Dear Reader,
What on Earth is going on?
On Saturday, February 4, the U.S. shot down a Chinese spy balloon off the coast of South Carolina.
Last Friday, the U.S. used an F-22 fighter jet to shoot down an unidentified flying object over Alaska that was moving at altitudes similar to civilian aircraft. It was not identified as a balloon.
On Saturday, an F-22 was used again to shoot down a “cylindrical object” flying at 40,000 feet over the central Yukon territory in Canada.
Then, on Sunday, the U.S. used an F-16 fighter to shoot down an “octagonal structure” with strings attached to it over Lake Huron.
The commander of the U.S. Northern Command, General Glen VanHerck, interestingly said “I’m not going to categorize them as balloons. We’re calling them objects for a reason.”
The oddest part? No one seems to know what the heck is going on. Which I find very odd.
After all, we had clear photographs and videos of China’s spy balloon from the time that it was over Montana all the way to when it was shot down off the coast of South Carolina.
But we don’t have photos or video of the three objects that have been downed in the last few days? I don’t believe it.
The very best low earth orbit satellite imagery used for commercial purposes is capable of 25-30 cm resolution. This would provide a decent level of detail on an object at altitude. And intelligence satellites can image to 5 cm resolution which can “see” an individual human walking, or even down to 1 cm resolution, which can reveal as much as a crack in a sidewalk.
Better yet, the F-22s and F-16 that were used to shoot down the three objects have the ability to take photos and video at very close range. Not to mention earth-based observation that can be directed at any object at altitude.
Something is up. Are these UFOs? I seriously doubt it.
And these objects are being shot down with AIM-9X sidewinder missiles. Aside from costing about $400k each, they can incinerate the target. That won’t leave much left to identify the downed objects.
Curious, isn’t it? Especially when these fighter jets are equipped with 20-millimeter cannons that could take down the objects without destroying them at a fraction of the cost to taxpayers and leaving something concrete to recover for analysis. I suspect that’s by design.
My gut tells me we’re all being played again. I’m just speculating, but “they” may want us to be perplexed and fearful about what’s happening with these unidentifiable objects, so that we’re not noticing other things that are going on…
What is it that “they” don’t want us to see? We can’t be sure, but there are two things that jump out at me right now.
Last Wednesday (February 8), Pulitzer Prize winning journalist Seymour Hersh put out an incredible piece of journalism outlining how the Biden administration sabotaged the Nord Stream pipelines, cutting off Europe from its cheap and abundant source of natural gas. It’s an eye-opening piece with an amazing amount of detail about how the sabotage was orchestrated. It’s a fantastic read and highly recommended. It’s also politically damning.
After the pipelines were blown up, they emitted as much as 778 million cubic meters of methane gas into the atmosphere. Methane gas is about 82.5 times worse for the atmosphere compared to carbon emissions.
The Nord Stream sabotage has become an environmental disaster and was completely unnecessary. A Stanford climate scientist noted that “Whoever ordered this should be prosecuted for war crimes and go to jail.”
The other issue that has reached a fever pitch in the scientific and medical community is the record levels of excess deaths that are happening in every country that widely administered the COVID-19 mRNA “vaccines.” Whether it’s blood clots, aneurysms, heart attacks, or a radical increase in cancers, the numbers don’t lie. Something is seriously wrong.
First up, we have an interesting story that involves a bleeding edge generative AI company and – believe it or not – the ongoing debacle with Sam Bankman-Fried and FTX.
A related party, generative AI company Anthropic, just raised a cool $300 million from none other than Google.
If we remember, Anthropic is behind the generative AI called Claude. It’s designed to be a competitor to OpenAI’s already massively successful ChatGPT.
Just as a reminder for newer readers – these generative AIs are incredibly functional chatbots. They can have intelligent conversations with humans in real time. And they can create all kinds of content upon command.
Google was caught flat footed by OpenAI’s advancements in generative AI and its relationship with Microsoft, and it’s taking a page out of Microsoft’s playbook here. Per the $300 million deal, Anthropic is required to use Google Cloud for its cloud storage and computing needs. This is exactly what Microsoft did with OpenAI back in 2019.
But what’s more interesting here to me is the impact this investment has on Anthropic’s valuation.
We don’t know where this investment puts the company yet, but it’s certainly worth more now than it was at the time of its Series B funding round last April. At that time, Anthropic was valued at $3.42 billion.
As for why this is interesting, we have to think back to Anthropic’s Series A round. We talked about this last month.
If we remember, Sam Bankman-Fried (SBF) led the $580 million Series A round. Reportedly, he invested $500 million in that round. SBF is the founder of digital asset exchange FTX, which has become the scandal of the decade.
And Caroline Ellison, the CEO of Alameda Research, also participated in the round. Alameda was the trading firm owned by SBF and very closely tied to FTX.
These two invested in Anthropic at a $550 million pre-money valuation. That means their investment has gone up 6.2x at the very least, and almost certainly even more than that.
Yet, the bankruptcy courts may try to claw back these investments because we now know they were made with stolen funds. SBF and Caroline Ellison used client funds, which of course is illegal.
So we have to wonder – imagine if Anthropic becomes a $50 billion company within the next 24 months?
That’s not unrealistic at all. OpenAI is now a $30 billion company on the back of ChatGPT. And within the next two years I wouldn’t be surprised at all if it raised capital at a $50–60 billion valuation.
Presuming the courts could sell off the value of SBF and Ellison’s Anthropic shares, the proceeds could potentially be enough to cover the entire cost of the FTX bankruptcy and return all stolen funds back to FTX creditors.
That would be a spectacular end to what I believe will be remembered as one of the greatest financial crimes in history. What a story that would be.
We’ve talked extensively about all the powerful applications that generative AI can perform. With any luck, this technology has the power to even fix the giant mess that SBF and FTX made in the digital asset industry.
The social media world has been fixated upon Twitter now that Elon Musk is making radical and positive changes at the company. But there’s another big story happening in the background…
The founder of Twitter, Jack Dorsey, just launched his own decentralized social media network. It’s called Damus.
Decentralized social media is something that Dorsey has talked about for years now. It’s all about resiliency and censorship resistance. That’s ironic considering Dorsey oversaw Twitter for years as the company ramped up its censorship and shadow banning regime. Dorsey has always been a bit of an enigma in that sense.
When we use centralized social media platforms like Facebook, Instagram, LinkedIn, and Twitter, the company itself has total control over everything… as we’ve learned. And if the company decides it doesn’t like something or someone, it can censor and ban them.
With decentralized social media platform, that can’t happen. There’s no centralized company in control of anything. There is no single computer to “turn off.” Instead, there are protocols that deliver content through a series of what we call “relays.”
Relays are analogous to servers with centralized social media. They are where content is hosted.
The difference is, anybody can run a relay. And whoever runs these relays can take them offline and then put them back online at any time.
This is a system that works a lot like BitTorrent, for those familiar with it. The Bitcoin network works in a similar way as well. Network participants can run nodes and effectively “host” the network’s infrastructure.
Another great example that consumers may be more familiar with is LimeWire.
LimeWire was a popular peer-to-peer music network. It allowed users to download music from any number of relays on the network. And if one relay went down, users could simply download from a different relay.
Damus works in just the same way. Content can go up on multiple relays. That way, if one is taken down, the content lives on somewhere else in the network.
Of course, the big question here is – can this approach work for social media? And so far the answer is yes.
Dorsey went through the long, tedious process to get approval for Damus in Apple’s China-based app store. That made the app available to Chinese users.
Two days later the Chinese government banned the app. They claimed it contained content that’s illegal in China. This forced Apple to remove Damus from the app store. After all that work, it only lasted two days.
But here’s the thing – the people who had already downloaded the app can still use it. It’s not available for download anymore from the app store… but they can’t forcibly remove it from individual devices.
And sure enough, people in China are still using Damus, despite the ban. It’s proving to be a robust censorship-resistant network. That’s the beauty of decentralized social media.
That said, the challenge with this approach is that there are no guardrails whatsoever. Centralized social media companies have mechanisms in place to block or remove obscene and illicit content. That’s not possible with decentralized social media.
Some consider this a feature. Others see it as a major problem.
But either way, Dorsey is proving that these decentralized protocols cannot be stopped. As long as the network has users willing to run relays, there’s nothing anyone can do to ban, remove, or censor content. If a government found the physical location of one relay, they could take that down, but the traffic would simply move to other relays.
It’s like a massive game of Whac-A-Mole, just in the world of blockchains.
Source: Joystixgames.com
So this is a very interesting case study. We’re learning that decentralized social media can indeed function even in hostile environments.
Now the question is – can it build the same kind of network effects that are on par with centralized social media? In other words, can Damus attract enough users to make it a true alternative to Twitter and the other centralized giants today?
This is going to be a hot topic in the industry this year. And at least in the near future, I don’t believe it will be possible. The decentralized nature of relays fragments the network, and thus has a negative impact on network effects. This puts Twitter in a far stronger position. And given the positive changes on the platform, Twitter’s network effects continue to improve daily.
We’ll wrap up today with a mind-blowing milestone. ChatGPT just crossed the 100 million monthly active user (MAU) mark.
Last month, ChatGPT broke records by getting to one million users in just five days after its launch. For context, this is something that took Instagram two and a half months to do. It took Twitter two years to hit one million users. And it took Netflix three and half years before it attracted a million users.
So ChatGPT blew everybody out of the water on that metric.
But I don’t think anybody predicted that ChatGPT would get to 100 million users in just two months.
This is hands down the fastest software application adoption in history. Even Instagram took two and a half years to attract 100 million users.
Of course, there are immense implications here.
Just last week, OpenAI launched its $20 a month subscription program for ChatGPT. If we assume 10% of the current 100 million users sign up, that’s going to produce $200 million in revenue every single month. That equates to $2.4 billion a year. This is what explains OpenAI’s latest valuation of $29 billion.
Then I have to think – how long will it take ChatGPT to get to one billion users? At this rate, it could be there by the end of this year.
And if we assume 10% of those one billion users sign up for the paid subscription… that’s good for $2 billion a month in revenue. That would be $24 billion in revenue annually. That could result in a valuation of as much as a quarter trillion dollars.
The point is, OpenAI is on track to become an incredibly valuable company. Obviously, there are scenarios where Google can catch up, but there is the possibility that OpenAI could become a trillion-dollar company if it captures a major swath of the search market.
And remember, Microsoft now owns somewhere around 75% of OpenAI. I’m not ready to recommend Microsoft (MSFT) as an investment yet given its lofty valuation in a volatile market… but it’s certainly on my watch list.
Regards,
Jeff Brown
Editor, The Bleeding Edge
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
