in terms of a medium-of-exchange, and he forgets that reserve currencies are a unit-of-account. He is conflating, ostensibly because the dollar did. But throughout history there were two-tiered currency regimes.

While he is correct about stablecoins being preferred for a medium-of-exchange, he seems to forget that if stablecoins are not decentralized then the bilateral (i.e. permissionlessness) is lost. And you can not have an algorithmically backed stablecoin without an underlying non-stablecoin, decentralized crypto asset.

18:15 timestamp in Dr. Charles’ explanation of why he thinks Bitcoin will decline to 0, he thinks the only utility of the Bitcoin is as a payment system. This is egregiously myopic. The world will naturally gravitate to a reserve currency, and the void left by the natural, unavoidable destruction of the U.S. dollar’s role in that regard because of deglobalization forced by end-of-line, global debt-to-GDP ratios means that there will only be Bitcoin available to fill that looming void.

Btw, I forgot to mention that one of the key drivers of CBDC is that it’s a regulatory end-run around the political unpopularity of increased taxes, given they enable negative real interest rates on savings (i.e. financial repression) thus a hidden tax.

[1] Additionally I wonder if Hayes even knows that if you do not store your Bitcoin in addresses that start with a 1 (not 3 nor bc1) then you will have all your Bitcoin donated to the miners circa ~2028. This could be a very costly ignorance for him. I am thinking he does not even read the comments here.

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Peter, how are you playing it?

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Outstanding!

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Great artilcle.

Thx for the provided information Arthur !!!

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Incredible article. Thank you

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Holy moly, another great article!

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This was a delight to read. Thank you so much! One can only wish to have such a clear understanding of capital markets as does Arthur Hayes. Thanks for sharing

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enjoyed the thoughts, i have some questions though.

wasn't Trump president for all of 2020 though? and would there not be lag effects on the purchasing power from all the print print in 2020? how is "inflation and raises accounted for" in the two charts you present? just asking don't hurt me

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All Hail Lord Satoshi!!!

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ICP?

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Imagine paying tuition for higher education economics courses when Professor Hayes drops this type of quality knowledge to degens on the bird app for free

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