In which Balaji gives away at least a million dollars
noahpinion.substack.com
noahpinion.substack.com
I’ve seen versions of this take, and they all conveniently ignore the more obvious possibility:
This “intellectual dark web genious” and his buddies work together to orchestrate a stupid publicity stunt that is nothing more than a naked attempt to artificially inflate the price of bitcoin by trying to recreate the anxiety around USD that helped propel bitcoin to its tenuous quasi-legitimacy in the first place.
“Crypto millionaire sets money on fire to try to push more people to dump cash into a magical internet poker chips in order to cash out even more” is not some sort of philosophical experiment, it’s an obvious ploy to enrich some bitcoin maximalists by preying on economic anxiety.
I love how all of these crypto “philosophical true believers” always require that you take actual cash out of your bank account to buy into their experiments.
It’s always nice to compliment dudes with “nice tank top bro”
if that happens, society will not be run by people with BTC, it will be run by people with AR15
By that time, many of the active followers were already aware something was up. He did t do anything special.
While his recent fearhype is despicable, that tweet from 1/30/2020 was prescient compared to what others were saying at that time.
If you have examples of other equally loud voices saying the same thing that early, please share.
For the record, his tweet stated:
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Going viral
What if this coronavirus is the pandemic that public health people have been warning about for years?
It would accelerate many pre-existing trends.
- border closures
- nationalism
- social isolation
- preppers
- remote work
- face masks
- distrust in governments
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If we do permit the unconventional analysis, I’ll instead note that Noah failed to analyze Medlock’s opportunity costs.
(I’m no economist but it also seems like an incorrect analysis of opportunity cost? For one, this is not Balaji’s only opportunity to buy Bitcoin. This million dollars only counts if it prevents Balaji buying as much Bitcoin as he wants to - i.e. if it costs him the opportunity to buy 37 Bitcoin, which it can only do if he spends all of his other money buying Bitcoin first and would have liked to spend this million as well, but cannot because it’s in escrow. Again, I’m not an economist and Noah is, so maybe I’m wrong here, feel free to correct me.)
Fundamentally it seems like Noah’s claim is actually “if you think Bitcoin will go to $1M, there are other ways you could have made more money than taking this bet, like investing in Bitcoin instead”. That doesn’t make this bet a sure loser, it makes betting a bad way of making money relative to other methods like investment. But we already knew betting is bad and mostly about reputation. I don’t get it.
A more conventional analysis says Balaji put in $1M and Medlock put in $27K and if the total value of the pot rises above $2M then Balaji takes it all, while if the total value of the pot stays below $2M then Medlock takes it all. These are the terms of the bet, and this is a really bad bet for Balaji because it seems very unlikely the pot will go over $2M, but it’s not a “sure loser”, just an extremely likely loser.
In fact, if Bitcoin were to go to $10M instead of $1M, Balaji walks with $11M; if Bitcoin to $100M then Balaji sees $101M; if $1B then $1.001B, etc. Medlock’s return is meanwhile forever capped at $1,999,999. If you leaned on this angle of analysis - maybe by pointing out that Bitcoin is iconic for its massive fluctuations and thus implausible outcomes like going from $30K to $10M are still strictly more plausible for Bitcoin than almost any other asset you could name - you could argue that Balaji has the better side of the bet! (You’d be wrong, but still more right than Noah’s “sure loser” claim.)
The reason opportunity cost matters is because he could have done something with the money, like buying bitcoin, instead of putting it up for a bet.
Balaji claims to believe that Bitcoin will be worth $1 million dollars in 90 days.
Also, Balaji has $1 million dollars in his bank account.
In 90 days, we can pretend there are three outcomes for Bitcoin's value: a. It's worth $1 million+ b. It's worth between 0 and $1 million c. It's worth zero.
If Balaji bought 37 bitcoins today with his $1 million, the value of his assets at the end of 90 days in those three scenarios would be: a. Over $36 million b. Between zero and $36 million. c. Zero
Instead, here are the outcomes under the bet he made: a. $2 million b. Zero c. Zero
Assuming he is being sincere in his belief, every other outcome in the price of bitcoin makes his bet suboptimal to just purchasing Bitcoin, outside of Bitcoin falling to zero, which is why it's been called a "sure loser" bet.
Just buying 37 BTC anonymously won't have the same effect on the btc price.
The less oxygen given these clowns, the better society fares, and the fewer desperate, naive, or avaricious, fools who will be taken advantage of.
He's very wealthy but what makes him a clown is that he's a slave to his reputation (and therefore his followers). Can't act independently. Can't back down. His masters are his audience.
Through this bet, Balaji instantly increased FOMO among a lot of people waiting in sidelines. This bet has gone viral (and contributing to current BTC's increase).
Balaji has made more than a Million $$$ through this bet, while mainstream is focused on irrelevant details about the bet and laughing at him.
Balaji got what he wants.
So has he sold his bitcoins? Otherwise he's made nothing but paper profits that can evaporate at any time.
Balaji made more than $1 Million on his bet.. Think about it
/sarcasm
There is a lot of interesting philosophy around Bitcoin as a solution to the existing economic system but increasing total volume of awareness doesn't make sense if reduces the signal:noise ratio.
Especially as the "noise" is exactly the type of gambling speculation that this bet is representative of.