Displaying items by tag: Financial Shenanigans

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".

Excerpts from deeper into the report...

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).

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.

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:

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:

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?

Now, a much, much, much smaller Bitcoin exchange fails after flashing obvious warning signs for months and does not require bailing out by the tax payer or the Federal Reserve (how can I emphasize how big a plus this is for Bitcoin), and bitcoin dips in price for a single evening - rebounding nigh immediately! Citibank and JP Morgan's incompetence through the entire world into a near depression - and that's with globally collaborative ZIRP, trillion's of dollars of bailouts and the clandestive changing of accounting rules and the morphing if simple  math to make it look like the insolvent were really not so.

Re: Mt. Gox failure -  Would Mt. Gox still be in business today, like JPM and Citi if the Federal Reserve dropped rates to a negative level, FASB authorized the changing of accounting standards to minimize Gox's liabilities and no one at the exchange was held liable for what appeared to be outright fraud, as claimed by the SEC? would there be analysts in Mt. Gox writing silly papers overflowing with hypocritical hypothesis about how XYZ the dollar was dead because a US bank went bust? Probably!

Remember, I turned JP Morgan's alleged research upside down in Theres' Something Fishy In The House Of Morgan, Pt. 2: Bitcoin Fear, Envy & Loathing, to wit:

I've worked hard to establish a strong reputation - not only in terms of competence but in terms of integrity. For those who don't know of me, you canview my media apearances and calls as well as my Wikipedia page. You see, my mommy and daddy raised me to appreciate both aspects of success - not only one. With that in mind I'd like to address the recent report from JP Morgan slamming Bitcoin. Just so most know my viewpoint, the typical Bitcoin enthusiast and entrepeneur is primarily technologist leaning, thus may or may not see all of the aspects of the financial side of this new... "thing". In addition, and because of that, the financial guys often get away with some outrageous bullshit that they'd never even try under different circumstances. Let's apply this perspective to JPM's latest FX strategic outlook report, "The Audacity of Bitcoin". I will refute this report, point by point, and in the process make the managing director whose name is on the report look downright ignorant and uneducated. This is not a personal attack or an attempt at sleight (hey, he may be a downright stand-up guy), I am simply calling it as I see it.

Before we get to the report though, I want to address the foolishness of following these "reports" from the big name brand money center banks.

Mainstream media entities such as the Wall Street Journal and Business Insider take the conflicted interest ridden drivel from these investment banks as actual legitimate analysis and actually base their reporting on it. That really gives me pause! Now on to addressing what Citibank claims as espoused through Business Insider, and I quote:

In a new note, Citi currency strategist — and the bank's defacto Bitcoin analyst — Steven Englander basically asks: What's the point of Bitcoin now?

Many of his comments echo our take in the week leading up to Gox's shutdown about how huge a setback this was not only for mainstream Bitcoin adoption, but also for the central tenets that got Bitcoin off the ground in the first place.

But for Englander, the technical glitch that hit not only Gox but other exchanges "seems to have been known for years without the Bitcoin developers instituting a complete fix,"... "So one question is whether the decentralized structure, which is the attraction to many, makes it too cumbersome to enact essential fixes."

"Bitcoin transactions [were] thought to be impregnable and turned out not to be," said Englander. "Earlier security questions had centered around everything except the possibility that there might be a fraudulent transactions record. The imperviousness to fraud was one the big attractions of Bitcoin and the surprise exploitation of a known defect is a setback. Now it looks like just another payments system that has to worry about fraud."

Where am I to start with this? Long story short, this is plain old simple ignorance! Bitcoin is open source software. That is why you get it for free! It's not as if the core Bitcoin development team ran a company and Mt. Gox bought a commercial software package from them with a warranty and represenations. Mt. Gox relied on an open sourced code base and refused to both contribute back to the community and even keep abreast of what was going on in the community. The end result? A problem that was recognized and solved 3 years ago went unseen by Mt. Gox until they were bled of hundreds of million of dollars worth of bitcoin.  JPM acts as if it is the open source communty's responsibility to instruct Mt. Gox on how to write and maintain software when in actuality it was Mt. Gox's responsibility to give back to and monitor the open source community!!! Notice how entities that were paying attention and playing by the open source communities rules were unscathed by this so-called "defect". If I say there is a hole in the ground and I send out a report that there is a hole in the ground, but you don't read that report and continue to walk until you fall into the hole - all the while knowing you gained access to the ground for free, are you going to blame the ground for being imperfect or yourself for ignoring the community that gave you free access when the warned you about the hole and even gave you instructions on how to avoid the hole?

"Bitcoin's market cap on paper by far exceeds that of the competition and that are many Bitcoin holders heavily invested in Bitcoin, so it has a first mover advantage. However as a store of value, its only value is reputational, and recent developments have shaken that reputation."

Go to 1:25 in this video for an answer to the statement above...

Business insider goes on to warn of the following risk: "That big banks themselves co-opt the still-relevant technological developments embedded in Bitcoin and junk all the bad parts". Actually, the banks will implement bad parts and junk all the good parts. You see, this is all relative. In general, what's good for you and me is generally bad for the banks, and vice versa. Why do Citibank and JP Morgan harp on the pitfalls of decentralization? It's because the banks are the guys with the centralized servers!!! If you eliminate the need for centralized servers you eliminate the need for banks! 

Why harp on the dangers of peer to peer? Because bank branches will disappear in a heartbeat, as will centralized exchanges and the ability to pack in massive fees and charges unbenknownst to the client, the same fees and charges that fund those oh so many decimillionaire annual bonuses. It means a paycut for Wall Street and Wall Street is known to be vociferous in its attempts to avoid paycuts.

Reference UltraCoin: The Future of Money!!! for a long list of reasons why the banks fear and loathe Bitcoin, and by extension, UltraCoin!