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Living legend: man turns right-wing doomsaying about inflation into winning bet

TurkeysGhost

Penultimate Amazing
Joined
Apr 2, 2018
Messages
35,043
A crypto-world gentleman’s wager was resolved this week — and not in favor of the Bitcoin booster who sparked it.

Back in March, my colleague Ben Schreckinger reported on a bet between gadfly venture capitalist Balaji Srinivisan and pseudonymous economics blogger James Medlock. The terms: Srinivasan bet Medlock that 1 Bitcoin, then (and still) hovering just below $30,000, would be worth more than $1 million in 90 days as a result of catastrophic “hyperinflation.”

It’s possible Srinivasan truly believed it would happen in the immediate aftermath of Silicon Valley Bank’s collapse. And it’s possible he simply wanted to pump up the value of Bitcoin and overtake a theoretical loss on the bet with gains in its overall value. (Read Ben for more on that.)

However, it’s also possible he was just *********** in the brash, consequence-disregarding manner that’s almost a requirement to participate in the Bitcoin community — an act that has subtly turned the gears of history in the modern internet era.

But hold that thought. Whatever Srinivasan’s motivation, on Monday he lost the bet. (Inflation modestly decreased in March.) Or rather, he surrendered, 45 days ahead of its date of expiry — “The million dollar bet is now closed out by mutual agreement,” he tweeted, adding that he donated $1 million to charity and paid out $500,000 to Medlock. (Nice work, if you can get it.)

https://www.politico.com/newsletters/digital-future-daily/2023/05/03/a-very-theatrical-bitcoin-bet-collapses-00095112

All this started as a response to a ****-post by Medlock that he'd bet anyone a million dollars that hyperinflation isn't happening (the joke being that if hyperinflation did occur, a million dollars would be easy to pay)

https://twitter.com/jdcmedlock/status/1636480393007489024

Rare bit of personal integrity from the Bitcoin community that Srinivisan actually payed out.

Right wing fear-mongering about runaway inflation was quite hot at the time and being used to shill crypto investments as a supposed hedge against the soon to be doomed US dollar.

Medlock says he plans to buy a fancy cat condo for ferals in his neighborhood, among other things:

Medlock has plans for the rest of the money. “I’ll pay off some debt, build a nice cat house for my neighborhood feral, and invest in a much better investment than BTC, namely low-fee index funds.”

https://qz.com/the-case-for-investing-a-lot-more-in-middle-managers-in-1850548862
 
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All this started as a response to a ****-post by Medlock that he'd bet anyone a million dollars that hyperinflation isn't happening (the joke being that if hyperinflation did occur, a million dollars would be easy to pay)

Not a very smart bet. If you win, you get, effectively, about $30,000, but if you lose you have to pay about a million dollars.

Sadly, even though I would love to take the other side of that bet, I couldn't in good conscience take a bet that I cannot make good on in the event I lose, even if I'm nearly certain that I won't lose.

I suppose you could hedge your bet by buying a bitcoin, just in case, assuming you can afford one. But that exposes you to price fluctuations of bitcoin for 90 days.
 
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Not a very smart bet. If you win, you get, effectively, about $30,000, but if you lose you have to pay about a million dollars.

Sadly, even though I would love to take the other side of that bet, I couldn't in good conscience take a bet that I cannot make good on in the event I lose, even if I'm nearly certain that I won't lose.

I suppose you could hedge your bet by buying a bitcoin, just in case, assuming you can afford one. But that exposes you to price fluctuations of bitcoin for 90 days.

My understanding is that both parties put their wager into escrow, so a payout was going to happen. Nothing to worry your conscience over.

The risks of this bet really are quite low. The terms of the bet is that the price of bitcoin would exceed 1 million USD (priced around 30,000 USD at the time) within 90 days, presumably because the floor was going to fall out from under the US dollar and rapidly become essentially worthless while Bitcoin more or less stayed the same. These doomsaying weirdos weren't just saying that inflation would be bad, they were saying the US was going to enter hyperinflation, which is a real economic term that is defined.

We're talking "wheelbarrows full of money for a day's wage" levels of inflation, money that's more useful for burning as fuel or using as bricks than as currency.

In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, the book often regarded as the first serious study of hyperinflation and its effects[5] (though The Economics of Inflation by C. Bresciani-Turroni on the German hyperinflation was published in Italian in 1931[6]). In his book, Cagan defined a hyperinflationary episode as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year.[7] Economists usually follow Cagan's description that hyperinflation occurs when the monthly inflation rate exceeds 50% (this is equivalent to a yearly rate of 12874.63%).[5]

https://en.wikipedia.org/wiki/Hyperinflation
 
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Wouldn't BTC almost immediately become worthless in the event of hyperinflation in a superpower economy? I mean, if the Great Satan tanked, that's got global.economic consequences that make online monopoly money pretty worthless, yeah? I mean, what are you doing with crypto if you are burning dolla bills to cook roadkill?
 
Wouldn't BTC almost immediately become worthless in the event of hyperinflation in a superpower economy? I mean, if the Great Satan tanked, that's got global.economic consequences that make online monopoly money pretty worthless, yeah? I mean, what are you doing with crypto if you are burning dolla bills to cook roadkill?

It's an open question as to whether the global petrodollar can even go bust, but yeah, I assume you're right that the USD going tits up would be a worldwide catastrophic event that would make Kohls cash Bitcoin funbucks worthless. People would be too busy trying to snare rabbits in the wreckage of society to trade crypto. More likely to use a PC case as a stove than to fire up the blockchain

All the more reason to take that bet, at least for the winning side
 
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Wouldn't BTC almost immediately become worthless in the event of hyperinflation in a superpower economy? I mean, if the Great Satan tanked, that's got global.economic consequences that make online monopoly money pretty worthless, yeah? I mean, what are you doing with crypto if you are burning dolla bills to cook roadkill?

Almost certainly. BTC is not really currency. Practically no one uses it to buy and sell things, except for illicit transactions. Its mainly traded by people hoping to make money against the USD/Euro etc. Makes perfect sense for someone in Argentina or Turkey to hold though if they cannot get their hands on a real major currency.

What happened when the USD inflated in 2022? Did BTC beat it? No. It was trashed.
 
Almost certainly. BTC is not really currency. Practically no one uses it to buy and sell things, except for illicit transactions. Its mainly traded by people hoping to make money against the USD/Euro etc. Makes perfect sense for someone in Argentina or Turkey to hold though if they cannot get their hands on a real major currency.

What happened when the USD inflated in 2022? Did BTC beat it? No. It was trashed.

I don't even know it's that great for illicit purposes anymore. The Silk Road days are well behind us. Price is far too volatile for anyone who isn't speculating.

But yeah, BTC being an investment vehicle means that when real money is short, people cash out and the price drops.
 
I don't even know it's that great for illicit purposes anymore. The Silk Road days are well behind us. Price is far too volatile for anyone who isn't speculating.

But yeah, BTC being an investment vehicle means that when real money is short, people cash out and the price drops.

Yeah exactly. Without getting into the really illicit stuff, I see some things like anonymous VPN's that let you optionally pay in BTC. However, their price in BTC is just the calculated value of a real currency. For example, if its based in Sweden, they might offer it for 100 Kronar a month, or optionally you can pay whatever BTC is valued against the Kronar at that specific time. Practically nothing is actually priced in BTC.
 
This was a PR stunt. I mean, seriously, Bitcoin to go up over 30X in 90 days? And I note that according to the article, the bet was "cancelled early" apparently for $500,000, not $1 million, which was paid to a "pseudonymous" blogger. The story may have more manure in it than your average cow pasture.
 
This was a PR stunt. I mean, seriously, Bitcoin to go up over 30X in 90 days? And I note that according to the article, the bet was "cancelled early" apparently for $500,000, not $1 million, which was paid to a "pseudonymous" blogger. The story may have more manure in it than your average cow pasture.

I doubt it.

The "James Medlock" account is an outspoken lefty economic policy poster and the account itself is nearly a decade old. If you're suggesting this is just a sock puppet, that's quite a bit of commitment to the bit. The account has been commenting heavily on financial policy current events for years now.

Strange PR to be seen giving money to someone who is generally quite critical of crypto.
 
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I doubt it.

The "James Medlock" account is an outspoken lefty economic policy poster and the account itself is nearly a decade old. If you're suggesting this is just a sock puppet, that's quite a bit of commitment to the bit. The account has been commenting heavily on financial policy current events for years now.

Strange PR to be seen giving money to someone who is generally quite critical of crypto.

Your point on Medlock. But I'm still scratching my head at any other explanation than the cryptodude got more that he shelled out in free publicity. Why would Medlock settle the bet for half the amount he was owed? Yes, there was time remaining but he had to be even more confident than when he made the original bet, precisely because time had passed and Bitcoin was not moving significantly.
 
Your point on Medlock. But I'm still scratching my head at any other explanation than the cryptodude got more that he shelled out in free publicity. Why would Medlock settle the bet for half the amount he was owed? Yes, there was time remaining but he had to be even more confident than when he made the original bet, precisely because time had passed and Bitcoin was not moving significantly.

Sure, he's either high on his own supply, or more likely felt that the high profile bet was good press, even if he knew it was a loser.

Hard to make sense of these kind of cranks, their "fiat is doomed" predictions read as pure gobbledygook to me. His blog posts explains why he settled early, though his reasoning seems quite nonsensical to me.

https://balajis.com/p/fiat


Seems they agreed to send half of the million to a charity, so Medlock only ended up with 500k, and Balaji ended up throwing another 500k in for "bitcoin development", taking him all in for 1.5 million.

As noted in the video, the million dollar bet is now closed out by mutual agreement. I made $1M+ in provable on-chain donations, which you can verify by clicking the links below:

$500k to Bitcoin Core development via Chaincode (block explorer, tweet 1, tweet 2)

$500k to Give Directly (block explorer, tweet)

$500k to Medlock (block explorer, tweet)
 
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Wouldn't BTC almost immediately become worthless in the event of hyperinflation in a superpower economy? I mean, if the Great Satan tanked, that's got global.economic consequences that make online monopoly money pretty worthless, yeah? I mean, what are you doing with crypto if you are burning dolla bills to cook roadkill?
The price of bitcoin is not tied to any currency/commodity so I fail to see how a collapse of the USD would bring BTC down with it.

If anything, the collapse of the USD would probably bring more people to BTC but in a world where the USD collapsed, things would be too chaotic for any reliable predictions.
 
The price of bitcoin is not tied to any currency/commodity so I fail to see how a collapse of the USD would bring BTC down with it.

Well, if you say a Bitcoin is worth one Bitcoin, that's pretty useless. BTC only has meaning when weighed against real currency. Absent a meaningful standard, BTC is monopoly money, only as good as people declare it to be. The Ruble is illustrative, there. Should the US economy go full tilt El Tanko, I don't think online anything is going to have market value. We'd be lucky if servers stayed up and running, much less widespread internet access. There's really no point to online commodity speculation when there are no buyers.

Like, in the event of global economic collapse, PayPal and Visa and all go belly up, and whatever credits you had online with them are gone. Same with BTC. No robust online economy, no Bitcoin value.

If anything, the collapse of the USD would probably bring more people to BTC but in a world where the USD collapsed, things would be too chaotic for any reliable predictions.
To buy what, especially with no casual internet?
 
Well, if you say a Bitcoin is worth one Bitcoin, that's pretty useless. BTC only has meaning when weighed against real currency. Absent a meaningful standard, BTC is monopoly money, only as good as people declare it to be. The Ruble is illustrative, there. Should the US economy go full tilt El Tanko, I don't think online anything is going to have market value. We'd be lucky if servers stayed up and running, much less widespread internet access. There's really no point to online commodity speculation when there are no buyers.

Like, in the event of global economic collapse, PayPal and Visa and all go belly up, and whatever credits you had online with them are gone. Same with BTC. No robust online economy, no Bitcoin value.


To buy what, especially with no casual internet?
Ah, the Flanian Pobble Bead....
 
Well, if you say a Bitcoin is worth one Bitcoin, that's pretty useless.
That's why I don't say it. I say that one bitcoin is worth whatever somebody is willing to give in exchange for it. Even if currencies are worthless, you can always exchange BTC for a commodity (gold, silver etc).

But in the case of the total collapse of the USD, we have no idea of what the world will be like so we can't say that it would take down BTC. It is more likely that some other currency will become the de facto reserve currency of the world and BTC would probably be priced in that new currency.
 
That's why I don't say it. I say that one bitcoin is worth whatever somebody is willing to give in exchange for it. Even if currencies are worthless, you can always exchange BTC for a commodity (gold, silver etc).

But in the case of the total collapse of the USD, we have no idea of what the world will be like so we can't say that it would take down BTC. It is more likely that some other currency will become the de facto reserve currency of the world and BTC would probably be priced in that new currency.

The scenario of the bet is not just that the US dollar collapses but that it suffers hyperinflation. An economic event capable of doing that would be globally catastrophic. Nobody would have money of any denomination to put into BTC.
 
The scenario of the bet is not just that the US dollar collapses but that it suffers hyperinflation. An economic event capable of doing that would be globally catastrophic. Nobody would have money of any denomination to put into BTC.
Of course not. If the USD got hyperinflated away then there would be no money in the world.
 
Shades of Michaelsuede (late of this parish) and his claim that the silver in a pre-1946 dime would feed him for several days.

Everything about this prediction was utterly wrong, not least that dimes were 90% silver right up until 1964. Even I knew that and I'm British.
 
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