Kryptonite of the Crypto Knight

By The Archivist | The Archive | 30 Oct 2021


(The Archive: Article)

Kryptonite is the crystalline structure from planet Krypton, which appears in the comic books and film adaptations of Superman. Specifically, Kryptonite is harmful to Superman.

This character, created in 1933 by Jerry Siegel and Joe Shuster, is often portrayed as the embodiment of Bitcoin, capable of feats never seen before such as flying to the moon. It is a force for good, which defeats evil and returns those in danger to safety.

In this article, I will look at the character of Superman, his portrayal as the emblem of Bitcoin and examine the perils ahead, which I refer to here as the Kryptonite. The Crypto Knight, of course, is Superman himself.

Superman - Original creation by Jerry Siegel - Copyrights DC Comics

(Above: The creation of Jerry Siegel and Joe Shuster: Superman)

 

 

 

Superman

The character was invented in 1933 and later refined and then published by DC comics around 1938. Historically and from what I can remember, Superman was always associated with doing heroic things unless for some very specific circumstances. But in general, he helps humanity and saves the lives of many.

Superman, like Bitcoin, had no obligation to do good. Both just appeared suddenly in our world and grew into what they are today. Superman has emotions however and has to decide to do good. Sometimes, he must make difficult choices. Bitcoin has none of that. Humans have to make difficult choices regarding Bitcoin. But still, both represent hope for humanity and something new, powerful.

Obviously, another common association is that of laser eyes, something that Superman did have also. This bonus "feat" is quite remarkable and doubles down on the ability of Superman to see in X-Ray if he feels like it. Superhuman capabilities like this are what makes Superman unique.

Superman Returns - Cover for the 2006 Film Adaptation - DC Comics adaptation

(Above: Cover for the 2006 film Adaptation: Superman Returns)

Couple that with Superman's ability to fly and his passing as a Nerd in everyday life. The narrative of Satoshi Nakamoto and the near religion that surrounds them make both concepts quite similar. The resilience and sheer power of Bitcoin is also an example that brings both concepts together.

Superman comics were the best sellers of comics of all time in the USA. The older copies are extremely expensive and nowadays, the medium itself is dying, in favour of NFTed copies. Yet if someone buys an NFT of a Tweet, I don't see why not buy the NFT of the first Edition of the Superman comics.

Multiple films and series have been made on the character and it is not my goal to go into details about it. Wikipedia sometimes covers subjects very well. I suggest their page for further details about the character and its media.

 

 

Supermine

For Bitcoin, it is the sheer power of mining behind it that makes it so impregnable. Essentially, since its inception, Bitcoin has made real the promise of being rewarded for participating in the Search for Extra Terrestrials (SETI) program that used to exist. Back in the day, you could lend processing power to the network in order to identify patterns in radio signals from the cosmos.

Today, building mining machines has become an industry on its own and the Main Stream Media (MSM) has failed to inform the public of the terrifying demand for cutting edge Graphical Processing Units (GPUs) and the consequences.

Nvidia's TITAN X GPU - Star Wars special edition

(Above: NVIDIA TITAN X - Star Wars special edition)

I remember a year ago, buying a AMD Radeon VII for 780$ on EBay. I have since mined much more than that with it. What could explain that mere days after buying it, other ones were on sale for 1000$ minimum? How come a graphics card that was getting older was rising in prices? Why were all the stores online sold out of high-memory GPU boards? Because of miners and many like myself, for ETH and XMR mining.

Never before in my life did I have the capacity to build a money-making machine. Cryptocurrency POW has made that possible. That was what brought and what still makes Bitcoin the leader of the Crypto Knights. The pursuit of ever more powerful ASICs to compute SHA-256 algorithms has never been more pushing on innovation. It acts as a natural catalyst for innovation.

To give the incentive to put together computing machines for the sole goal of solving math problems so that you can earn money by doing so was a revolution. It went beyond the concept of lottery and presented instead a decentralised mechanism for pooling processing power to enable the resolution of difficult problems which also provided income relative to performance. That was the fuel that ignited the explosion.

Bitmain Mining Farm - Bitcoin mining Red light wall of crypto miners

Of course, and just to be clear, I don't pretend here that mining is the domain of GPUs. Obviously, you should know that things have evolved. GPUs gave way to Field Programmable Gate Arrays (FPGAs) and then eventually to Application Specific Integrated Circuits (ASICs). What is seen in the above image is a Bitcoin mining farm which uses Bitmain mining ASICs.

There's a ton to be discussed about the technology, the industry, its geographic distribution but those more specific topics are out of scope of this current article.

 

 

What's on Superman's Tasklist?

The Tasklist for the Crypto Knight is basically to find utility in society. I am making a parallel because Superman also had to choose which fire to put out first.

For BTC, in the early days of ancestors electronic cash, the utility or application is that of money. To take back control of money's creation and hold it to account by mathematical means was impossible in an age where everything could get copied. China is known to have perfected the art and a casual visit through New-York's Chinatown would get you designer glasses for 10$. You want a Rollex? 10$.

But with blockchain technology, cryptography and distributed computing put together, it was possible to prevent anyone from interfering with the supply of something.

The further applications are making a popular breakthrough this cycle as "software platforms", decentralised Apps (dApps) and distributed computing services in general are the larger utility space which followed that of money. It is the ETH, ADA, SOL, DOT and others.

Other areas are still too small to really shine. I suspect that the next cycle in 2025 will see the major global adoption of crypto and then all of the NFTs, insurance, DEFI, banking, lending, market makers, etc. will grow and mature by that time.

Kryptonite illustration

(Above: Kryptonite illustration. Src: https://www.merriam-webster.com/words-at-play/is-kryptonite-real)

But we all know that Bitcoin is not invincible. Crypto-mining, as led proudly by Bitcoin will be interesting to follow in the future. Will we soon breach the utility barrier of quantum computers to solve SHA-256 much faster? Would BTC adapt it's difficulty correctly in the face of such a revolution in terms of processing power?

Just like Superman had limits, cryptocurrencies in general also face limits. I call those "The Kryptonites".

 

 

 

Kryptonites

The perils facing Bitcoin and Cryptocurrencies in general today are many:

  • Upcoming crypto winter (see below).

  • Better alternatives to decentralised money (threat to BTC dominance).

  • CBDCs.

  • Banning of transactions and circulation or exchange or confiscation of keys under penalty.

  • Permanent loss if keys lost or inaccessible.

  • The regulation and banning of "non-conformants".

  • Meme-ification without utility loses capital.

  • Increased association of crypto+gaming+gambling as a form of "lottery".

  • Centralised "honey-pot" crypto to draw attention away from others (ETFs?)

Its strengths are also numerous:

  • Lightning Network to have faster transactions

  • Power of the POW global processing power

  • Strong proposition: BTC is digital gold, we mine it, store the energy

  • Global investments in mining hardware

  • First mover advantage (original Satoshi Nakamoto)

  • Largest number of followers

  • 13 years after its invention, it is still dominant at 44%

Superman facing kryptonite: DC Comics, Superman #17 image - Ivan ReisSuperman #17 image - Ivan Reis

(Above: Superman in front of Kryptonite. Taken from the Ivan Reis edition)

The first point I mentioned above as a peril (or challenge) is that of what is called "Crypto Winter". I regard this as a prolonged period of descending prices and popularity of the crypto space in general. The last crypto winter we experienced went from the start of 2018 up until the end of 2020. Basically, the winter is between the peaks of total crypto market capitalisation. It is normal for this behaviour to occur as prices go up in a parabolic fashion, reach excess levels and then correct back down. The industry matures, newcomers arrive, some people leave. Over time, I think those cycles will become less pronounced and as such, the volatility will also go down. But the peril of this coming crypto-winter is that for the next 3 years (2022 until 2024) prices will be going down or sideways and many people will look elsewhere. Prices going down will fuel a lot of FUD regarding the crypto space.

Some of the challenges that Bitcoin faces are more subtle. The cryptocurrency is still the object of game theory and its utility is still being examined (as an outlier) by the Superpowers of this world.

Much the same as if we had Superman and that he helped everybody without really making official contact with any government. Some nations would welcome certain acts while eyeing the potential to use this Superman, as a weapon.

The military applications of the blockchain are important but do not constitute groundbreaking technology, to my knowledge. Blockchain and decentralisation will help mostly with security and cryptographic strengthening for the nations that wish to use them. Distributed computing and storage have existed for years and already provide for the military the benefits that now everyone can benefit from.

Green Crypto Mine - Chia

(Above: Cryptomine. Src: https://www.analyticsinsight.net/countries-that-boast-the-biggest-bitcoin-farms-in-the-world/)

Otherwise, the much greater military use cases are towards economic attacks by using the cryptos as a vector of attack. Funds could be stolen for the sole purpose of damaging the reputation of adversarial exchanges or to harm certain projects back by other nations. Flash loans and complex transactions involving multiple accounts with obfuscated routes are also part of the game. Circumventing the US dollar sanctions is now a piece of cake since USDT. And that's what did not please the USA.

By launching their own, without it being known, nations will be able to play the game in a different fashion.

When nations inevitably launch their own crypto-currencies, named Central Bank Digital Currencies (CBDCs), it will be without much fanfare but more as a sound adaptation of states to a changing world.

Cyber-war. Nations on the defensive stance against all vectors - including crypto

The critical thinker must realise that we already have all the convenience of electronic cash today. CBDCs are just government's response to a technological challenge to the banks. Their name should instead be FCBDCs with F for Fiat.

Different actors may be inclined to aggressively short Bitcoin for personal gains but their efforts over the long term will only strengthen the cryptocurrency.

The proposition of Proof of Work (POW) is also under attack in a general fashion by proponents of a greener environment. But we must not be fooled. Multiple energy sources exist perfectly free on the planet today and using mining is a benefit to the environment. We make more efficient use of the energy and less is lost as useless radiation, more is used for processing purposes.

For instance, the advantages of heating homes with cryptominers are obvious. El Salvador has also activated the Supermine itself: The Volcanode. Also, home heating with cryptominers is a big incentive for people of Earth living in the northern hemisphere.

Illustration of a Volcano - The Volcanode in El Salvador is what is illustrated

But regardless, we have seen Bitcoin mining using coal in Xinjiang be used by Elon Musk to justify his corporation stopping to accept it but now coal mining of Bitcoin has migrated to the USA and nobody seems to care. This just goes to show how hypocritical the MSM has gotten these days where the same fact is used against their enemies and not spoken about when it comes to problems at home.

Each individual state will use Bitcoin as it sees fit in the big scheme of things, either to trade and profit from it or to use it as a hedge against other assets.

Those forms of attacks from popular figures could continue in the future but I think the strength of any individual's Tweets to sway the price of Bitcoin will be diminished over time.

To say a word about the Kryptonite that is represented by the army of Exchange Traded Funds (ETFs) that are launching to offer easy to buy products that are "linked" with Bitcoin, I must take a look at a diagram that I made recently to illustrate the money flow.

I also looked into the details of the upcoming BITO ETF as well as others such as the newest BTFD. Those are the symbols of this new army of derivative products and their attacks on Bitcoin are basically by diverting capital away from the underlying. It's the same attack pattern that has been used for decades on precious metals.

Here is the diagram regarding the new BITO ETF but this also applies to all new Bitcoin ETFs that trade in futures contracts:

Money Flow for the BITO ETF and other futures purchsing ETFs linked to Bitcoin

(Above: Illustration of the money flow for the new BITO ETF)

I've drawn this diagram to illustrate the money flow. I've taken liberties to add a few actors here and there. Isn't it funny that we have ETFs in NY and Futures in Chicago? Perfect for the HFT boys to front-run orders! (Read the book Flashboys if you want to learn more.)      

In the diagram, begin at the top left, with the MSM shilling the ETF to retail. The smart money captures a profit illustrated with the red +X% which is the premium they charge on the sale of the futures contract. 

What they do with the money is anyone's guess but Raoul Pal (see the video below) argued that they could buy the underlying (Bitcoin) and at the end of the day (I suppose) sell that BTC and buy the opposite futures to liquidate their positions. So they make risk free profits. But you can let you imagination wild as to what else they can do with leverage and with the HFT crew. But I could be wrong! Maybe it will be sell the news and they'll short it aggressively. But that's unlikely. There's more money to be drained from retail and they know it. The vortex of futures, options and ETFs should match perfectly with a rise to 200K+ USD by year end.

 

 

Superhero

Batman overlooking crystals such as Kryptonite

(Above: Batman looking at crystals such as Kryptonite. Src: http://www.ksitetv.com/forums/showthread.php?113910-Amount-of-)

Is there going to be another superhero of the crypto world? Could it be ETH or DOGE? I doubt so. While ETH has clearly more vision and utility than DOGE, as we have seen, popular adoption can be key to success. But I think Bitcoin and ETH are here to stay.

But more than that, long-term adoption will require to have solid fundamentals that appeal to a wide audience because of their retention capabilities. Such offerings will mature and attract capital while letting little of it go away. Offerings such as LINK, SOL, DOT, MATIC, VET and many others, including DAOs, provide some solid ground to build on.

But there cannot be a single superhero in the decentralised world. In my opinion, the best superhero that crypto will have is its product: Decentralised innovation, decentralised decentralisation and by that I mean that the proliferation, mergers and forks that will occur, will be crypto's strength: its superhero.

But remember that if Batman is the embodiment of self improvement and thus somehow represents our collective capability to make crypto succeed, there is someone making his meals and acting as naysayer back at home. And that man is Alfred.

 

 

Coming Up Next

Next is Alfred. Not the Alfred from Batman! I will be pleased to be Presenting Alfred Hitchcock Presents. Subscribe here, here and here!

Alfred Hitchcock Logo - Upcoming A.H. article

All Superman images are copyright to DC Comics. Resources:

 

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The Archivist
The Archivist

The Archivist provides original content related to crypto, global macro trends and information, technology and other fun stuff! Thanks for your time!


The Archive
The Archive

The archive provides various publications relating to the world of cryptocurrencies and to the real world that surrounds it. Updates on various topics, major news events and their potential effects on crypto along with various observations on the subject are presented in a concise manner. Thanks for your time!

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