Spitznagel: Why Cryptocurrencies Will Never Be Safe Havens

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Authored by Mark Spitznagel via The Mises Institute,

Every further new high in the price of Bitcoin brings ever more claims that it is destined to become the preeminent safe haven investment of the modern age — the new gold.

But there’s no getting around the fact that Bitcoin is essentially a speculative investment in a new technology, specifically the blockchain. Think of the blockchain, very basically, as layers of independent electronic security that encapsulate a cryptocurrency and keep it frozen in time and space — like layers of amber around a fly. This is what makes a cryptocurrency “crypto.”

That’s not to say that the price of Bitcoin cannot make further (and further…) new highs. After all, that is what speculative bubbles do (until they don’t). 

Bitcoin and each new initial coin offering (ICO) should be thought of as software infrastructure innovation tools, not competing currencies. It’s the amber that determines their value, not the flies. Cryptocurrencies are a very significant value-added technological innovation that calls directly into question the government monopoly over money. This insurrection against government-manipulated fiat money will only grow more pronounced as cryptocurrencies catch on as transactional fiduciary media; at that point, who will need government money? The blockchain, though still in its infancy, is a really big deal.

While governments can’t control cryptocurrencies directly, why shouldn’t we expect cryptocurrencies to face the same fate as what started happening to numbered Swiss bank accounts (whose secrecy remain legally enforced by Swiss law)? All local governments had to do was make it illegal to hide, and thus force law-abiding citizens to become criminals if they fail to disclose such accounts. We should expect similar anti-money laundering hygiene and taxation among the cryptocurrencies. The more electronic security layers inherent in a cryptocurrency’s perceived value, the more vulnerable its price is to such an eventual decree.

Bitcoins should be regarded as assets, or really equities, not as currencies. They are each little business plans — each perceived to create future value. They are not stores-of-value, but rather volatile expectations on the future success of these business plans. But most ICOs probably don’t have viable business plans; they are truly castles in the sky, relying only on momentum effects among the growing herd of crypto-investors. (The Securities and Exchange Commission is correct in looking at them as equities.) Thus, we should expect their current value to be derived by the same razor-thin equity risk premiums and bubbly growth expectations that we see throughout markets today. And we should expect that value to suffer the same fate as occurs at the end of every speculative bubble. 

If you wanted to create your own private country with your own currency, no matter how safe you were from outside invaders, you’d be wise to start with some pre-existing store-of-value, such as a foreign currency, gold, or land. Otherwise, why would anyone trade for your new currency? Arbitrarily assigning a store-of-value component to a cryptocurrency, no matter how secure it is, is trying to do the same thing (except much easier than starting a new country). And somehow it’s been working.

Moreover, as competing cryptocurrencies are created, whether for specific applications (such as automating contracts, for instance), these ICOs seem to have the effect of driving up all cryptocurrencies. Clearly, there is the potential for additional cryptocurrencies to bolster the transactional value of each other—perhaps even adding to the fungibility of all cryptocurrencies. But as various cryptocurrencies start competing with each other, they will not be additive in value. The technology, like new innovations, can, in fact, create some value from thin air. But not so any underlying store-of-value component in the cryptocurrencies. As a new cryptocurrency is assigned units of a store-of-value, those units must, by necessity, leave other stores-of-value, whether gold or another cryptocurrency. New depositories of value must siphon off the existing depositories of value. On a global scale, it is very much a zero sum game.

Or, as we might say, we can improve the layers of amber, but we can’t create more flies.

This competition, both in the technology and the underlying store-of-value, must, by definition, constrain each specific cryptocurrency’s price appreciation. Put simply, cryptocurrencies have an enormous scarcity problem. The constraints on any one cryptocurrency’s supply are an enormous improvement over the lack of any constraint whatsoever on governments when it comes to printing currencies. However, unlike physical assets such as gold and silver that have unique physical attributes endowing them with monetary importance for millennia, the problem is that there is no barrier to entry for cryptocurrencies; as each new competing cryptocurrency finds success, it dilutes or inflates the universe of the others.

The store-of-value component of cryptocurrencies — which is, at a bare-minimum, a fundamental requirement for safe haven status — is a minuscule part of its value and appreciation. After all, stores of value are just that: stable and reliable holding places of value. They do not create new value, but are finite in supply and are merely intended to hold value that has already been created through savings and productive investment. To miss this point is to perpetuate the very same fallacy that global central banks blindly follow today. You simply cannot create money, or capital, from thin air (whether it be credit or a new cool cryptocurrency). Rather, it represents resources that have been created and saved for future consumption. There is simply no way around this fundamental truth.

Viewing cryptocurrencies as having safe haven status opens investors to layering more risk on their portfolios. Holding Bitcoins and other cryptocurrencies likely constitutes a bigger bet on the same central bank-driven bubble that some hope to protect themselves against. The great irony is that both the libertarian supporters of cryptocurrencies and the interventionist supporters of central bank-manipulated fiat money both fall for this very same fallacy.

Cryptocurrencies are a very important development, and an enormous step in the direction toward the decentralization of monetary power. This has enormously positive potential, and I am a big cheerleader for their success. But caveat emptor – thinking that we are magically creating new stores-of-value and thus a new safe haven is a profound mistake.

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Scientists are testing out a device that could heal organs and brain injuries in seconds

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Ohio State University created a non-invasive chip that uses Tissue Nanotransfection to alter skin cells into cells of any kind according to their study. Researchers say it may be able to heal anything from nerve damage to brain injuries. It’s only been tested on mice and pigs, but researchers hope to start clinical trials on humans in 2018.

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Scientists Finally Unlock the Recipe For Magic Mushrooms

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Image: Shuttershock

Based on prior reporting from field work and various sources, this reporter can confidently conclude that magic mushrooms are very chill. There’s more than college weekends to back that stance up, though. Past research has suggested they can help with the existential anxiety of cancer, positively change personalities, and even help kick nicotine addictions.

You might wonder, then, why doctors don’t prescribe mushrooms’ active ingredient, psilocybin. Aside from being a schedule 1 drug, scientists haven’t fully understood the chemistry behind how mushrooms produce the chemical—until now. A new study may finally lay the groundwork for a medical-grade psilocybin patients can take.

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“Given the renewed pharmaceutical interest in psilocybin, our results may lay the foundation for its biotechnological production,” the researchers write in the study published this month in the journal Angewandte Chemie (it’s German).

Living things make molecules through a series of chemical reactions, similar to how car makers produce cars on assembly lines. Enzymes act as the workers/robots, speeding up the reactions by helping put the pieces together. Actually making psilocybin requires mapping the biological factory.

A 1968 paper (obviously it was in 1968) offered a proposed order of events leading to a finished psilocybin molecule, by adding radioactive elements and watching what happened to them on the assembly line. The researchers thought that maybe tryptophan, the amino acid everyone wrongly says makes you sleepy, was the first piece, which then went through four successive steps to become the finished product.

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The new study shows that the 1968 paper got the order wrong, and introduces the responsible genes and enzymes, the workers that do the specific task to get the final product. This time around, mapping the factory required sequencing the genomes of two magic mushroom species, Psilocybe cubensis and Psilocybe cyanescens. Then, the researchers found exactly which genes produce the required enzymes and spliced them into E. coli bacteria. Using those enzymes, they were able to rebuild the factory and create their own psilocybin. Hell yeah.

If you’re interested in the actual steps: It starts with a special kind of tryptophan molecule, with an extra oxygen and hydrogen stuck on, like an anglerfish with a big head and a tail and an extra piece hanging off like the headlight. An enzyme the researchers named PsiD first strips a carbon dioxide molecule off of the tail. Then, an enzyme they called PsiK phosphorylates it, meaning it replaces the headlight’s oxygen with a special setup of phosphorus with some oxygen attached. A final enzyme, called PsiM, works to replace two hydrogen atoms on the tail with methyl groups, or carbon atoms with three hydrogens attached.

There, now you know how to make psilocybin. Go crazy! Re-enact Breaking Bad!

Other scientists thought this was a praiseworthy advance, reports Chemical and Engineering News. “The new work lays the foundation for developing a fermentation process for production of this powerful psychedelic fungal drug, which has a fascinating history and pharmacology,” University of Minnesota, Twin Cities medicinal chemist Courtney Aldrich told them.

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There are still regulatory hurdles, and it won’t be tomorrow that your doctor will prescribe lab-made psilocybin. But medical-grade magic mushroom pills could be closer than you think.

[Agewandte Chemie via C&EN] 

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The Challenges of Programmatic Advertising and How to Overcome Them [Infographic]

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Programmatic ad buying can save marketers time and create more efficient advertising programs. But, as an infographic by Infectious Media explains, it’s not a panacea, and marketers face three top challenges when buying media:

1. Brand safety: The infographic explains that the longer the supply chain, the more chances that advertisers lose transparency and data, which means loss of control over brand safety.

2. Ad fraud: This is a scary term, and fraud is expected to cost advertisers $16.4 billion this year, the infographic says.

3. Viewability: The ability of recipients to actually see you ads varies by device and advertising network.

But don’t lose hope. The infographic ends by explaining that a layered approach with both tech and human elements can help brands maximize the quality of their media buys. To learn more, check out the infographic:

Laura Forer is the manager of MarketingProfs: Made to Order, Original Content Services, which helps clients generate leads, drive site traffic, and build their brands through useful, well-designed content.

LinkedIn: Laura Forer

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A physical therapist explains how to recover from a tough workout

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Erica Fritz, a physical therapist and the manager of the Orthopedic Physical Therapy Center at Hospital for Special Surgery, explains how you should stretch for your workouts. The following is a transcript of the video:

Soreness is a very common thing, and it’s interesting because soreness after activities usually doesn’t onset right away. We call it delayed onset muscle soreness. Usually happens 24 to 48 hours after the activity. 

One of the most important things for muscle recovery and for your body is to make sure you stay hydrated. We see a lot of athletes, especially in athletic training, who are dehydrated and that’s a very dangerous thing.

So make sure you stay hydrated, whether it’s water, using sports drinks. I wouldn’t just do straight Gatorade alone. You want to mix it with some water as well.

Also, you want to do some sort of active recovery exercise. For example, the day after a big sporting game you don’t need to go do full-force exercises, but you might want want to do some light jogging, exercise bike, something to keep your muscles going to pump out any sort of muscle soreness that you have.

But you need to give yourself time to recover. So you want to go, like, half-speed with everything that you’re doing.

Stretching is important. So stretching has been shown to reduce muscle pain and discomfort. So doing those prolonged static stretching the day after exercise is beneficial.

And then also things like massage. So we really use foam rolls a lot at Hospital for Special Surgery with all of our athletes. If you ever see us at a Road Runner event or a race, we’ll have foam rolls out.

Because getting on a foam roll can help lengthen the muscle, but it also really is effective at reducing soreness and discomfort.

Also, rest is important. We see a lot of tendinitis overuse injuries. And it’s because people want to go, go, go every single day. But when you’re working out, you get little microtears in the muscle. And if you keep getting these microtears day in and day out, it leads to tendinitis injuries. So, rest.

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A blood test for cancer could be closer than people realize

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  • bloodThe gold standards for cancer detection still have many flaws.
  • Cancer researcher Jimmy Lin has developed a blood test that promises faster, less invasive, and more specific results.
  • Research in cancer patients could lead to trials on healthy people. 

The best way people can maximize their chances of surviving most cancers is to catch them as early as possible, and Jimmy Lin thinks he’s found the new gold standard in detection: a blood test.

Lin is a cancer genomics researcher, which means he looks at how cancer works on a genetic level. In April, he gave a TED talk that shed light on the shortcomings of the three leading cancer detection methods.

The first, medical procedures, are highly invasive. The second, testing for protein biomarkers, can produce a lot of false positives. And the third, imaging, can expose people to harmful levels of radiation, and it doesn’t always work for everyone.

For the past few years, Lin has been interested in the idea of a non-invasive, highly specific, and widely applicable test that could find cancer early on.

"Does such a technology exist?" Lin asked the TED crowd. "Well, I wouldn’t be up here giving a talk if it didn’t."

Detecting trace DNA

The solution currently being developed by Lin and his team at the biotech company Natera is a blood test that can screen for all types of cancer. They’ve already found promising results. In his talk, he described a study in which doctors monitoring lung cancer patients in remission were able to use the blood test to catch the cancer’s reccurence 100 days before traditional methods like a CT scan. That 100-day window, Lin said, could mean the difference between life and death.

The week after he gave his TED talk, Lin and his colleagues published the full study in the journal Nature. (Since the study hadn’t been published, he couldn’t talk about it in full at TED.)

The study showed that out of 24 cancer patients studied over time, the blood test picked up their cancer DNA 93% of the time and produced no false positives. The test also managed to detect cancer reccurence as early as 11 months before traditional methods.

"Lung cancer, when it recurs, is a pretty aggressive disease," Lin told Business Insider. Even the earliest stage, Stage IA, carries about a 50-50 chance of survival over a five-year period. For the worst stage, metastatic lung cancer, the five-year survival rate drops to 1%.

Lin conceded the data aren’t perfect, even if the test seems to work. His future studies will increase the sample size to hone in on the specificity of the test — or the ability for it to pick up one kind of cancer and not just cancer DNA in general.

As the company pursue that goal, Natera will make the blood test available for research use on cancer patients later this fall. At some point in 2018, armed with better data about which cancer varieties the test screens for best, Natera plans to launch a cancer-specific test for clinical use.

An even bigger jump, Lin said, is moving from testing cancer patients in remission to testing healthy patients. When doctors screen people that have had cancers with a possibility of recurrence, the chances are much greater of putting the test to work. But in healthy people it becomes more of a shot in the dark, and researchers can’t be as sure they’re not getting a false positive.

Decades down the line, Lin hopes patients will be able to learn if they have cancer in the same way they learn if they have high cholesterol. The presence or absence of cancer DNA would be just another piece of data on the long printout of bloodwork.

In the meantime, Lin advises people to rely on the current methods. Methods like colonoscopies and mammograms aren’t perfect, but they still reduce cancer-related risk of death dramatically.

"Those adoption rates could be higher," Lin said. "So even with existing technologies, people should have this done."

SEE ALSO: Here are the ages you peak at everything throughout life

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NOW WATCH: Scientists have developed a new weapon in the fight against cancer

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Here Are The Top Relationship Dealbreakers According To Women, Plus What They WILL Tolerate

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top relationship dealbreakers for women

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Once again, here we are talking about dating. Why? Because for centuries now both men and women have been doing it wrong over and over and over again. Not that there is any 100% fool-proof right way to do it, because there isn’t. Which probably explains why we keep doing it wrong and why here we are talking about dating again.

That being said, it’s always nice to have a little pertinent data on our side as we venture out to try to find a mate. Which is where this survey of 1,500 adults by Superdrug Online Doctor comes into play.

In this survey they answer some of the tough question like: How often do people do the deed, and is it as often as they’d like? Do they prefer a partner who is a professional chef in the kitchen or a god in bed? And what sexual tastes are considered relationship deal-breakers? And what people would and would not be willing to put up with in a relationship.

Ready to learn? Again? Here we go…

Sexuality and romance sometimes go hand in hand. More than half of all European and American men and women described themselves as “somewhat romantic” and “somewhat sexual.”

However, nearly 30 percent of all men considered themselves to be “extremely sexual,” while 17 percent of all women responded the same. Interestingly, around 19 percent of all men and women said they were “very romantic.”

European men cared more about their partner being great in bed than being a great cook (nearly 73 percent). However, American men and women most valued effective communication over sexual prowess – almost 88 percent of women and nearly 73 percent of men preferred their partner to be a great communicator over being great in bed.

Overall, men would have sex much more often than women, with over 7 percent of women wanting sex more than once a day compared to nearly 18 percent of men. However, a good portion of men and women (over 42 percent and 48 percent, respectively) would prefer to jump in bed just a few times a week.

Sixty-six percent of European and American men would rather date someone who forgot their anniversary than someone who’s quick to cross the finish line. Comparatively, just over half of women surveyed would prefer to date someone who forgot their anniversary than someone who can’t pace him or herself during sex.

Men and women most certainly do think differently when it comes to relationship deal breakers. In fact, roughly 15 percent of women would break up with someone if they did not receive compliments regularly, compared to only 7 percent of men.

More than 1 in 4 respondents are or have been in a relationship with someone who is not good in bed; however, the average length of this kind of relationship was one year and five months. Almost 12 percent of people said they were in a relationship with someone they found unattractive, but these relationships lasted a somewhat shorter length of time.

Got all that? I know, it’s a lot to take in, but apparently communication is key to making a partnership last. Go figure.

Check out the rest of the survey over at Superdrug Online Doctor.

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Stocks, Dollar Bounce On Relief World Did Not End This Weekend

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The world did not come to an end this weekend and that’s all the excuse markets needed to squeeze higher again…

 

World did not end – yay! Buy Stocks, Dump Gold…

 

But bonds and bullion remain the winners since Trump spoke last week…

 

December rate-hike odds bounced higher today but remain well below levels before CPI/PPI hit last week…

 

Trannies and Small Caps were panic bid but one glance at the chart below and its clear that The Dow and S&P went nowhere from the gap higher open…

 

All the indices remain red post-"fire-and fury"…

 

The S&P bounced back above its 50DMA but Small Caps remain below theirs…

 

Financials and Tech outperformed (though notably drifted only marginally higher from the opening gap) and Energy underperformed as oil lagged…

 

FANG Stocks retraced half the "Fire & Fury" losses then faded…

 

VIX was clubbed back down towards its 200DMA (at 11.99) but failed to make it…

 

Another quick rip and dip in vol…

 

VXX (VIX ETF) tumbled back below its 50DMA..

 

Treasury yields remain below last week highs but were marginally higher on the day, thanks to comments from The Fed’s Dudley on balance sheet normalization…

 

However, 30Y yields never even made it back to Friday’s highs…

 

The Dollar Index rallied on the day…erasing the post-CPI plunge thanks to Dudley’s comments…

 

With all the majors weaker against the greenback…

 

We wonder if this is the start of 2016 deja vu all over again…

 

Gold sank modestly lower after failing to tag $1300 into Friday’s close…

 

Ugly day for WTI Crude…

 

Finally, don’t worry America – FED’S DUDLEY SAYS ASSET PRICES CONSISTENT WITH ECONOMY’S PERFORMANCE…

hhmm.

 

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