I hate to be the one to break bad news to you, but most of the pop media/mainstream media financial pundits that I hear and see opine on bitcoin have absolutely no idea what the hell they are talking about.  This article will be the piece that strips the pretense of knowledge away from all of those other "smart guy" media types.

thumb Bitcoin sharpe ratio today

Published in BoomBustBlog

My last post on the topic of disintermediation during a paradigm shift was Wall Street Should Be First To Invest In Reggie Middleton's UltraCoin, Much Of It Won't Be Here In 10 Years! I clearly illustrated the potential for growth of Bitcoin related companies and cited statistics for the transformation of the financial industry as we know it today.

This post introduces long form research from the analysts at Veritaseum, the same team that brought you the hard hitting BoomBustBlog research. The first page of the report says it all - "Stress Test on Banks’ Earnings Facing the Veritaseum UltraCoin Value Transaction Platform".

research report cover

Excerpts from deeper into the report...

research report 2research report 3

And of course the inevitable... What happens when a less expensive product is introduced into the market with similar or superior attributes? Margin Compression! We analyzed three big Wall Street banks, starting with the "Riskiest Bank on the Street" (time permitting, reference our hard hitting, prescient research from early 2008).

Veritaseum research report on Morgan Stanley Margin Compression

I invite all to download the free Veritasuem Research Report for July 2014. I also invite all to meet me for the soft beta launch of Veritaseum's UltraCoin Value Trading Platform in my suite at the Drake Hotel in downtown Chicago, the evening of Saturday July 19th (this is also the weekend of The North American Bitcoin Conference in Chicago, where I will be speaking on the topic of money center bank disintermediation.

You will get to touch, play with and trade value via UltraCoin. Below is a screenshot of UltraCoin running on a Mac. I will also be taking applications for large scale beta testers and entities who wish to have customized value trading solutions created for them.

Screen Shot 2014-06-26 at 11.05.24 

 
Published in BoomBustBlog
Wednesday, 04 June 2014 09:04

Bitcoin (and Apple) Mythbusting 101

Yesterday, I did a radio interview with Benzinga. In it I busted myths about Apple, Bitcoin and Coins in general (ABCs). Listen to the interview below and the info sheets afterwards and let me know if you knew this stuff was possible with today's tech - and Apple! 

As for Apple...

And more on http://Ultra-Coin.com...

Why am I so bullish on Bitcoin? Note: this is not an offer to buy or solicitation for securities and is presented for illustrative purposes only.

Veritaseum Executive Summary page one

Veritaseum Executive Summary page two

As we roll out Veritaseum's UltraCoin ZeroTrust Smart Contracts, I'll be posting much more on "the new way of doing business".

Media Exposure

  1. Reggie Middleton Intro
  2. How Reggie Middleton's Start-up Patented The Future of Global Finance!
  3. Reggie Middleton on Wikipedia
  4. Who is Reggie Middleton?
  5. Bitcoin is not just digital currency. It's Napster for finance.
  6. Reggie Middleton's UltraCoin @ NYC CryptoCurrency Convention
  7. Reggie Middleton Wins CNBC Stock Draft for the 2nd time in a row - with the same stock
Published in BoomBustBlog

After an interesting discussion with those in my laboratory, I've decided to apply the forensic analysis team from BoomBustBlog to the privately funded companies in the Bitcoin space. See my post from yesterday for much of the reason why.

As clearly predicted yesterday, the better funded of the payment processors will initiate a pricing blood bath they'd likely kill for...

From PayPal's subsite on Mass Payments:

Paypal Mass Pay Site Screenshot

 As you can see, PayPal has already imbued its service with much of the attributes that are being offered by the Bitcoin payment processors. They also have a material advantage as of right now, a massive installed base.

I also cannot emphasize enough how damaging the all too necessary customer service option is to margins. You see, the problem is most service companies don't put enough into customer service and handholding of the customer. From an optimal perspective, this should actually be part of the marketing and sales process, but it's often either non-existent or implemented as an after thought after enough customers start bitching and complaining, or worse yet (and likely most often the case) leaving!

As a company with mature management, it appears as if PayPal is trying to head this off at the pass as it attempts to change consumer behavior and prod them into adopting its new electronic currency payment system...

Paypal Mass Pay Site Support Screenshot

 Now, let's compare PayPal to the newly funded Bitcoin payment processors...

Bitpay

Funding Rounds (3) - $32.50M

- See more at: http://www.crunchbase.com/organization/bitpay#sthash.yvlqpNtr.dpufBitpay prices

An interesting departure from the per transaction/fee model, Bitpay implemented a subscription system which benefits those customers who perform a large quantity of relatively small transactions moreso than those who process large orders.

I calculate Bitpay's most recent $30 million series A round to have been at around 9.2x sales, valuing the company at $160 million. This is a guestimate, of course, since I do not have access to internal numbers.  

Next we have Coinbase...

Funding Rounds (3) - $31.70M

- See more at: http://www.crunchbase.com/organization/coinbase#sthash.CD8IPTp6.dpufCoinbase 

There's also Circle, founded by Mr. Allaire of Coldfusion fame (sold to Adobe Systems).

Funding Rounds (2) - $26M 

- See more at: http://www.crunchbase.com/organization/nfc-direct#sthash.dd0DaxHc.dpuf

Circle has not publicly launched yet but promises to bring a new level of simplicity and user-friendliness to the bitcoin payment ecosystem, concentrating more on a banking paradigm then the technical bent that bitcoin is known to represent. This is all you need ot know about the Circle business model as it relates to this discussion of impending margin compression...

Circle

Free=Margin Compression!

Let's see how this plays out for customers. The most lucrative segments for this industry is the SME (small and medium business enterprises) who process anywhere between 10 and 1,000 transactions per month. Why? Because there are simply more SMEs than they are big companies in the world. Let's see what the two biggest bitcoin processors look like when stacked up against PayPal's Mass Pay product for the SME market...

image019

image027image028image029

Of course, the Bitcoin transactions are likely a loss leader for additional, value added services for many companies in the not too distant future. As a matter of fact, I feel that the payment space will quickly become commoditized by Bitcoin technology - forcing these companies and many more (I'm talking about you Mastercard, Visa and Western Union) to innovate and offer significantly and materially better value for the buck.

Imagine what this competitive landscape will look like when Mastercard, Visa, American Express, Discover and Western Union jump into the fray. Of course, before that a much greater portion of the VC and private equity community will wake up and realize the opportunity in Bitcoin to pour more cash into it than sugar into a Bubble gum machine (emphasis on "Bubble"). The key is to get in early, and get in right. But how does one do that and where will this tale of uber margin compression end?

Well, the research report from which this info is being prepared will be offered to accredited and instituional investors starting next week, at least those who have an interest in UltraCoin. 

My next article on this topic will explicitly illustrate how UltraCoin can assist ALL players (that's right, including PayPal, Bitpay, Circle, Coinbase, Mastercard, Visa, American Express, Discover and Western Union) as well as their direct customers, in climbing up both the food chain and the value proposition ladder - thus rapidly repairing the margin compression damage they are about to bring upon thier business models.

 image014

 

Published in BoomBustBlog

Bloomberg ran a story earlier this week illustrating the human capital flight out of the Wall Street machine and into tech:

At elite universities, fewer MBA and finance candidates are willing to even consider a life of missed weddings, busted romances and deep-into-the-night deal negotiations. The percentage of Harvard Business School graduates entering investment banking, sales or trading dropped to 5 percent last year from 12 percent in 2006, while those entering technology almost tripled to 18 percent during that period.

At the University of Pennsylvania’s Wharton School, the percentage of MBAs entering investment banking dropped to 13.3 percent last year from 26 percent in 2006, while those entering tech more than doubled to 11.1 percent.

 Those of you who have been following finance from the Wall Street/Bay Street/Canary Wharf perspective realize that this is a cyclical occurence. Basically, Wall Street falls out of favor with MBA whiz kids every ten years of so. But!!!! This time is different. This time around, Wall Street, et. al. is about to succumb to the destructive forces of technology that transformed, revolutionized, disintermediated, gutted and absolutely reinvigorated the media, news and retail industries. 

That's right! The Internet Paradigm Shift has finally hit Global Finance... and it's going to hurt, and hurt a lot!

As many know, the I've poured my time and resources into a start-up by the name of UltraCoin. Many have been clamoring for white papers and details, and I have been purposely secretive about such. The reason? I needed to entrency protection from my competition - the money center banks. How did I do this? Well...

I patented the future of Global Finance!

patent to the Future of finance big

This video illustrates my presentation to both the mainstream and alternative media as I start my capital raising rounds from venture capitalists and strategic investos alike. Check it out!

We're looking for financial and human capital as we prepare to expand globally. Financial capital is self-explanatory. On the human capital side...
We're seeking a full stack contract developer. Must be proficient in: Java or C#; git, bzr, or similar. Must have a solid understanding of: race conditions and how to avoid them; scalable concurrency and data integrity architectural concepts (replication, sharding, etc.); software development processes and best practices. Proficiency in some CRUD technology (*SQL, NoSQL, etc.) as well as and some scripting language (Javascript, PHP, Python, etc.) is highly preferred. Experience with the Bitcoin protocol is a huge plus. Your first interview is to e-mail your resume along with a response to this challenge: https://gist.github.com/mbogosian/28815ae606c663c983c3

Must be willing to sign an NDA. You should be knowledgeable and competent, but we prefer grit to genius. Prima donnas need not apply.

Published in BoomBustBlog

For those who didn't get the memo, I've been toiling away in my lab creating the world's first "investment bank, securities brokerage, asset manager, money transfer agent" in-a-box that allows users to perform all of theses functions themselves on a ZeroTrust (meaning you don't need to trust or even know the other side of the transaction), peer to peer basis.

Well, it appears as quite a few of the big boys and heavy weights have a similar idea and are in the market to make acquisitions. Wouldn't it be ironic if UltraCoin (my iconic venture) was acquired before it gets its seed round???!!!  

 DSC08472

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow Facebook to issue units of stored monetary value that represent a claim against the company. This e-money would be valid throughout Europe via a process known as “passporting”.

Facebook has also discussed potential partnerships with at least three London start-ups that offer international money transfer services online and via smartphones: TransferWise, Moni Technologies and Azimo, according to three people involved in the discussions.

In the case of Azimo, Facebook offered to pay the company $10m to recruit one of its co-founders as a director of business development, according to people familiar with the situation.

 Yes, this space is heating up. It makes me feel good! You see, the Visas, Mastercards, Western Unions and Paypals of the world make a lot of money selling a relatively cheap services for a relatively large amount. BUT!!!! The Goldmans and JP Morgans of the world make much more money by selling very deep margined products and services for a lot more while paying a lot less to create them. It is here where UltraCoin has staked its ground. As the competition amongst the big boys starts to heat up, they will want to crawl up the food chain and I already have the ladder built! 

Ultracoin dektop

“Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion,” said a person familiar with the company’s strategy. Facebook recently passed 100m users in India, which is its largest national market outside the United States.

My last post on this topic illustrated how UltraCoin will operate in developing markets by allowing currency, stock and financial asset exposure trades of anywhere from $5 dollars to $5 million, as well as sending money to others for just a little more than nothing, as excerpted from "Hardware IS Dead" Thesis Has Now Torn Through All Handset Providers & Now Everyone Can Act On It:

I've created an infrastructure that significantly expands these investment markets by allowing anyone, anywhere with an Internet connection (of almost any speed) to participate in almost any of the world's public financial markets. Taking the subject matter of this article into consideration, we can short Samsung on its own home exchange of Korea for nearly any amount, from $10 million US down to $8 ...

The Family 2095-2097 - Copy

These same young investors can even hedge thier currency translation risk with a Korean Won US dollar forex pair, for 55 basis points!

manage currency risk in Ultracoin while using it to short Samsung

Armed with the information from simply reading my blog posts, your brothers from Haiti or Botstwana can now take short positions in these (margin)doomed hardware manufacturers - taking the other side of the trade from these big name financial institutions that don't seem to read my writings.

These are young brothers from Haiti who sat through an UltraCoin lesson...

 DSC08625DSC08627

 Back to the FT article:

 

It also comes as other internet groups – in particular, China’s Tencent and Alibaba – race to turn their sites into mobile payment platforms.

Google has reiterated its commitment to expanding its mobile payments and wallet products, which have yet to be widely adopted by consumers. It is registered in the UK to issue electronic money, in a process similar to the authorisation which Facebook is seeking in Ireland.

 

In 2013, the company  [Facebook] facilitated $2.1bn worth of transactions, almost exclusively from games, according to documents filed with the Securities and Exchange Commission.

Vodafone has acquired an e-money licence for the phone company to operate financial services in Europe.

“It’s great news that non-banks are challenging the traditional banking monopoly,” said Simon Deane-Johns, a UK-based lawyer and European payments expert at law firm Keystone Law.

 It will be interesting to see how the potential bidding contest will form as these companies compete to build the next generation financial infrastructure. I believe that I am very well positioned, as excerpted from yesterday's missive:

These are interesting times indeed. For those who are not aware of how far I've come in transforming the way value is traded across geo-political and socio-economic lines, I urge you to view the following video and/or peruse the embedded presentation below it.

 

 

Related BoomBustBlog research

Published in BoomBustBlog

called the Apple short before it became vogue! I called the Blackberry short beforethey became the industry whipping boy! I warned about Nokia and made clear that Samsung Will Be Ready To Do That Fruit Thing! How'd I know all of this? It's quite simple, I explained it all in 2012 - Smartphone Hardware Manufacturers Are Dead. Well, now the chickens continue to come home to roost, as per CNBC:

In order to deal with such pressures, Samsung appears to be pricing the Galaxy S5 lower than its predecessor S4, according to Kang, who has collected pre-order prices for the device from around the world.

"It reflects the trend of smart phone commoditization – Samsung will have to learn to create profits at a lower price point," Kang said.

Earlier this week, Samsung said it's on track to post its second straight quarter of profit decline, as slowing smartphone sales growth continued to weigh on earnings.

Samsung Electronics 1Q profit view just shy of estimates

The South Korean tech giant estimated that its January-March operating profit fell by 4.3 percent to 8.4 trillion won, slightly below an average forecast of 8.5 trillion won, according to Reuters.

I've created an infrastructure that significantly expands these investment markets by allowing anyone, anywhere with an Internet connection (of almost any speed) to participate in almost any of the world's public financial markets. Taking the subject matter of this article into consideration, we can short Samsung on its own home exchange of Korea for nearly any amount, from $10 million US down to $8 ...

The Family 2095-2097 - Copy

These same young investors can even hedge thier currency translation risk with a Korean Won US dollar forex pair, for 55 basis points!

manage currency risk in Ultracoin while using it to short Samsung

Armed with the information from simply reading my blog posts, your brothers from Haiti or Botstwana can now take short positions in these (margin)doomed hardware manufacturers - taking the other side of the trade from these big name financial institutions that don't seem to read my writings.

 DSC08625DSC08627

These are kids that I taught UltraCoin to during my trip to Haiti a couple of weeks ago. Before you assume, the kids are actually quite bright and adept at math, and yes - kdis can easily trade with UltraCoin. My kids have been doing it for months!
thumb Slide16

My UltraCoin project will nearly double the available potential investors able to profit from these markets. By making the ability to participate in multi-asset class prices moves bi-directionally (that's right,  long and short) I will be increase the liquidity of said markets by almost 2 billion people, as per McKinsey:

  • 2.5 billion adults, just over half of the world’s adult population, do not use formal financial services to save or borrow.
  • 2.2 billion of the unserved adults live in Africa, Asia, Latin America, and the Middle East.
  • Of the 1.2 billion adults who use formal financial services in Africa, Asia, and the Middle East, at least two-thirds, a little more than 800 million, live on less than $5 per day (purchasing power parity adjusted).
  • Regulatory and policy environments, as well as the actions of individual financial services providers, affect usage levels in a way that is, to a large extent, independent of countries’ socioeconomic and demographic characteristics.

I just had the pleasure of meeting this young lady from Botswana who's trying to spearhead Bitcoin adoption in her country. I've made friends and I'm going to supply her with the means to have the whole country trading a whole variety (UltraCoin can trade more than 10,000 tickers - stocks, bonds, options, futures, indices) of financial assets very soon. 

I'll leave it up to you to determine who'll win those trades. These are interesting times indeed. For those who are not aware of how far I've come in transforming the way value is traded across geo-political and socio-economic lines, I urge you to view the following video and/or peruse the embedded presentation below it.

 

Samsung Follows Footsteps Of Apple, HTC, Nokia - Wasn't ...

Sep 6, 2013 - Smartphone Hardware Manufacturers Are DeadNov 29, 2012 - Two and a ... BoomBustBlog Mar 7, 2013 - applecutsabreandriod3d Two and a ...

Sep 27, 2013 - Here I go again – Hardware is Dead & Samsung Agrees Featured ... raw fundamentals and margins, let's look at the newest crop of hardware.

Jan 25, 2013 - A Glimpse of the BoomBustBlog Internal Discussion Concerning the Fate of Apple - This ... So, you ask, "How is it that hardware is dead?" Well.
 

Nov 29, 2012 - Two and a half years ago I declared in my mobile computing wars series that Google would commoditized the mobile computing space, thereby ...

Dec 10, 2012 - Last week I told the world that hardwarevendors are DEAD! At least the fat margin business modelhardware vendors (like those whose name rhymes with Snapple). ... Related BoomBustBlog Subscription-only Research:.

 
Published in BoomBustBlog

The Turkish government has exercised its censorship chops in banning Twitter in an attempt to quell distribution of anti-government recordings, and in the process has materially popularized the service, to wit: Forbes - Streisand Effect Takes Hold As Turkey Bans Twitter

In an attempt to halt widespread allegations of corruption, Turkish prime minister Recep Tayyip Erdogan has shuttered Twitter – but so ineffectively that the number of tweets sent in the country has remained unaffected.

Last night, Erdogan announced that, following a court order, Twitter was now disabled in the country. “We’ll eradicate Twitter,” he said. “I don’t care what the international community says. Everyone will witness the power of the Turkish Republic.”

The Washington Post reports,Turkey bans Twitter — and Twitter explodes.
Of course, the Islamic leaning Aljazeera.com‎ says "Twitter users ridicule Turkey ban".
Leaked recordings shared on Twitter include one in which Erdogan allegedly instructs his son to dispose of cash [AP]

Turkish and global social media users have mocked moves by Turkey's government to restrict access to Twitter.

The hashtags #TwitterisblockedinTurkey and #Turkey blockedTwitter became the top trending topics globally on Friday, just hours after the Turkish government imposed the ban.

The number of tweets from Turkey reportedly rose by 138 percent as savvy Internet users, including the country's president Abdullah Gul, found it easy to circumvent the shutdown.

"The whole world is laughing at you #ErdoganBlockedTwitter," users tweeted, as dozens of images mocking the ban - including one showing Twitter birds covering Prime Minister Recep Tayyip Erdogan's head in droppings - were shared on the platform.

Another popular tweet shared a poster of the prime minister on a Barack Obama campaign poster with the message, "Yes, we ban".

Erdogan on Thursday night promised to "root out" and wipe out" the social media platform after users published claims of corruption against him.

Leaked recordings shared and linked on Twitter include one in which Erdogan allegedly instructs his son to dispose of large amounts of cash from a residence amid a police corruption probe.

One method of ridicule was to go around the the blocking if the Twitter domain name by using Google's DNS (Domain Name Server) services which allowed anxious and potential Twitter users to find the Twitter website through Google's machinations. So, what does the Turkish government do? They blocked Twitter at the IP level and then went so far as to bank Google's DNS. This means that Turkey is attempting to block out a portion of the Internet, to wit: Turkey Blocks Google DNS as Erdogan Defends Twitter Action 
 
Now here comes a quick education for the old fogey-type folk that declare Bitcoin is a bubble, ponzi scheme currency with no intrinsic value. If you recall my many videos that declare the value of Bitcoin is in the protocol, and not the unit of account that everyone is calling a currency, then you may realize that the Bitcoin technology can literally take the Turkish government down. 
(go to time market 1:10 in the video for the explanation)
Those that know the Bitcoin protocol well know that it is an ideal method of overcoming centralized control in regards to value transfer. Well, it's easily assumable that website data access is value transfer as well. If anybody in Turkey is reading this, then email me and I'll show you how to step around even Erdogan's Google DNS ban using the Bitcoin derivative known as Namecoin - A peer-to-peer, censorship resistant, alternative DNS root and data storage technology. Using that "tulip" technology with "no intrinsic value", Namecoin facilitates cryptographically secure decentralized name and data storage.
 
According toWikipedia: Namecoin (sign: ℕ; code: NMC) is a cryptocurrency which also acts as an alternative, decentralizedDNS, which would avoid domain namecensorship by making a new top level domain outside of ICANN control, and in turn, make internet censorship much more difficult, as well as reduce outages.[3][4][1][2][5][6][7][8]
Now, we all know that Krugman and Roubini and all of the not so technologically inclined macro economists may not believe that Bitcoin, et. al. has any intrinsic value, but if somebody like me led a "Coin" revolt in Turkey, do you think Erdogan would believe the economists or me in regards to the intrinsic value of this technology.
If you think Namecoin can be disruptive to the status quo, you aint't seen nothin' yet. Wait until the launch of UltraCoin, when those little Haitain kids in shacks out trade the Goldman prop desk on that BTC/AU pair trade.
That's right, I'm teaching 3rd world children how to trade using cryptocurrency derivatives and plain old fashioned derivatives. I'm comfortable pitting them against the names that the developed world worships, as long as its using this new tech. Let's see how they fair...
I just love the smell of creative disruption in the air. These pics were taken after some training sessions in Port au Prince, Haiti this weekend.
20140322 124403
DSC08625DSC08627
Read more...
 
Published in BoomBustBlog

On or about February 23rd, 2014, Mt. Gox (on of the larger bitcoin exchanges) collapsed. The MSM (mainstream media) had a field day...

kapre

LA times on btc

yhoo on btc

I warned everybody that the fall of Mt. Gox was simply a poorly managed small business getting its just dues. To correlate the fortunes of Mt. Gox with the fortunes of the Bitcoin ecosystem is akin correlating the fortune of the World Wide Web with that of Pets.com or Alta Vista in the 1990s. Sounds silly doesn't it? Well, fast forward 3 weeks from the Gox'd experience and this is what we find... BTC volatilityThe week after the media frenzy regarding Mt. Gox started to fade, the price of BTC (bitcoins) started a dramatic phase of price stabilization. This apparent price stabilization was verified by the very dramatic drop in standard deviation.

If we drill down to the weeks in question, we find... BTC volatility1

This price stabilization has occurred even before the wide scale adoption of UltraCoin. 

As always, I'm looking for:

  1. financial capital
  2. intellectual capital
  3. developers, management and sales/marketing expertise.

If you have any of this in abundance, hit me at This email address is being protected from spambots. You need JavaScript enabled to view it..

Published in BoomBustBlog

thumb Slide7

Let's quote some of the last lines of my last article on Bitcoin: "Witness the drivel that comes out of the the analyst's reports (and yes, I thoroughly ridiculed each one):

  1. Theres' Something Fishy In The House Of Morgan, Pt. 2: Bitcoin Fear, Envy & Loathing
  2. Does the Mainstream Media Assist Wall Street In Hypocritical Hypothesis For Fear Of The Next Paradigm Shift?"

You see, first JP Morgan threw baseless fear tactics, then Citibank jumped into the fray. Well, guess whose next? Goldman Sachs, of course. Everybody's favorite fair game player. As excerpted from Business Insider today:

"Dominic Wilson and Jose Ursua of the firm's markets research division are first up. They argue that Bitcoin fails to meet both basic criteria of a viable currency: while there remains an outside chance for widespread acceptance as a medium of exchange, as a stable source of value, it has so far failed. That undermines the premise that Bitcoin could serve as a way of short-circuiting exchange rates in inflation-prone countries."

 And Reggie, Chief of Bullshit Patrol & Related Crimes Division chimes in with a Google search on promintent "failed" currency processors:

Bitpay user growth google searchcoinbase user growth google search

But wait a minute! Goldman's business business is growing at a fraction of this pace, and actually negative in some areas. So, if Bitcoin as a currency and payment system is a failure, what the hell is Goldmam? Of course, Business Insider goes on to report...

For most users what matters is not the comparison with other currencies, but a comparison with the volatility of the currency that they hold (dollars in the US for instance) in terms of the things that they need to buy. The volatility of consumer prices (in dollars) has been even lower than FX rates, even if measured over a period including the 1970s. Put simply, if you hold cash today in most developed countries, you know within a few percentage points what you will be able to buy with it a day, a week or a year from now.  

This is Bullshit! Say it to the more mathematically challenged, my bonus hungry friends. Let's run the math using theusinflationcalculator.com:

Dollar as a store of value

As you can see, if you measure things from the '70s as the esteemed, erstwhile Wall Street aficiaondo from Goldman recommended, then you would have less than 17% of your buying power left. Yes, bitcoin is volatile, but its volatility stems from the price going up and down, while the USD has primarily just went down. You know that saying about the frog in the slowly heated boiling pot of water, right?

In addition, both of the largest Bitcoin payment processors absorb the exchange rate volatility for their customers, or did the best of breed Goldman analysts somehow overlook this pertinent fact?

 

Eliminate the bitcoin volatility risk with BitPay's guaranteed exchange rates. ... Import your BitPay sales into QuickBooks, to report and reconcile your bitcoin  ...

 

In addition, there are cutting edge products being introduced by tall, handsome, charsimatic and highly intelligent entrepeneurs who have a long track record of out gunning Goldman et. al. that allow anyone to hedge Bitcoin volatlity against any prominent fiat currency.

Back to those Goldman guys...

Wilson and Ursua include this graph showing volatility of Bitcoin versus the Argentine peso, the yen, the euro, the pound, and U.S. inflation. It's not even close. 

bitcoin volaitlity

But wait a minute! If the largest payment processors absorb the volatility and market risk of their customers, then Goldman must assuredly be referring to the currencies above from an investment perspective, no?

Yes! Bitcoin is truly volatile, indeed, but the guy at Goldman are cheating, hoping that the rest of us don't know our finance and/or basic common sense. You see, they are looking at just one side of the equation - the side that favors fiat currencies and disfavors bitcoin. You see, risk is the price of reward. For every reward you seek, you pay a price in risk. The goal, as a smart investor, is to pay little risk for much reward. Goldman is trying to make it appear as if you are paying nothing but risk for bitcoin and getting little reward in return. Let's see how that pans out when someone who knows what they're doing chimes in. From the BoomBustBlogresearch report File Icon Digital Currencies' Risks, Rewards & Returns - An Into Into Bitcoin Investing For Longer Term Horizons:

Bitcoin risk adjusted returns

You see, with high volatility (aka, risk), it's hard to earn your cost of capital, not to menton surpass it. Isn't that right, employess of Goldman Sachs? Let me jog your collective memories, as excerpted from the BoomBustBlog post on When the Patina Fades… The Rise and Fall of Goldman Sachs???

GS return on equity has declined substantially due to deleverage and is only marginally higher than its current cost of capital. With ROE down to c12% from c20% during pre-crisis levels, there is no way a stock with high beta as GS could justify adequate returns to cover the inherent risk. For GS to trade back at 200 it has to increase its leverage back to pre-crisis levels to assume ROE of 20%. And for that GS has to either increase its leverage back to 25x. With curbs on banks leverage this seems highly unlikely. Without any increase in leverage and ROE, the stock would only marginally cover returns to shareholders given that ROE is c12%. Even based on consensus estimates the stock should trade at about where it is trading right now, leaving no upside potential. Using BoomBustBlog estimates, the valuation drops considerably since we take into consideration a decrease in trading revenue or an increase in the cost of funding in combination with a limitation of leverage due to the impending global regulation coming down the pike.

gs_roe.jpg

 

 Now that we see how hard it is to truly produce Alpha, I query thee... What do you think would happen if a financial maverick, an out of the box thinker who's different from all of those other guys, got a seed round of funding for the most disruptive product to hit the finance world since the printing press? What if that seed round was for $8 million dollars, with a preferred A series coming right behind it? What would such a cash flush company do, being one of the most cash flush Bitcoin companies in the world? Hmmmnnn!!!

Speakin' of Goldman Sachs...

I anticipate being in the market very soon for (I'm not thier yet, but hopefully very soon):

CTO - Chief Technology Officer

COO - Chief Opertating Officer

General Counsel

CMO - Chief Marketing Officer 

CFO - Chief Financial Officer

As well as skilled Java and Blockchain developers.

Hit me via reggie at ultra-coin.com if you have an interest in coming on board.

Published in BoomBustBlog
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