🚨LARGE INFORMED PLAYERS HAVE BEEN RISK ON SINCE LIBERATION DAY AND ARE INCREASING THEIR EXPOSURE FURTHER DURING THIS GEOPOL DIP.

*March 2021: Admiral Davidson, head of US Indo-Pacific Command, testified before the Senate Armed Services Committee that a Chinese move on Taiwan will "manifest during the next six years."

*June 2021: General Mark Milley clarified that Xi Jinping had ordered the People's Liberation Army (PLA) to be capable of an invasion by 2027, even though a final decision hadn't been made.

*February 2023: CIA Director Burns went on the record stating that US intelligence "knows as a matter of intelligence" that Xi has instructed the PLA to be ready for a successful invasion by 2027.

*July 2023: CIA Director William Burns & DNI Avril Haines personally briefed top tech with classified assessments that China's military buildup was specifically synchronized to reach peak readiness by 2027.

Smart money always knew 2026 was scheduled to run hot.

[BTFD before everything rips!]

Best macro analysis by far imo, you're missing out on some serious macro alpha if you aren't following @bullcase. It has the most convincing bull thesis by far for 2026

It seems like the IRS just built a form that maps out every wallet or exchange you've ever used. And of course this Tik toker who has no clue about the tech shills Monero in the end. If you use Monero for privacy all you do is make Palantir rich.

That said, it's almost as if we're inside a social experiment where they ban privacy, try to push surveillance as far as they can until it reaches a point where people finally realize why privacy matters. Then when privacy becomes a social norm, they roll back everything.

And privacy laws become the litmus test that differentiate the "free" world from Russia and China.

By the way, China and Russia have very effective capital control laws in place. Ever think how would the world change if only there was a way to make those capital control laws ineffective? It's either that or we have to fight a kinetic war at some point

I think crypto as we know it will take a huge hit in the next 2 years. The current supercycle started in 2008 with Obama's QE, QE however came with many strings attached. When you print a lot of money, you want to make sure that the extra money goes in the right places (ie: to prevent the too big to fail from failing) to avoid inflation and the erosion of purchase power.

For this, QE comes with a progressive restriction of privacy rights, through the implementation of capital control laws and excessive taxation. At least here (in our side of the world), it's not because we're worried people may run away with their earnings/savings to China or Russia. The reason we have capital control laws is to prevent that money created to close balance sheet holes falls through the cracks and ends up triggering Weimar-style hyperinflation.

I mean we print so big banks stay solvent, and numbers on computer screens keep showing the right amount. We don't want plebs to start playing if I don't see it I don't believe it, and then try to withdraw all that money in cash. Because then we would see people with wheelbarrows full of money moving around and hyperinflation would kick in.

Of course though, we justify the choking points with prove you're not a criminal if you want to withdraw more than X amount. A lot of "criminals, terrorists, sanction dodgers etc" out there Billie, to keep you safe, I need to verify this first.

In Russia/China, on the other hand, they've capital control laws for another reason, because without them people would take the money and run to invest elsewhere. Now I've been reading up a bit on Kevin Warsh and if in 2027 shit hits the fan in Taiwan, the fun begins. Warsh says we're in the beginning of a structural decline in prices because of AI. Remember how companies used to go to China to save on labor force? Now they will move to US to save even more by leveraging AI, and this means lower prices and a stronger dollar long term. Since we no longer need to outsource manfucturing to China and elsewhere offshore, we no longer need a weak dollar.

Now the best part, why should privacy maximalists & cypherpunks care?

I will tell you in the next post with a chart I created that shows why this is has huge implications for privacy...hold on a sec

Believe it or not, this policy shift will lax up all surveillance laws and privacy will become the norm again.

A structural decline in prices implies M2 will be reduced, and how Kevin Warsh plans to do this remains to be seen, but what matters is that when you dry up excessive liquidity, you no longer need capital control laws, so you go back to "privacy first" laws. See the attached chart, I hope you get what I mean.

Anything that isn't private in this new paradigm will be dumb and useless. Even BTC imo will stop going up, now that's a bold call I know so please bear in mind none of this is financial advice. After 2027, I think a new regime will kick in, and Ray Dalio must know something since he is openly talking about privacy and criticizing bitcoin for being transparent.

TLDR: The Dark Age of privacy coins is about to end, especially for the ones that work as intended (like Dero).

An interesting read 🤔

That article brings up 2 important points: cockroach level defi and the agentic economy. Then it implodes when it calls Eth cockroach level defi.

Anyway, if in the future AI will be commoditized, then frictionless and censorship resistant payment rails will be required. Agents will interact with each other as they are programmed to perform specific tasks, and each call will need to be paid, from agent to agent.

But also, to make this AI accessible to real people and deliver utility, we will again need frictionless payment rails for the front end. So while AI won't need big container ships to be shipped globally, it will need censorship resistant money that is private, global/unstoppable and decentralized.

This currency can't be transparent, can't be POS/censorable, and can't have 99% of its chips produced in Taiwan.

Said currency will become a way of converting energy into intelligence. Now I can't help but wonder, what will that currency be?

And also, when people think of friction, they think of fees. In reality lack of privacy is an even bigger source of friction, because anything that's not private can be surveilled/controlled/censored/gatekept.

Laws and bans aside, surveillance on its own can have a cooling effect. If I'm worried big brother will be able to detect when I buy AI, I'm less likely/more scared to buy AI. For any country that aims to become an AI powerhouse and sell AI by the meter, like Sam Altman says here, then such p2p cash solution will be key for max market share/size.

And again, I can't help but wonder, what will that currency be? Bitcoin, Eth, ZEC, Monero or...Dero?

Eid Mubarak to everyone celebrating! 🌙✨

🚨BEARTARDS HAVE GONE FULL IDIOT SANDWICH BY PRICING 50% CHANCE OF RATE HIKE BY END OF YEAR (exclusive analysis by @bullcase)

Ten reasons why major TACO shocks are inbound and there will be no hikes:

*Bessent wants 10Y yields under 4.5%; Now: 4.40%
*Bessent wants 30Y yields under 5%; Now: 4.94%

In 2025, every single time yields approached those levels we saw TACO.

*Ongoing unofficial of negotiations via Qatar
*Ongoing official negotiations via Pakistan
*Fox News Poll: Trump -28 approval on Iran

There will be no boots on the ground, it's just a negotiation tactic. Trump has absolutely no room to escalate.

*Oil-to-copper ratio: 17 (Stagflation warning >25)
*Freight rejections at cycle high; if oil were hitting industrials, we'd see it here.

Inflation is far from becoming a problem.

There will be no hikes, only more cuts to run it hot. BTFD ASAP if you haven't yet.

Follow @bullcase if you haven't yet, they work really hard to deliver alpha ahead of everyone else. And not minutes ahead, but like months ahead, their altcoin picks are a bitty shitty but the macro analysis part is always on point and ahead of the curve

Canton Network, a banking cartel crypto project, has been doing conflict marketing by attacking ZKPs for being too risky for institutional adoption. As you probably know, I couldn't care less about institutional adoption, but it looks like someone has tipped Canton's shills about an important weakness in ZKPs.

ZKPs rely on SNARKs, SNARKs are a circuit of mathematical constraints where you basically create a set of rules and conditions that define what a valid transaction is. These rules are the brain of your network and are automatically enforced by the circuit at once. Whenever a user creates and signs a transaction, the wallet uses the transaction data as input to generate a proof that the conditions are satisfied. This proof then can be used by anyone to verify the outputs created with it are valid and makes sure the network accepts the new outputs.

So what's the problem here? The risk is that this is like a fully automated pizza vending machine, that does everything on its own from A to Z. You insert a coin, and get the pizza. If something goes wrong inside the machine however the process isn't stopped, you still get the pizza (eg: with grease oil on it)

Chains that don't use ZKPs are a bit different, because the pizza making process has some checks in place, such as humans in a cooking/preparation chain. Let's say a human prepares the base, another adds the ingredients you picked, another one bakes it, and the pizza is served to you ready. If something was wrong with the dough, or if the oven is underheated or overheated, or some ingredient is missing, the process is stopped and either restarted from scratch (if possible) or you're returned the money because the pizza making "failed".

The issue with ZKPs is that it assumes all constraints are working as intended, but what if someone put sand that weighs just like flour? There are no "humans" (proofs) to check the parts for faults along the process. The mathematical rules are executed together at once. If someone fills the dough tank with sand from the Maldives that the sensor detects as dough, then if you put your coins in the machine you will get a hot trail full of sand with tomato sauce and pepperonis on top. The vending machine takes your money and considers the job done. The process doesn't stop, you're served the bad pizza and take the loss.

In a preparation chain OTOH, even if the pizza comes out wrong, the company knows one of the 3 humans in the preparation chain did a mistake. Once the source is identified that human is trained to not repeat the mistake and the problem is fixed.

The problem with SNARKs is that they're very black boxish in execution, you don't know what went wrong until everything is very wrong and probably wrong beyond repair. Canton shills have got a point here, but the solution, obviously, is not a premissioned network like Canton.

Wait and see...wait and see.

Crypto Fear & Greed Index is now sitting in (Extreme) Fear for 70 consecutive days.

the LONGEST streak since the FTX collapse in 2022.

At this point, what other signal do you really need?

I've joined Nostr, follow me there if you're real and check out my first article on the platform. You will find some new insights I've never shared before about Cryptonote, Zcash, SNARKs, FCMP, homomorphic encryption and verifiability https://primal.net/a/naddr1qvzqqqr4gupzqmxxjq5semtwydpy25pcgugsvztp74mfjynxklrt063hr6rry2mkqyg8wumn8ghj7mn0wd68ytnddakj7qgkwaehxw309aex2mrp0yhxummnw3ezumn9wshsqdt9wejhy7t5dp5kueed09hh2an9943x2etw94kkjumnd9hxwttpvfhh2apdwdshgmmndp5j6mnpddsk6mm5duksy8dm6l

🚨There is a huge risk in Zcash nobody wants to talk about. If you read my article on Nostr you should understand the issue with SNARKs. The issue is that the network blindly trusts a binary circuit to do all the necessary checks to make sure no new coins are created. Network nodes never do the raw verification math themselves, only the sender's wallet does this verification locally, once, when the transaction is first created.

Only the sender's wallet performs the raw operations on the raw data. Then it issues a SNARK proof for which anyone can only verify that it was issued correctly by the open source SNARK circuit.

With rings and Pedersen Commitments (like Monero) we do the actual homomorphic operations ourselves. For every transaction, I can do the sum of the commitments of all outputs involved on the input side, compare that homomorphically to that of the new outputs (receiver side) and make sure they are the same. The network nodes do this raw math verification.

With SNARKs nobody in the network does this verification. Instead the sender is asked to submit all his data to a binary circuit in the wallet that is designed to do these checks. This circuit of course doesn't rely on homomorphic operations only, it check various constraints. For example must also make sure the outputs being spent are present onchain and were never spent before etc.

So the sender submits this data to the SNARK, and if it passes the SNARK verification the senders gets a receipt that allows him to publish the transaction.

But what if the sender manages to fool the SNARK? What if there is a bug in the SNARK logic? The SNARK is public of course, and trust in the network relies on getting expensive auditors to review the SNARK code and issue certificates that they found no bugs with it.

But that's no trustless verification. We're not trusting math, we are trusting the word of an auditor or the ingenuity of the engineers who designed the SNARK that these SNARKs cannot be exploited.

If you understand this deep issue in ZEC you understand the whole network integrity rests on Trust Me Bro quite a bit.

This is also the reason why ZEC's shielded pool is optional, because an inflation bug (SNARK exploit) can happen in the shielded pool only. But by having optional privacy we would be able to detect the extra coins when the exploiter unshields them to sell them.

So optional privacy is a cryptographic necessity first and foremost, it has got nothing to do with "legal". Once you understand how much trust is vested in SNARKs you see this clearly.

The curious thing here is that Monero is now (theoretically) on a path to committing harakiri to solve its unfixable privacy issues. FCMP is a type of zero knowledge proof, so again you're trusting Luke Parker (who sounds like he is high on weed in 90% of interviews) to have devised the perfect binary circuit. But again, you can never be sure. Maybe you can buy an expensive audit for it too, but you will never have mathematical proof.

By upgrading for FCMP you're trading off verifiability for better privacy. And in FCMP Monero privacy wouldn't be optional, but a system like FCMP would require optional privacy as some sort of backstop.

Or maybe no wait, but I heard FCMP is bundled with CARROT in Monero, which also introduces optional privacy. And that's why they need CARROT, it's a cryptographic necessity.

Nobody is discussing this of course. They are glossing over it with compliance mumbojumbo but the reality is that moving to FCMP means giving up verifiability and adding optional privacy.

You're centralizing the chain, you are no longer trustless.

🚨🚨Now the final important bit, what would an inflation exploit exit scam look like in a chain like ZEC? If someone has exploited the chain, then they have a lot of coins locked in the shielded pool.

They cannot unshield these coins or the exploit would get detected.

So the first step is to pump it up, farm trust, and get more people to shield their coins. If enough coins are shielded then that creates a path for the exploiter to start liquidating his illegal coins without being detected.

If thousands of users start shielding their coins, and reach millions of coins in total, then an exploiter can now exfiltrate millions of coins without being detected because from the outside the balance of the coins going in and out of the shielded pool will remain positive (total shielded amount - total unshielded).

The bottomline is that I feel increasingly uneasy with any pump paired with a "cypherpunk" push in a coin like Zcash. Because that's exactly what a carefully engineered inflation exploiter would need to do to be able to liquidate his coins without being detected.

If I've found a way to mint 3M coins, then I can go to a VC and ask for help with marketing. Get them to pump the coin hard and give them a good chunk of those illegal coins.

So when people start shielding en masse, we can start unshielding and liquidating our illegal coins without raising red flags. And when real people also start liquidating, the word finally comes out as the imbalance becomes obvious to everyone.

But by then we will be out, and it will be too late for everyone else.

Is the deep trust vested in SNARKs similar to the trust in proofs of other coins like RingCT Monero? I think not, and the simplest way to see why is to imagine a "ghost output attack vector", defined as an attack vector where a flaw in the soundness of a single (highly abstract) proof makes possible to spend a completely non existent output. In other words, we refer to nothing on the spending side and still are able to create new outputs that are accepted by the network as valid. This is possible only with SNARKs and FCMP, and is not possible with Monero with RingCT and other coins that use modular, local proofs.

So SNARKs have 2 sets of vulnerabilities:

➡️ Circuit attack (comparable to Monero's): manipulate one or few parameters and still get a valid proof from the circuit prover. Allows printing new coins although in this case the attacker would still have to feed the system some output while manipulating how it handles its balance/commitment/ membership etc.

➡️ SNARK attack: After witnessing the parameters, the circuit generates a highly abstract succinct proof that can be verified by other nodes and proves that the transaction checked all parameters. A flaw in the parameters of this proof allows bypassing all the "witnessing part" completely. In other words, an attacker doesn't go through the circuit at all anymore but directly generates a fake proof that verifies. Since the circuit was bypassed completely, no notes among those present onchain are being spent/referenced. The attacker spends a "ghost output"

SNARKs/FCMP coins are unique in this sense, because they contain a highly complex, abstract mathematical proof (meaning huge attack surface) whose architectural position is such that a soundness bug there allows spending ghost outputs, equivalent to breaking all parameters constraints/proofs at once.

Ariel Gabizon found this exact type of vulnerability in ZEC in March 2018, which wasn't patched until October 2018 and was disclosed only in February 2019 (almost 1 year later). The bug allowed faking a SNARK proof starting from a valid one. Faking meant that from a valid SNARK present onchain, you could start spending ghost outputs, ie without having any inputs to show because there was a way to fool the SNARK verifier directly.

The bug remained in the wild for 6 months. Zooko's team said that in these 6 months they found no indication that anyone had exploited the bug, although in reality there was no way to detect such exploit onchain. Which explains also why when they did the upgrade out of Sprout you had to unshield and then shield again. This process effectively worked as a supply audit after the fact.

Now again back to what I wrote a few days ago, ZEC should grow organically because any rush to get people to shield notes en masse creates an exit path for a fatal exploit in the SNARKs.