Inside Today's Meteor
- Disrupt: BTC Maxi Balaji Srinivasan's Very Public Bet
- Create: The Secret Life of Spock
- Compress: Can AI Turn $100 into $100K?
BTC Maxi Balaji Srinivasan's Very Public Bet
It may seem self evident there are a million ways to lose your shirt betting on Bitcoin. Now some famous Internet punters have made it a million and one.
It's a bit off topic for us at Meteor, but too hilarious to ignore, and there are some actual lessons in economics that apply to the U.S. Federal Reserve Bank, interest rates and the current banking mess (don't call it a crisis!), which are things everyone should be educating themselves about, whether or not you know what a "Bitcoin maxi" is.
It started last week with a joke about hyperinflation.
Hyperinflation is generally defined as 50% price increases a month, compounded. Under the slowest version of that scenario, a $20 cocktail in San Francisco including taxes and tip would cost $2,594.93 in about a year, two month's salary for a minimum wage worker in most of America. It's a phenomenon associated more with Venezuela and the Weimar Republic than the good old USA.
The joke is if the U.S. actually entered a cycle of hyperinflation, it wouldn't take long for $1 million to be worthless, so James Medlock's (a pseudonymn) exposure is basically zip.
But then. Someone took Medlock up on his offer – former Coinbase CTO Balaji Srinivasan. $1 million bet accepted.
Now, for Balaji to win, Bitcoin needs to go to $1M in three months, a 40x gain above recent trading prices.
Why on earth would anyone make that bet? If you really think Bitcoin is going to $1M, buy $1M in Bitcoin at today's prices and make about 40 times as much if you're right.
Here's where it gets interesting. Balaji said he did it to send a "Bitsignal" to alert the world to the stealth financial crisis (he said it!) and convince people the only safe place for your savings is...Bitcoin!
He calls it the equivalent of digital gold, an asset beyond the reach of central banks and bad monetary policies that drive inflation in the first place. A flight to Bitcoin is rational, in his view, and if it happens the value of Bitcoin will in fact soar, maybe not to a million but it'll go up as more people buy in.
Does this even make sense?
Here's what I think Balaji may believe: The recent round of bank bailouts is going to require governments to print more money which is inflationary. And they are going to do it at the same time they continue to raise interest rates to try to knock down inflation. Since rising interest rates tanked the banks in the first place, it's only going to get worse, and fast, and there are no tools available to stop it turning into a runaway cycle of raise rates, step in to save more insolvent banks, print more money, tank more banks, raise rates etc.
It's not just happening in the U.S., Switzerland recently had to bail out its second largest bank, Credit Suisse to the tune of $54B, so a global crisis is looming according to this logic.
The only problems with this theory are nothing in macroeconomic history suggests the outcomes he is predicting, and he's definitely going to lose the $1M.
So let's assume for a minute that Balaji knows the financial crisis he's warning about is very unlikely to happen, at least not in a way that moves the price of Bitcoin to $1M, does he actually need Bitcoin to go to $1M to win off this bet?
It's a given he is a "hodler," meaning he bought and held a lot of Bitcoin a while ago, so anything that moves the price up is going to make him money.
This is a pretty wild flex, at a time when Bitcoin is already up more than 30% in the wake of the Silicon Valley Bank collapse. Occam's Razor says this is a simple pump to get more alpha out of another historic banking rout. Even a perceived bank crisis should be good for Bitcoin – after all, it was born out of the actual 2008 crisis, which inspired the inventor of Bitcoin, Satoshi Nakamoto, to create a decentralized digital currency as an alternative to central banks.
In addition to the bet, Balaji put a cool million in marketing rewards to boost the BitSignal ($1,000 for the best 1,000 Tweets), so he's really in for $2M, meaning even if he wins he's losing. Then again, that's pretty run of the mill in a $545B market cap asset like Bitcoin. Given the attention this stunt is getting, it might even be a deal.
While putting Midjourney 5 through its paces, we were shocked to discover the secret life of Spock. The famously emotionless Vulcan apparently liked dating human starlets and singing in smoky nightclubs. After retiring from Starfleet, he used his complete inability to understand human emotions as a springboard to become a famous psychologist and podcast host. On occasion he would dress as Dr. Evil, including the cat. He never said why.
Midjourney 5 is like an alternate reality
Designer Julie W. is getting ridiculous results out of Midjourney 5 with fairly simple prompts that she generously shares on Twitter. What's impressive here is Midjourney's ability to render a nearly perfect photograph while taking window reflections into account.
Meanwhile technologist Olof Lindh is finding Midjourney has a powerful ability to render completely absurd images like this sumo wrestling cradling a newborn or a man playing chess against an octopus. We're living in a rapidly growing alternate history.
Can Society Adjust at the Speed of AI?
What if AI means infinite scientists and engineers in a box? Are we ready for a world that moves that fast? AI researcher Holden Karnofsky sounds off.
HustleGPT Challenge: Can AI turn $100 into $100K?
So far the bot's suggestions sound like gems from Andrew Tate university but more than 50K people are now following designer Jackson Greathouse Fall's journey to try to squeeze some cash from GPT-4.
GPT-4 Solves Scooby Doo Mystery from 1969
No Scooby snacks required.