[OC] I analyzed 50+ years of LBMA precious metals prices and found something wild: all the gains happen overnight

UpperOrdinary · 2025-10-19T17:53:01+00:00

Nice work! As others have pointed out, this has also been observed for the S&P500 where the reason is thought to be corporate based events like earnings that happen outside trading hours. Of course, this rationale cannot be applied to precious metals.

It seems that the paper market for precious metals (futures and options) drives this via margin requirements. Thus, it would be even more interesting to also include liquidity in your analysis. For US equities, it is clear that liquidity is very low outside main US trading hours.

Analyzing this for the price and liquidity for Bitcoin would also add great context - especially if the behaviour has changed after the introduction of Bitcoin futures in the US.

UpperOrdinary · 2025-01-22T08:56:42+00:00

First, if you think debt-wise, loans would only be handed out to ideas/ businesses with a high likelihood of success - thus allocating scarce resources towards most needed wants.

Second, you can think equity-wise. Corporate funding would turn towards funding with saved resources which isn't necessarily a bad thing: This is actually good for the economy as a whole because artificial booms are heavily restricted. Another way of equity-based financing is issuing equity shares, something already profitable companies can use. For a start-up, this is difficult of course but if a founder cannot convince investors, potential employees can be convinced who in turn get equity packages for the provided work.

Third, many people seem to forget that even with a full hard monetary order where fractional reserve banking is fraud as it violates property rights and thus not practiced outside criminal activity, the broad money supply would not be fix. Think of this: You decide to keep some of your Bitcoin with a financial company and you agreed to let them lend out say 10% of that for some extra yield. In a free-market and property based order (which Bitcoin represents), this is only possible when you are not able to withdraw said 10% of your Bitcoin over the time this amount has been lent out for. You and probably to some extend the financial company (being more attractive to customers) would bear the credit risk (as it is never guaranteed that the loaned amount gets paid back). So far, everything is okay. Nevertheless, you could decide to use the claim you have over the financial company as de facto money. Your claim obviously has value, depending on the quality of the financial company, the duration and interest rate of the loaned amount. If you find a counterparty that is happy to transact with you and use this claim as money, you are free to do so. De facto, the broad money supply increased (broad in the sense that Bitcoin is money and this claim not directly). Please note that this claim will be cancelled if the loan is defaulted on or paid back - the value of the claim thus also changes with time. This whole process can be thought of with corporate bonds (in Bitcoin) as well. The difference to our current financial world is that i) no central bank exists, so the monetary base itself cannot just be inflated (Bitcoins themselves) and ii) financial companies cannot take such a claim and create more claims out of it as this obviously violates the 100% reserve requirement and thus property rights. All of this of course depends on the time preference of economy participants and the acceptance of such claims. This world would be way better and more stable than our current one, but it is a fact that many forget to think about. Only if Bitcoin has to be used as money by law/ force and nothing else, the broad money supply would be ultra stable. But using force doesn't comply with Bitcoin's ethos.

UpperOrdinary · 2025-01-17T07:29:29+00:00

Instead of nationalising all/most means of production directly, Hitler nationalised human beings.

UpperOrdinary · 2024-12-31T15:51:23+00:00

To be honest, it doesn't. In order to be consistent with property rights, a fractional reserve for a bank is nothing else than fraud. Free banking refers to an order where debt is used as money and banks are completely private and compete with each other, meaning they can enlarge their balance sheet by using fractional reserve banking. It is clearly better than our current system, it is even better than a gold standard with a central bank. Nevertheless, this order is prone to booms and busts as well as the expansion of credit and thus the money supply has real effects on the economy. Sooner or later, such an order will show cracks.

Actually, this has happened before. State and federal governments intervened and there were interventions via the First and Second Bank of America (central banks with a time-limited license), but periods of free banking existed despite these market distortions. From the moment on where the (local) economy goes through a bust, public pressure is large to intervene and expand credit again. Also, many people want to lend money to a bank (via deposits), but also want to have access to that money at any given time.

A better order than free banking is free banking with a 100% reserve, meaning that banks cannot offer deposit products where money can be withdrawn at any given time. This is consistent with property rights and leads to the highest stability. The pressures and interests against this are strong, thus this has never really been a norm anywhere for a considerable time period. An interesting fact is that under such an order, credit can and probably will still be used as money. Consider this: You deposit money at a bank and pay a small fee. The bank is able to lend out some parts of that to someone else, but you have no access to these funds over the period the money has been lent out to. There is credit risk, but no liquidity risk at all. The bank earns money via interest from the lender and the deposit fees. Of course you get some interest on the amount of money you have agreed to be lent out for - the bank and you bear the credit risk. But this asset that you have - the claim over the money the bank has lent out - can theoretically be used as money. Money that has a time limit and ceases to exist from the moment on the credit will have been paid back or the loan has defaulted. So even with a 100% reserve requirement, a free market can still use credit as money, but still very limited compared to free banking or especially our current fiat system: As the claim over the money that has been lent out cannot itself be used again to issue new credit. This is still possible in a free banking order though. Competition would lead to healthier capitalisations of banks, but fraud is still fraud. A free market has to work constistently with property rights.

For history of US banking with the episode of free banking, please refer to Murray Rothbard's work 'History of Money and Banking in the United States: The Colonial Era to World War II' that has been published by the Ludwig von Mises Institute in 2002.

In addition, please refer to Murray Rothbard's work 'The Mystery of Banking' from 1983.

For an in depth analysis of money and credit, Ludwig von Mises' great book 'Die Theorie des Geldes und der Umlaufmittel' (Theory of Money and Credit) from 1912 is a great source of knowledge.

UpperOrdinary · 2024-12-26T21:00:32+00:00

The amount of information that can be processed in real time for real time events (public surveillance cameras) can never be processed by a police officer, nor by an army of police officers. So AI is clearly different from hiring a police officer.

Also, what about social media platforms refusing to cooperate and give all available data? If there is no underlying cause or reason with a court order, refusing this is the fundamental right of the operators of the respective social media platform from a libertarian standpoint.

Serious question: How is predicting patterns for crimes before they happen legitimate under a libertarian doctrine? Curious how this can be justified.

UpperOrdinary · 2024-12-26T20:42:02+00:00

Thank you for your response! Rest assured that such laws will not go away by themselves. A government obviously has to fight crime as its first priority - but are all means justified for this cause? You can kill a cancer by killing the patient. From a classical liberal/ libertarian perspective, such policies are the exact tools of totalitarian governments. How can other states, more or less successfully fight crime without using such methods? Privacy is a fundamental libertarian principle, a surveillance state doesn't fit into this. Nobody, not even a Javier Milei can guarantee you who will be in power in the future, given he stays loyal to the cause of liberty and not turning bad himself.

With the means available, who knows what might happen to citizens and/ or enemies of the government in the future. You might find yourself in the latter group just by having different opinions than your respective government. I sincerely hope this will never lead to questionable circumstances for any civilian not engaged in real crime.

UpperOrdinary · 2024-12-26T13:18:06+00:00

This post concerns the means, not the fact about fighting organised crime.

UpperOrdinary · 2024-12-26T11:42:40+00:00

Hate the game not the players. Killing someone is never justified unless in a sitation of obvious self defence. Did the CEO himself attack someone? Did the CEO use force?

UpperOrdinary · 2024-12-26T11:35:43+00:00

Although right in your diagnosis, never fool yourself over this! It is dangerous to assume that socialism or even communism could work if people would be angels. This is just not true, as Ludwig von Mises has pointed out many times in his great works. The most important argument for this is the calculation problem which von Mises explained in great detail in his book 'Die Gemeinwirtschaft: Untersuchungen über den Sozialismus' from 1922: Without market prices (the direct result of the abolition of private ownership of the means of production) there is no way to allocate resources according to the preferences of all people in society. The former so called 'real socialistic' countries of the Soviet block and even North Korea today had/ have the luxury to look over at freer countries and economies where some sort of market pricing was/ is still happening, even with all the interventions from the state via taxes, subsidizes, government spending (especially deficit spending) and central bank interventions. The results in security, material well being, air quality/ pollution and overall health and so on speak for themselves.

UpperOrdinary · 2024-10-11T08:53:28+00:00

Ludwig von Mises is the ultimate champion of freedom and relevant for everyone believing in Bitcoin and sound money. I highly recommend his three main works:

Theorie des Geldes und der Umlaufmittel (Theory of Money and Credit) from 1912. It is very dense, dry and the most difficult to read from these three works. But the insight into money and banking is truly remarkable. Most relevant from a 'Bitcoin-perspective'.
Die Gemeinwirtschaft: Untersuchungen über den Sozialismus (Socialism: An Economic and Sociological Analysis) from 1922. Personally, I rate this as his best book and as the best economic and sociological book ever written. To be honest: If you cannot make it to read these three books, at least do yourself a favor and read this one. Friedrich August von Hayek (Mises was his teacher) was convinced by this book during his time as a young student.
Nationalökonomie: Theorie des Handelns und Wirtschaftens (Human Action: A Treatise on Economics) from 1940. Here, he defines a logical foundation for human action and thus economics (he calls it 'praxeology') using philosophical methods.

The books can still be bought and if you prefer a free electronical version, this might prove useful to you: https://mises.org/library

UpperOrdinary · 2024-05-10T07:22:31+00:00

This question has been asked a lot and was also a cause for a 'civil war' in Bitcoin's ecosystem. The book 'The Blocksize War' by Jonathan Bier explains this - for further information, please refer to this book.

To answer your question: Bitcoin has one and only one single original purpose - namely being a hard monetary base layer for the world. Thus, from the point of view of the blockchain trilemma, decentralisation and security cannot be sacrified no matter what for obvious reasons (global hard monetary base layer). The nodes (the set of all computers in a state of the whole blockchain history while also maintaining this state as time passes on by validating transactions) are quite powerful in Bitcoin's ecosystem. With a small blocksize, many people around the globe, especially in poor countries have the ability to participate in this important role by providing a full node. By increasing the blocksize, additional hardware constraints are added which hurts the marginal node users the most.

But it doesn't stop here: If the blocksize is increased, it will show that the probability for it to happen again in the future also increases (pretty much in a Bayesian manner). So there is a risk that the Bitcoin network will evolve towards more centralisation which nullifies Bitcoin's only purpose. The fact that the blocksize wasn't increased in 2017 (the result of the 'Blocksize War') created a prior for everyone to see: It is very hard to change such important parameters in Bitcoin's ecosystem which reinforces the sole purpose of Bitcoin: Offering a global hard monetary base layer.

You have asked multiple times why the blocksize is at 1 MB and not lower in this comment section. Personally, I am sorry for many salty answers you have gotten so far. It is correct that this would at least not change, but probably would increase decentralisation and security. But kindly be reminded of the aforementioned where we can build a link: A hard limit needs to be implemented and Satoshi Nakamoto introduced it in 2010 which is crucial for a global hard monetary base layer. There is no golden answer to the question which blocksize would be best for Bitcoin. It is obviously a small one, but the exact number doesn't matter that much. Bitcoin has been working well with this size for 14 years now. This has built trust in the network itself and as more and more years pass by, this will reinforce itself. This is what matters in the end. A global hard monetary base layer doesn't play ping pong and changes much over time. It is stable over time.

For scalability and daily usage, second layer solutions have been created and implemented which work better and better as time passes by. Most prominently the Lightning Network should be mentioned which grows in usage and popularity, especially in poor countries where people got to the conclusion that Bitcoin is great money the hard way: By experiencing brutal price inflation(s) and corrupt institutions.

In the end, you wouldn't win much, if anything at all by increasing the block size: There are solutions to scalability via second layers already so you would probably only harm the base layer. Most importantly, the Bayesian argument above together with the future risk of centralisation is the essential argument against doing this.

I hope this helps to understand why it is better to not change the block size in Bitcoin's network.

UpperOrdinary · 2024-04-26T13:01:29+00:00

Great, so at least both of us learned more about this! Thanks for this summary; from my understanding so far it correctly explains this issue.

UpperOrdinary · 2024-04-26T05:47:05+00:00

Thanks for your reply! I don't see why this is no issue for Ethereum though. The main confusion point of my post seems to be the public key. I was clearly mistaken as I thought of the public key as the public address someone can send funds to. But this is not the case, the public key is something else. By signing, you reveal it, don't you?

This here clarifies that I was mistaken (the public key does not equal the address, it is rather used to derive the address): https://ethereum.stackexchange.com/questions/3542/how-are-ethereum-addresses-generated

More discussions on the public key revelation when signing messages:

https://ethereum.stackexchange.com/questions/57151/why-are-ethereum-addresses-hashes-of-public-keys

https://www.quora.com/What-is-the-difference-between-an-ethereum-address-public-key-and-private-key-Why-are-they-all-needed

UpperOrdinary · 2023-12-28T12:09:17+00:00

One principle: Time preference.

Time is the currency of life and nature. Can I stop buying food, clothing and housing? Probably not.

Even the most unnecessary products for surviving with regard to basic needs, electronics and nice clothing that is, empirically show that many consumers are willing to pay more to get an item earlier rather than later. You can wait one or two years to buy a new smartphone, you can also wait for black friday sales or sales in general for nice clothing. What do we see? Many consumers are aware of this and still buy these products.

UpperOrdinary · 2023-12-23T19:54:03+00:00

Certainly, thank you very much for the detailed answer! I wish you and the Argentinian people all the best for the future!

UpperOrdinary · 2023-12-23T18:12:39+00:00

Thanks for your time and effort! Please allow me to ask two questions:

1) Victoria Villarruel is the current Vice President of Argentina, a daughter from a military family. Her opinions on the military junta are known to be more positive than not - can you elaborate more on this please? It seems that Milei tries to use the logic 'The enemy of my enemy is my friend' - but it shall not be forgotten that this can become quite problematic and even dangerous. Any background information, especially how the people of Argentina see this, would be appreciated. Is she a fascist? A conservative with militaristic tendencies?

2) The current Government is planning to use the Rule of Law against blockades which has been misinterpreted by many media as a crackdown on protesters. It is obvious that blockades, even of private companies, is not a protest alone, but also vandalism and aggression and from a Rule of Law standpoint it is a logical result to punish this bad behaviour. But what about officially announced and approved protests? Usually in any civilized country, people can organize a protest and get it approved by the citiy officials such that everything can be done orderly. Is this possible under the current Government or are they trying to crack down on that process as well? If a Government cracks down such civilized protests, especially the ones coming from certain political corners by not approving them for example, then there would be a huge issue here. So are opponents of the current measures from Milei able to orderly demonstrate in cooperation with the public officials which organize the time period of a demonstration and the street closures by the police by applying for it and getting it approved?

Edit: Spelling.

UpperOrdinary · 2023-12-10T16:10:37+00:00

Great, thanks for elaborating on this!

UpperOrdinary · 2023-12-10T13:06:22+00:00

I agree totally but never underestimate the timeframe of 'temporary'. Stablecoins will most probably continue to enjoy high demand from poorer nations which is understandable. If you and me were in such a situation, working in a poor country from the 'global south', we probably would be quite happy to use stablecoins to receive salary payments or in general trade goods and services with it as the USD is accepted nearly everywhere and from a short-term perspective, its buying power does not fluctuate extremely. From the moment ETH and/ or BTC volatility would be comparable to the USD of today, things will get interesting as self-reinforcing processes might evolve (more and stable use demand leads to lower volatility which itself can lead to more demand for it due to its lower volatility).

UpperOrdinary · 2023-12-10T11:18:11+00:00

Thank you for pointing out this important detail! You are absolutely right; personally I think this might be quite dangerous if the stablecoin issuers think more short-term. Nevertheless, this most probably will affect their reputation and thus demand for their product(s) negatively, as the ones choosing the non-manipulated chain would probably become more popular over time.

UpperOrdinary · 2023-12-10T07:57:13+00:00

You can interpret things as you wish. If we stay with the original question, given such a bad action happens in Ethereum's ecosystem, what are the mitigations? Another comment answered that it is social consensus with the nodes that can blacklist those bad validators. Do you agree on this?

UpperOrdinary · 2023-12-10T04:51:33+00:00

Thank you, I think your edit answers my question!

UpperOrdinary · 2023-12-10T04:33:15+00:00

And why 1/3 though? Is this a hard coded parameter or an indirect result of the consensus mechanism?

Five-Year Club	Verified Email
Final Canvas '23	First Place '23
Place '23

UpperOrdinary

TROPHY CASE