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In this issue:  "Catfish"? Caitlin, my Vacation, & some basic economics
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Let me clear up a few things.

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This user is [not] on vacation...

I haven't been on vacation, I just haven't been getting as much bitcoin, so I've kept my ads off to save the bitcoin I do get for my best customers (thats you!).  I won't actually be on vacation until June, and even then, I'll probably still be able to sell you bitcoin.  If you haven't saved my number, you can get it from Localbitcoins and save it.  I will be driving to Columbia, Missouri on June 9th and 10th.  I'm starting from Murrieta, CA.  If you're along the way, let me know and maybe we can meet.

Correction
In my last newsletter, I described the verb "catfish" as a method to scam people.  It is, but its prevalent use is not about scamming, but about love, ego, superficiality, and self-esteem.  Nev Schulman's documentary and TV show showed me that, and I wrote that newsletter without first watching any of it.  I'm sorry if I left you with a misconception for a month and a half.  I hope it did more good than harm.  Sometimes misconceptions do that!  That's still no justification for spreading my assumptions without checking them first.

[NOT] Caitlin
Caitlin is her first name.  I gave her a link to this newsletter when she finally got in touch with me, but I doubt that she signed up.  I could go check, but I'd rather be surprised if she responds.  She had a bank account that was stolen by someone who is or knows the woman in this picture.

A few other accounts on Localbitcoins have since used my "check by mail" ad to try to send me money from what I assume were stolen bank accounts to pay for bitcoins.  Since the real Caitlin is not a scammer, there are pictures of her on the Internet, so I knew what she looked like, and it isn't this.  Here are the signs, in the order I received them, that I was dealing with a scammer:
  1. Her messages to me on LBC were curt and unresponsive, providing very little evidence that she is fluent in English.
  2. She sent me a screenshot of a bill payment to me.  This is what really made me cautious.
  3. The bill pay was from a business account, but she didn't tell me anything about her business even though I asked.
  4. She sent this message: "40%?".  I believe she was tempting me to split the victim's money (though it might be the bank's money).  What is the price of your integrity?
  5. After I asked for clarification on this temptation (though I simply said I didn't understand her next attempt: "if you can 40% of the amount that you have transferred ?" - notice the space before the question mark - that was consistent, and awfully rare for a Chicagoan), I requested the picture shown above.  She sent it to me about 20 hours later.
That was on Monday.  Meanwhile, I had made several outreaches to find the real Caitlin, and waited all week hoping to hear back from one of them.  I still wasn't sure if the woman pictured above was really part of a scam.  On Friday, I got a call from a number I had found for a business attached to Caitlin's name.  When the caller told me she was Caitlin, it was a nice verification that I had protected a stranger from a scammer.  She explained that she had been on the phone with her bank for three hours. She cancelled the check and got her money back and so I tore up the check and threw it in the trash. That was April Fools Day, no joke!

Supply and Demand
I read somewhere that the spike happens before the halving.  What that means is that lots of people are going to be buying extra bitcoin because they know that in the first half of July, the production of bitcoins will be cut in half, and all that buying will spike the price.  Maybe that prediction will come true.  It has the nice property of being self-fulfilling, but there are central bankers on this planet.

Some miners might declare bankruptcy, like KnCMiner just did, or go out of business altogether.  However, if you've ever read The Driver or this other book that borrowed a lot from it, then you know that appearances can be deceiving, and understanding the underlying economics can provide immense profits.

The fact is that mining bitcoin is supported primarily by the sale of the bitcoin it produces, and a little bit by the bitcoins it earns by getting transactions into the blockchain.  The cost of mining can only ever temporarily exceed the revenue it generates, and then it returns to "normal."  Either the cost will fall, or the revenue will increase.  Lowering the cost is an ongoing endeavor that requires research and work, but raising the revenue just means charging more for the bitcoin you sell.  When I stop selling bitcoin, many of my customers pay more, and that raises the price.  The same is true for everyone else who sells bitcoin, including the miners.  Some miners will stop, and some will sell less, but just about none of them is going to start selling more near the halving, at least not until and unless the price goes up.  Constrained supply, as bitcoin will have in July, is a problem that solves itself.
 
Dave
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