I was a little surprised today when Nathaniel Whittemore covered some of the best-selling excerpts from the New York Times targeting bitcoins in a recent episode of his podcast, “The Breakdown.” The first article attempted to challenge the decentralization of Bitcoin using mining statistics from the early days, when very few people were exploiting it. A second article by Paul Krugman attempted to denigrate Bitcoin by saying that it was essentially useless. This comes from a Nobel Prize-winning economist who is famous for an article on the Internet as a passing fad. Why do we trust these people, let alone what they think?
The difference between signal and noise is simple, but hard to see in times of panic or euphoria when prices become parabolic. To me, the price itself is noise. The price is on the margins; buyers and sellers outperform others for short periods. That doesn’t tell you anything about network strength or long-term adoption. Price stories are nothing more than attempts to generate fear-inspiring clicks based on short-term price movements.
The signal, on the other hand, is deeper; a look under the hood, if you will. Stories about the hash rate reaching an all-time high, implying that the network is more secure than ever. Stories that show unique addresses of bitcoins reaching an all-time high, indicating a continued growth in the number of users. Bank of America polls show that 90% of Americans plan to invest in bitcoins next year, demonstrating continued adoption and higher growth. All of these issues have been addressed in recent days, regardless of falling prices. Signal.
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The signal on Bitcoin is happening every day, but it seems that we are inundated with pieces of fear, uncertainty and doubt (FUD) and crystal ball technical analysis predictions about the end of the world. I’m here to remind you that most media companies rely on clicks. Clickbait generates engagement and engagement generates advertising revenue. Don’t let these headlines fool you, there’s a sign hiding everywhere and there are a lot of valuable articles with more than you think.
A Miniature Case Study: Benzinga Whale Alerts June 10, 2022
A few days ago I noticed that in a few minutes Benzinga had published two articles: one about a whale exchange depot and the other about a whale retreat. Bezinga will often value the deposit in US dollars, while maintaining the withdrawal in terms of bitcoins. The items are almost identical for each type of trade and will characterize currency deposits as a bearish signal, while describing currency withdrawals as a prudent long-term holding technique.
“Why it’s important: cryptocurrency transfers from wallets to exchanges are usually a bearish signal.”
Versus:
“Why is it important: Bitcoin ‘Whales’ (investors with $ 10 million or more in BTC) usually send cryptocurrencies from exchanges when they plan to keep their investments for an extended period of time. Storing large amounts of Money in an exchange poses an additional risk of theft, as exchange portfolios are the most sought after target for cryptocurrency hackers.
Perhaps most interestingly, if you take the time to do the calculations, you will be able to see as clearly as the day that the withdrawal withdrawals far exceed the deposits. In this particular snippet, nearly $ 200,000,000. Nine full digits. So where is the bearish signal here?
They could have grouped together for days or weeks and written a thoughtful article on the clean movements of whales to actually dive into the actual signal, but they don’t. Because just like the New York Times, headlines and clicks are all that matters. They just want the volume.
Technology-induced deflation, Jeff Booth’s thesis as described in his book, “The Price of Tomorrow,” is unfolding before our eyes. The Internet has disrupted access to and dissemination of information. A big help for billions of people, but also a double-edged sword that has cut the financial positions of big media companies, forcing them to fight small publishers like Benzinga for your attention.
This is one of the reasons I love Bitcoin Magazine so much. They have many articles criticizing bitcoin. They do it all the time, but it’s fundamentally different in the sense that you won’t find it with a flashy title to drive engagement alone. I see it as a way to move the web forward: experts presenting their cases to develop the conversation with other experts. It is not a lightly veiled piece that can be easily refuted or blatantly skewed. Download the Carrot i app Bitcoin Magazine it will even pay you to read their articles. Value by value; a mutually beneficial transaction. Can you say the same about Benzinga? The New York Times? I haven’t even been able to access New York Times articles because they’re hidden behind a pay wall. A small practical obstacle to strengthening the echo chamber.
Finding a real signal through all this noise seems to be getting harder and harder, especially in this perceived bear market. All I can say is that I don’t trust the headlines. Especially when they are shocking or sensational. Media companies keep track of their incentives just like anyone else. When the incentive is to generate as much involvement as possible, sometimes this juicy headline turns out to be the complete opposite of what was actually written.
This is a guest post by Mickey Koss. The views expressed are purely personal and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.