> So either way, Balaji is 100% guaranteed to lose money on this bet, no matter what happens. It’s not a risky bet; it’s a sure loser.
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.
A suit and tie wouldn't be blinked at in almost any other office job interview, especially if it's not on the West Coast. Tech has it's uniform like any other industry, and people care _deeply_ about sticking to it. It just happens to be casual wear we've adopted.
These idiots (and their like) are the people in charge of our industry cause they control the purse strings. They have no vision, and are just degenerate gamblers with money and an appetite for risk.
Making very specific predictions about the future is very similar to gambling: Depending on your psychological disposition, winning high and early might just be worse for you than losing.
Note it’s only a “sure loser” bet because Noah is factoring the opportunity cost of 37 Bitcoin into Balaji’s stake, which is not at all a conventional way of analyzing a bet.
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.
Alright, so my analysis was correct, good to know. I stand by my claim that Noah is analyzing the bet in a very unorthodox manner, in order to claim it’s a “sure loser” when it’s actually just a bad bet and not what people would usually think of when they hear “sure loser” and “mathematically no way to make money”.
a third option is that balaji already owns tons of bitcoin, and plans on manipulating the btc value just enough to largely compensate for the 1 million $, thus making money.
Just buying 37 BTC anonymously won't have the same effect on the btc price.
I assume all these high-profile crypto people have 10's of millions in crypto. Maybe I'm wrong. But if that's the case creating excitement around BTC seems like a good way to increase his portfolio value and $1M is really just marketing spend.
this seems the most rational. BTC is up 15% in the last 5 days. Who knows how much effect his publicity stunt is having on the price but assuming he has a large percentage of his liquid assets in bitcoin. The pump may end up making him more money than the million he puts into escrow.
Even if the USD fails someday this was a crazy bet. Even the most extreme economic failures like Venezuela and Argentina took many years to get to hyperinflation. The USD has gotten stronger relative to other currencies since covid. There's no way the world reserve currency collapses in the next 90 days.
But it has to for the crypto bros sniffing last week's BTC bubble to not be under water and out of breath. Balaji, David Sacks, Elon, Peter Thiel and others are astroturfing, using their crypto bro audience, economic collapse because they hold enough BTC to profit from it. This is watching disaster capitalism in the act.
He has either started getting high on his own supply, or it's one last pump-and-dump before he cashes out. You got 20 million in BTC and spend 1 to pump it up 25%? Good deal, enough to pay your taxes.
The guy made a grand claim on Twitter and because his credibility would be ruined, he was forced to play along and now he's losing a million dollars. What a clown hahaha
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.
If he convinces the world that bitcoin is an alternative to the banking crisis -- whether by losing 1 million dollars or against all odds winning his bet -- his overall pile of money will grow over time.
Something cynical about the BTC bros rooting/willing for a system to collapse that millions of people depend on just so that these guys can get hyper-rich/attain libertarian nirvana. Take a look at his feed and the BTC bros he retweets.
This is a perfect example of how mainstream doesn't get eccentrics like Balaji, Trump, Elon....
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.
How do you read a blog that says "So either way, Balaji is 100% guaranteed to lose money on this bet, no matter what happens. It’s not a risky bet; it’s a sure loser." and then come to this conclusion?
"if Bitcoin goes to $1M, Balaji gave up the opportunity to buy 37 BTC at a price of $27,000. He will thus wind up winning 1 BTC but losing 37 BTC" but that's not really losing the big picture. If BTC goes to $1M in the next 90 days https://thenetworkstate.com/ is happening!
Ok on one side he spends a million dollars and loses it because Bitcoin doesn't go to a million. On the other side he breaks even on the Bitcoin but doesn't feel bad about buying 37 because…someone creates an internationalized recognized country on the internet?
This feels like burning reputation to increase awareness
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.
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.