20 Dec 2021

We are eagerly awaiting the open of the US futures market to see what direction the markets are likely to take. Not a helluva lot going on in crypto for that matter. However, a story worth mentioning is the fat finger trouble an NFT investor experienced recently. Maybe the fat came from the tasty profits he was already sitting on having bought the NFT more than a year ago for next to nothing with its current value around $300,000.

“Max” instantly realised when he clicked his mouse that he had mistakenly listed his NFT from The Bored Ape Yacht Club collection for 0.75 Ether instead of 75. What is not being as well reported is the speed of the trader who spotted the mistake and paid over 8 Ether of “gas fees” to make sure the block chain updated its ledger almost instantaneously.

For those of you who don’t know how the Ether blockchain works, it relies on an auction process for prioritising the speed of a transaction being minted on the blockchain. This is one of the weaknesses of the old generation layer 1 protocols. The transactions per minute are pretty slow, with Bitcoin usuallty even slower than Ether. With Bitcoin you simply wait your turn, but with Ether you can jump the queue if you are prepared to pay more. Wow 8 x $4,000 = $32,000 in transaction costs, this speaks a little to some of the drawbacks to the current blockchain usability. I can tell you when it comes to Bitcoin, transacting $100 or $100 million costs the same; therein lies a weakness for me and probably speaks to why people are so dedicated to sitting on their holdings versus spending them.

Whenever Jim Rickards has something to say I usually listen, when has something to say together with the beautiful and smart Daniela Cambone I am all ears. He has written some amazing books about money, by the way.

“whatever the Fed says, they’re usually wrong” says Rickard. He in fact thinks inflation is transitory. He believes the Austrian’s (my camp) are wrong in believing that the dollar printing is inflationary. He believes the money is not leaking out into the broader banking system. Money is being printed by the Fed, they print it by buying bonds from banks. The Fed then holds the bonds on its balance sheet and the banks get the money. Here is the important point, what are the banks doing with the money? They are largely giving it back to the Fed as excess reserves. So the Feds assets on its balance sheet have grown and so has the excess reserves which means the money didn’t go anywhere. He makes this statement by asking the questions whether the banks balance sheets are growing and he says they are not.

Let us leave it here for today and keep an eye out for Omicron’s impact. I suspect Covid-19 still has 22 legs.

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