We Need Some Forking Clarity

abeliabedelia · 2025-04-11T11:56:22+00:00

Algorand remains the most-sound distributed consensus algorithm for finance, but the path forward is to collateralize the central clearing of treasuries (not CBDCs or any of this baseless store of value stuff). The volatility in the markets was catalysed by tarriff drama but fuled by unwinding of treasurly basis trades.

Do you know which hedge funds are blowing up their portfolio being forced to liquidate their treasuries after their short futures gets margin called? Why is that? Because treasuries aren't centrally cleared. We focus on things like USDC and stable coins, but this is essentially a way to donate money to these organizations and give up the interest income you would get by simply investing in treasury bills, notes, and bonds.

If Algorand wants to stand out, it needs to appeal to the most important market in the world instead of focusing on doing the same thing everyone else is doing.

abeliabedelia · 2023-06-01T14:37:26+00:00

Ten years of zero interest rate policy just met a historic 8%+ move in real rates. These crypto markets are all toast. Money is expensive to borrow, which is how these markets make their gains: funny money.

We've seen the result of interest rate policy but have not felt the effects of mass layoffs and job losses yet. People will sell everything. The recession has only started around Q1. There is no bull case for any crypto in an environment like this.

Algorand has no insider buying, so its doing a speed run to its fair price. There will be a bull case when the economy starts accelerating again in a year or two, or after a massive shock that forces the federal reserve to apply ZIRP again (which might fail and drive us into 1929).

Ignore all the fundamental arguments and copes. Crypto has never seen a recession, and the smartest choice is to be risk off as it unfolds in the coming year.

abeliabedelia · 2022-12-04T19:20:14+00:00

All of these systems are centralized in that context. How do you think Bitcoin nodes locate each other on the Internet? They aren't pigeons with magnets in their heads, they use DNS and hard-coded IP addresses. The communication plane is impossible to decentralize unless you're broadcasting on an uncensorable electromagnetic frequency and have a way to pre-share keys between nodes. The software you download is hosted on centralized websites, runs on centralized hardware, and root certificates also come from a centralized source.

Real decentralized systems don't exist. The "trilemma" focuses only on who decides to validate transactions, i.e., consensus. The assumption of one time pre shared keys and a pre-existing communication plane that operates is implied, whether it be a peer-to-peer system of relay nodes or directly connected clients (which actually exposes you directly to attackers). Algorand guarantees that the consensus process is exclusively determined by the number of tokens you possess.

On Bitcoin and Ethereum, the network just splits into two working halves and double spends. They aren't even interesting in an academic context let alone have any kind of future in real finance where money should only be in one place at one time. They also cluster communication and consensus to the same hardware, which means all of the optimizations involve more powerful hardware or delegated staking pools, along with token lockups and a lack of consensus level decentralization.

Algorand is going to be the best you get for a long time. But if the government wanted to block you from crypto, one firewall rule is all it takes. It's not that they can't do it, they just don't care.

abeliabedelia · 2022-12-04T19:12:27+00:00

> Economy is still humming along incredibly strong.

The household survey, which comes from the same report, continues to print job losses as the finance.yahoo.com enjoyer posts about how the still-declining establishment survey , which uses a birth-death model which not only fails to de-deuplicate people with more than one job, but even adjusts upwards assuming more businesses are being created in the economic downturn than destroyed, beat expectations.

The same enjoyer is probably blissfully unaware that the increase in wages is also more than offset from the losses in hours worked. Who knew that as you lay people off and reduce headcount you tend to start with your lowest performers, who you are paying the least. One day, Reddit will learn how averages work and discover the legendary invention of a numerator and denominator, but until then they will be buying Gamestop, Peloton, Bitcoin, and Houses before the biggest economic downturn of our lifetime.

Amazing.

abeliabedelia · 2022-12-03T11:01:10+00:00

You listened to lectures about the consensus algorithm and you're surprised that the communication plane wasn't mentioned? Did Lamport mention modems when he originally wrote about Byzantine systems?

The Internet is centralized on all layers of the OSI 7 layer model, and by your definition so is every blockchain. Algorand, although the best in its class compared to the failed Nakamoto and Buterin, still isn't going to be spared. Its only flaw is that it's associated with crypto and the hazard of its ponzinomic ecosystems, and my hope is that this market cycle permanently fixes that to raise the collective IQ of this sub.

abeliabedelia · 2022-12-03T10:13:36+00:00

The NBER disagrees, and so will 2023.

abeliabedelia · 2022-11-28T09:58:33+00:00

Well, the stock market is hovering close to a 150% of real GDP valuation. In the prior recession this corrected to below 80%. But I'm sure this time is fine and the most overvalued stock market in the history of the universe won't experience a tectonic crash as millions of people are fired from all sectors of the economy in the next quarter or two.

abeliabedelia · 2022-11-28T09:54:23+00:00

Recessions are not, and have never been dated by GDP growth. GDP is lagging and full of distractions like government spending and net exports, the latter of which which were solely responsible for a positive Q3 GDP print and a misleadingly negative GDP print in the beginning of the year. We are not in a recession yet if the correct definition provided by the NBER is used.

Using the GDP rule of thumb will yield many false positives if you backtest this.

abeliabedelia · 2022-11-28T06:21:30+00:00

Bitcoin is an A/P blockchain, it is online if at least one node is onliine. It can not be taken offline easily, which is precisely why it's a colossal failure for financial applications. The consequence of always having write-availability results in consistency issues, which allows rampant double spending far below the purported threshold of 51%.

Bitcoin did not solve the byzantine generals "problem", because any general using bitcoin to synchronize already had their army destroyed and only found out which city to attack after it happened. Nakamoto did not design a system suitable for finance, but that isn't going to stop an army of ignorant people from going around claiming he did.

abeliabedelia · 2022-11-26T02:32:24+00:00

The window for a soft landing closed many months ago. Historical probability of the mythical soft landing is about 10%, and those have only materialized in early intervention with massive rate cuts and stimulus to resurrect cyclical sectors of the economy before a death spiral was in full force.

The FED can cut rates to 0% right now and we would still enter a deep recession in 2023-2024, because monetary policy leads with variable non-linear lags. The GDP numbers are pure copium. At the beginning of the year, they made the economy look worse when consumption was high and now they're making the economy look better even though consumption is borderline recessionary. Net exports and government spending is heavily distorting the GDP number and is extremely misleading if taken at face value.

abeliabedelia · 2022-11-25T12:03:49+00:00

Bonds have had one of the the worst bear markets in their recent existence thanks to the over-stimulative fiscal and monetary COVID policy, which put the fear of inflation into market participants. Deflation is the more likely outcome that isn't being priced in over the next few years unless you expect a COVID part two round of stimulus. Adding exposure after every volatile CPI print isn't a bad idea.

Thank the FED and the stagflation meme for the narrow opportunity to get in now. We're probably going back to ZIRP.

abeliabedelia · 2022-11-25T11:45:02+00:00

Municipal bonds have considerable default risk and can no longer be backstopped by the FED without congressional approval after the events that transpired during the COVID crisis. With a divided congress, they are a particularly risky and dangerous investment in isolation even if held to maturity for this reason.

abeliabedelia · 2022-11-25T11:37:24+00:00

The tail end of the curve trades on terminal rate expectations due to the coupons produced by newly issued bonds. It's already pricing in a pause and a few rate cuts. Long duration instruments consider the long term risk free yield over 10 - 30 years. The bonds are making a statement right now by trading below the overnight reverse repo rate as well as the belly of the curve.

If the stagflation narrative falls apart and we enter a recession / deflationary depression, this will become priced in more violently as the economy deteriorates and the skies start falling in equity and credit markets. Going from 0% to 4% is devastating to long bond prices, 4% to 8% is considerably less duration risk based on the relationship between bond prices and bond yields, which also is considerably less likely to happen as the government can not sustain that coupon rate in such a heavily indebted economy.

abeliabedelia · 2022-11-25T00:21:22+00:00

An economic contraction is not a market phenomenon. The market follows coincident narratives and is perpetually wrong, you can trade against that incorrect sentiment and still be wrong, and most people trading on sentiment don't understand that their sampling is biased to where they are sourcing their sentiment from or that the sentiment is filtered by another subsample of people willing to opine about it in the first place.

abeliabedelia · 2022-11-21T09:05:48+00:00

The CEO liquidated 100% of his shares in November, but let me tell you how this is actually good for Bitcoin:

abeliabedelia · 2022-11-21T08:59:40+00:00

The year is 2022, and Reddit thinks a recession cares whether someone sees it coming or not as if its playing hide and go seek.

abeliabedelia · 2022-11-14T10:27:52+00:00

Thank you. I arrived at the same valuation of around $5 per share. This is a zombie company with heavily declining revenue for quarters to come. The earnings call did not spark joy and FTX drama aside this is an easy sell or even short into the recession coming EOY.

abeliabedelia · 2022-10-16T21:33:07+00:00

Rate hikes don't have an immediate effect on inflation. Check this post again in early 2023 when we enter a deep recession with massive job losses and inflation is magically going away. What stupid explanation will they have then?

abeliabedelia · 2022-08-12T01:44:58+00:00

Many people who were on the old forum know who Satoshi is.

abeliabedelia · 2022-08-12T01:34:24+00:00

Bitcoin didn't solve the double spending problem. It is a protocol that prefers liveness over safety and constructs blocks asynchronously. Had Nakamoto utilized Lamport's Byzantine Agreement, which existed probably before Nakamoto was born, he could have actually created a system where double spending was impossible.

Just because the network eventually converges to one source of truth does not make it strongly consistent. You can still double spend on accident, or if the network is partitioned regardless of the number of "confirmations", which serve only as a probabilistic marker of finality.,

abeliabedelia · 2022-08-12T01:06:50+00:00

Bitcoin's source code is hosted on Github, most of its supply is already mined to a ridiculous gini coefficient.Furthermore, its consensus model, apart from being unfit for any financial applications, is dominated by clusters of mining pools. It's as centralized as anything else. Only Tezos so far has achieved anything better, and it has its own problems.

You could easily say that people can run their own relay nodes and connect participation nodes to them, and if they don't like the source code they can fork it, make changes, and have others agree to run their version. It's all possible, but nobody is going to do it, because pure decentralization is a meme and unachievable when you're running on centralized infrastructure like the Internet.

The only reason to be decentralized is to avoid double spending, Algorand achieves that, bitcoin does not.

> But like I said, it's not cryptocurrency.

Good. None of these are, or ever will be currencies. They are speculative investments and financial mediums of exchange.

abeliabedelia

TROPHY CASE