Kroger Drops Visa

Quote from Cointelegraph, a daily cryptocurrency news feed:

“On Friday, Mar. 1, Kroger officially announced that its Smith's Food & Drug stores will not accept Visa cards starting Apr. 3 due to the high fees that company imposes on major retailers. "Visa has been misusing its position and charging retailers excessive fees for a long time," Kroger's chief financial officer Mike Schlotman said, explaining the decision.”

Link to the original online statement:

It stands to reason that a grocery chain such as Kroger’s would find it necessary to restrict the use of VISA cards in their stores.  You would think the small fees merchants are required to pay to accept VISA cards is well worth the attraction to customers. But grocery stores work with extremely small margins.  While a typical suburban store may hold a million dollars in inventory on its shelves and turn over that merchanize several times per year, the markups are so slight that added VISA costs could tip the economics in the wrong direction.  

The equivalent ‘fees’ cryptocurrencies charge are miniscule by comparison.  Mining fees are usually just pennies compared with VISA and MASTERCARD fees which are a small fraction of the total spent.  A $6.00 item might cost the merchant $0.45 in fees. Grocery stores are particularly hard hit by the VISA costs since fees are comprised of a flat fee for every transaction, around $0.15, and a percentage of the gross amount.  Higher percentages are charged for smaller ticket items. An expensive item might have a 1.5% VISA fee, while an item selling for under $2.00 might have a 4% fee. Groceries are usually under $10.00 per item.

A merchant, therefore, must compare VISA fees of $0.45 or more and cryptocurrency fees of just pennies.  What merchant wouldn’t want to save an extra $0.30 per transaction?

To make matters worse, VISA and MASTERCARD formulae include extra premiums on smaller merchants, out-of-the-way sales locations, and sole-proprietorships.  In other words, the smaller, less secure the merchant’s situation, the higher the fees. Some Etsy-type merchants selling from their homes are being charged a 10% processing fee.

Cryptocurrency is going to attract merchants facing these excessive plastic card charges.

Bitcoin (Smartmoney) Is Here To Stay

Screen Shot 2018-01-08 at 1.36.16 AMCryptocurrencies are not a bubble, not a Ponzi scheme, and not a flash-in-the-pan, here-today-gone-tomorrow phenomenon.  Cryptocurrencies (think Bitcoin) are here to stay.  They are the next generation of money.  As fiat currency (paper money) disappears, we use checks less and less, we use debit and credit cards more and more, and we send and receive money via all sorts of electronic methodologies, it is quite apparent to me that we are moving towards virtual currencies.  In fact, we’re moving not just to replace dollars with virtual dollars but we’re moving towards a state where we have many different currencies to handle many different situations, many different circumstances that we will use throughout the day, throughout our lives (think Airmiles).

Have you ever wondered why we bother to purchase Metrocards to use in the subway?  Why don’t we swipe our credit or debit cards through the turnstiles directly just as we swipe our Metrocards?  The answer is because the Metrocard is doing something a Mastercard or Visa card can’t do.  The Metrocard has an ID number embedded in the magnetic strip that tells the system who is using the card or under what conditions the card is to be used.  If you purchased a monthly MetroCard, the card might look the same as any other MetroCard but the ID number lets the system know that you have paid for the right to travel in the system for a period of one month.  You are free to use the system as much as you want during that time.  Your debit or Visa card doesn’t have that kind of ID number nor can it hold that kind of information.  The ‘contract’ you have with the system is unknown by the transit system.

In a future world, that sort of unintelligent ‘money’ is unacceptable.  We are living in a world that is and will continue to be more and more dependent on ‘intelligent’ interactions between the systems we use. The transit systems, including buses, subways, taxis, airlines, water taxies, highways, tunnels, and bridges, will be smart systems which will allow us to establish ‘contracts’ with them.  These ‘contracts’ will be like the Metrocard ‘contracts’ for different rates at different times, for different periods of time, for different numbers of people, at different rates depending on the age of the user, to what use it is being put, and for what duration it is to be used.  The money will have to keep pace with these types of contracts.

We have EZPASS in the Northeastern United States for paying highway, bridge and tunnel tolls.  The system automatically replenishes our accounts without our direct involvement.  When our automobile passes through one of the EZPASS readers, the system knows what our ID number is and what ‘contract’ we have with the system.  Similar systems will appear in the coming years for other systems that we use.  There might be one for parking your car, buying and delivering food, taking taxis, using music, downloading information, buying online, vacationing, renting hotels, renting sporting equipment, online gaming, online gambling, education, going to the movies, renting furniture, renting art to hang on the wall, taking singing lessons, learning to skydive, and ordering a babysitter.  The list is endless.  Are you getting the idea?  The way we will conduct our lives in the future will be systematic, without currency, by a computer, online and by a ‘contract’ which is a set of guidelines agreed upon by both the party ordering the goods or service and the system or party delivering the goods or services.  To facilitate those transactions will be virtual currencies.

171202 Bitcoin’s Future


Screen Shot 2017-12-02 at 8.22.50 PM creates a bubble for every bitcoin transaction in real time.  The size of the bubble and the sound it makes are proportional to the trade size.


Once Bitcoin reaches its fighting weight, we probably won’t notice it.  Bitcoin is just another form of currency.  But the differences between life now and then will be obvious.  Exchanging money will be instantaneous.  There will no longer a need to wait for a check to clear, or stocks to be sold, or an insurance policy to be “cashed out.” Business is conducted between total strangers without a second thought.  Avoiding certain expenses simply because the banking fees are excessive would be a thing of the past.  There are no fees.  At that future time, bitcoin is just as common as dollars and cents are today.  Credit and debit cards disappear.  There’ll be no need for them. You’ll keep your bitcoin wallet on your smartphone.

In the transition from now ’til then, from bitcoin as a curiosity to bitcoin as a commodity, your other assets do not change.  Your house, which may be of average value on an average block in America, continues to be of average value.  Your stocks and bonds go up and down in value as they did before and continue into the future.  Gold and silver do what they have always done in providing safe haven and stability.  What will change is the value of bitcoin, going from zero to its ultimate value, whatever that is.  When it reaches that amount, it should become as stable as any currency can be.  We live in a dynamic world.  Shit happens.

When bitcoin started, it had no value.  The programmers, having fun with it, got the ball rolling.  Ever hear the story about the slice of pizza a programmer purchased for 10,000 bitcoin.  True enough.  From those early times, as people’s confidence grew in the concept and the currency, the value of bitcoin has continued to rise.  As it now ‘goes parabolic’ people liken the craze to a financial investment bubble, e.g. the tulip mania of the seventeenth century in the Golden Dutch Age.  Remember, the dot-com bubble of 1999?  There are similarities to that bubble and what is happening around bitcoin today.  At that time, anyone who could convince a group of investors to plunk down a few hundred grand could make themselves a website and a dot-com IPO.  Today ICOs (Initial Coin Offerings) are appearing almost daily.  Someone has an idea for a cryptocurrency and Bob’s your uncle.  The only thing is, Bitcoin is not a bubble or anything close to it.  Bitcoin represents the birth of a new asset class, cryptocurrency based on encryption techniques and money.

What is happening at the moment with bitcoin is a once in a lifetime phenomenon.  During this transition period, you can take your fiat currency and exchange it for another asset class, cryptocurrency, and ride the wave.  However, these are not tidal waters which ebb and flow.  Bitcoin is here to stay.  The only question is how pervasive it will be in our economy.  Compare it to gold. All the gold in the world weighs about 5.5 billion ounces.  There are 7.5 billion people in the world.  That works out to about 3/4 ounces gold per person.  If the gold were distributed evenly throughout the world, each person would have about $1000 in gold.  There are 21,000,000 theoretical bitcoins.  At present, 16,600,000 have been mined.  The rest will be mined in the coming 100 years as set out by the system’s designer, Satochi Nakamoto.  If Bitcoin came to represent all wealth, as we once used gold, each bitcoin would be about $452,000.

Bitcoin grew 400% from $2450, five short months ago, to $10,929 as of this writing. On the night it hit $11,500 to set a new high, it fell 20% in the next few hours. There is no doubt that the bitcoin market is volatile, no place for the faint-hearted, timid, nervous, easily scared, fearful or afraid.


171201 Not All Dot-com Companies Failed

webvanIf you’re old enough to remember the dot-com bubble you might remember what was going on at the time that gave rise to the fever.  The Internet was brand new.  Companies were popping up left and right.  All they needed was a value proposition and a domain name and off they went.  There were stories of instant, overnight millionaires who took a simple idea and turned it into a fortune.  Before you knew what was happening, many a famous actress or TV personality would be promoting his or her new dot-com idea and funded an initial public offering (IPO).  Hundreds of IPOs were streaming onto the market every day.  Suddenly, thirty million dollars in an IPO, for a website whose famous celebrity founder/owner was an expert in fashion advice and thought her website which would give advice to others would be an instant success.  It took several months but when these hotshot startups started bleeding money, no amount of funding was going to make them work.

In every industry sector, there were many bright ideas. There were well-funded websites for selling beauty products like,,, and They all failed. One famous fail was, a would-be pioneer in the e-commerce space. It was founded in ’98, started selling branded fashion apparel in ’99, and ended burning through $135 million by the end of the second year. Webvan was founded in ’99 as an online grocery store, delivering groceries (including perishables) to doorsteps across the US much like FreshDirect does today.  Webvan went from being a $1.2bn company to being liquidated in under two years.

The digital forerunner of Bitcoin, in 1999, was sold like a gift card without a store to back its value. The overall consumer reaction was “why?” Have you ever heard of and Both failures but not for lack of a good idea.

But what did we know? Gwen Stefani gives fashion advice as a Wall Street investment?  Who knows? No one knows.  Well… the bubble burst.  Those dot-com dreams disappeared and Wall Street got much more realistic about Internet riches.  That doesn’t mean that no one made money.  Many companies got started then with very good ideas and made lots of money the old-fashioned way. Amazon, Yahoo, Google, Facebook, LinkedIn, and eBay are amongst those, for example.  They earned it.

There’s talk right now about a cryptocurrency bubble, fueled by Bitcoin’s valuation.  Everyone mentions the tulip bubble and talks about outlandish prices going up in smoke for a virtual commodity no one can describe or understand.  What is happening at the moment has many similarities to the dot-com bubble.  Every nerdy programmer with a micron of an idea for a new cryptocurrency is creating an ICO (Initial Cryptocurrency Offering).  Most are sketchy ideas that have not been thoroughly fleshed out and lend themselves to scams and fraud.  ICOs have been outlawed in many countries.  Some of the ideas sound plausible.  Some don’t. Of the top ten cryptocurrencies, most of them will thrive.  Of the bottom ten cryptocurrencies, most won’t.


171130 Conditional Payments

ezpassOne area to which cryptocurrency will undoubtedly be the frontrunner is conditional payments.  In a conditional payment, the amount owed varies based upon conditions that are part of the sales agreement.  There is a system in the Northeastern United States called EZPASS to pay for toll roads on highways.  For example, EZPASS allows the highway authority to charge a varying amount based on the distance traveled.  In downtown congested areas, EZPASS could be set to charge more based on the amount of traffic or time of day.

When the automobile passes through the tollbooth, the highway authority scanner registers the EZPASS account.  When that same automobile passes through the tollbooth again, the amount of the transaction is computed and the account is charged.  That is a conditional payment.  The reason we can’t use credit cards directly for these transactions is credit cards were not designed to accommodate those two-step transactions, log-in to check-out.  A cryptocurrency could be designed to do just that.

For the same reasons, the New York City subway system cannot accept credit cards as payment directly.  Passengers must purchase a Metrocard with a credit card or cash and then swipe that card when they go through the turnstile.  Different passengers make different kinds of subway purchases, e.g. monthly passes, single rides.  The credit card would not know that the charge was anything other than a single fare.  A cryptocurrency could be designed to understand that the passenger purchases might be more beneficial when purchases as a monthly pass and charge the difference under certain circumstances.

Ohio Governor Turnpike

171125 Visacoin: Fabulous Idea or Fraud?

A tweet from (VCX) caught my attention yesterday.Screen Shot 2017-11-25 at 6.08.18 PM It took me thirty seconds to get the idea.  A virtual card which you fund with Bitcoin or Ethereum or Dash can be used wherever Visa can be used.  At the moment it is used, the correct amount of Visacoin is converted into dollars (if you’re in the U.S., for example), and the amount is paid.  This would be the perfect answer to “Yeah, Bitcoin. But what can you do with it?”  This is going to be very big, I thought!

I downloaded the White paper and started my due diligence.  Everything seems to make sense.  All of the legal verbiages that you would expect to see in such a monograph was there.  The reference to COMIT technology was there, too.  I downloaded that White paper, as well.  If you enjoy good grammar or appreciate well-edited English, be forewarned.  That, it is not.  Be that as it may, using COMIT technology to explain Visacoin is brilliant.

But glaring typos began to appear, not just in the COMIT paper which Visacoin does not lay claim to, but in the Visacoin whitepaper, itself.  The big, bold heading on the top of each and every page reads “VISACOIN IS A POTENTIAL ECOSYTEM FOR VISIONARY INVESTORS.”  I have to believe a huge effort like this project purports to be, would have writers, editors, graphic designers, accountants, lawyers, social media professionals, fact-checkers, and proofreaders going over such an important document with a fine-toothed comb.  How could a typo like that get overlooked?  I read in a post from an unsigned Visacoin rep. the following:

“Many people have been posing the question whether Visacoin is affiliated with VISA, visa credit card and Visa Inc.or not.

Our answer is that we are nothing related to Visa Inc. We have conducted thorough researches and you can be ensured that there is no legal issues related to Visacoin (VCX).

Visacoin ICO will start on December 05th, 2017. However, from now on, we have created opportunities for large investors to pre-order VCX on the website or between 00:00 a.m. and 02:00 a.m. every day.


I would ask the same question “What is the affiliation with Visa?” The answer “There is none,” is troubling.  Another tweet appeared yesterday:

Screen Shot 2017-11-25 at 6.02.55 PMI am not in the least ‘ensured that there is are no legal issues related to Visacoin.’  In fact, Visacoin probably runs the risk of being sued in 140 countries around the world, wherever Visa currently does business for injuring their good name not to mention trademark and copyright infringement.

They try to emulate the Visa logo.  The wing on the “V” is part of the Visa trademark but Visacoin failed to use the correct font.  That might not sound like a heiness crime but no program worthy of investment is going to fail like that. The list of problems grows longer by the minute.  There is a pre-sale.  Then an unannounced pre-pre-sale.  They have an Android app and will follow in several months with a Webapp and iOS.  Really?  The White paper includes the names Vitalik Buterin, creator of Ethereum, David Lee and Bo Shen.  I’d like to hear what they think of Visacoin.

In an environment where a new product must start, out of the gate, at full speed and finely tuned, this product will very quickly spin out of control, crash and burn if it is real.  God is in the details. Whatever you do, do it well, i.e. the details are important.


171106 Trusted Distributed Networks

trusted bridgeYou’re walking along the street, minding your own business, when a stranger comes up to you and says, “I’ll give you $10,000 for your hat.”  You know the hat is worth at best $25.  In fact, there is no love lost were you to part with this hat which you’ve been meaning to replace for months.  But this man’s proposal is crazy.  Who would pay $10,000 for a cheap hat? And, were you to agree how would he pay you?

If he gave you $10,000 in cash, chances are much more likely the bills would be counterfeit than real. Besides, who wants to walk around with $10,000 in cash on them? A check wouldn’t be worth the paper it was written on.  By the time you cashed it this guy would be long gone.  You can accept Mastercard or Visa with your smartphone.  The fee, though, is 6% or $600.00 in this case.  His phone allows him to make a Paypal payment.   But you don’t have a Paypal account.  What do you do?

You use Bitcoin, of course. You flash your Bitcoin wallet address barcode which his Bitcoin wallet reads and sends you the $10,000 in Bitcoin.  You give him the hat.  An instantaneous, no-fee, anonymous transaction.  You don’t have to pay a processing fee, the transaction happens in the wink of an eye, he doesn’t have to know your name, you don’t have to know his, and it is completely trustworthy.  That’s the value of Bitcoin’s trusted, distributed network.

171030 The Inevitability of Bitcoin

distributed networkBitcoin is a cryptocurrency.  If the term is new to you, a cryptocurrency is a digital currency; virtual money.  It was the byproduct of another invention, blockchain.  Blockchain was invented by Satochi Nakamoto, an unknown inventor.  In 2009 he made the following announcement:

Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority.  

Double-spending was the biggest problem for any electronic cash system.  If someone pays you online, how do you and your bank know that the payee didn’t already use all his money somewhere else?  You rely on your bank and the payee’s bank to ensure that the money hasn’t been double-spent.  It involves a lot of secrecy, electronic handshaking, passcodes, keys, locks, and accounting.  In the end, those systems aren’t very good.  There are often long delays, there is often theft, there is fraud and misdirected funds.  Blockchain is the technology that creates a decentralized network.  There is no central clearinghouse for the exchange of Bitcoin.  Bitcoin is the currency that is being exchanged.  We can go on and describe how it Bitcoin works in greater detail but suffice it to say over the past eight years Bitcoin has gained a huge following and spawned many other cryptocurrencies.

Before getting into all that, it’s important to ask “why?”  Why Bitcoin? Why now?

Bitcoin is inevitable.  At the beginning of the United States of America, when we had to create our own currency, we based our currency on gold. It was possible to trade paper and coin for gold.  Gold became impractical to use as everyday currency.  It was not easy to carry, divide or weigh.  For the next 250 years, paper and coin was the currency of choice.  Today most of our financial transactions are done with debit or credit cards.  Checks are quickly falling out of favor.  In fact, only 11% of people prefer cash as a method of payment.

Furthermore, more and more of our transactions are done online.  For those, we must use a digital form of payment.  In the very near future, a new payment requirement will become necessary — computer to computer payments.  Your computer will interact with the computer of a good or service without your direct involvement.  Those payments might be very, very small and/or very, very fast.  For example, you will go to a website where you pay to read what is there by the word.  A word might cost $0.0001324.  Your Lyft, Uber or Apple driverless car service gets directions and the payment from your smartphone.  You pay for groceries simply by bagging them and carrying them out of the store.  There are no cashiers.  Much of this will be micropayments and they will happen quickly, too quickly for us to be actively involved.  Nor would we want to be.  For this type of transaction, it will be necessary to have a cryptocurrency, one that can be divided into 1/100,000,000th of a coin if necessary.  Also, the cryptocurrency will have to be decentralized.  There is no time to send a message back to a central clearinghouse, wait for a response, and then send messages off to a couple of exchanges and two or more banks in order to keep up with the necessary bookkeeping.

Bitcoin does all of this with ease.  Until you have actually received or spent a bitcoin it is hard to imagine just how easy bitcoin is to use.  To keep bitcoin you use a bitcoin wallet.  Bitcoin is placed in the wallet by means of a public and private key.  To receive bitcoin, you would give the payee your bitcoin wallet public address.  Your address is part of the bitcoin blockchain.  Every single owner of bitcoin has a complete record of every bitcoin transaction, kept in the blockchain.  New transactions are not permitted until all of the modes in the bitcoin network surrounding the new transaction agree that it is a legitimate new transaction.  For a more detailed description of the blockchain technology and why it works, other entries cover that in great detail.

One of the first questions about bitcoin is “Isn’t bitcoin used by drug dealers and money launderers?”  Yes, it is.  That’s because it is totally anonymous, secure and fast.  But that is also why it is used by families sending money home to Venezuela and the Philippines.  That is why people suggested to the independence-seeking Catalonians who are now looking for a new currency to use Bitcoin.  The best part about Bitcoin — there are no fees.  There is no central government or governing body.  There is no clearinghouse or regulations, at least for now.  It would be very surprising if a country allowed bitcoin without imposing some sort of regulations or governance.  In fact, China has already barred some forms of cryptocurrency and announced they will be issuing regulations on Bitcoin soon.  Russia has already outlawed Bitcoin but then restated their intent to regulate it.  Russia will, however, be issuing CryptoRubles, a state-owned cryptocurrency.

There are 16,600,000 bitcoins in existence.  Some more will be issued as time goes on but the total will never exceed 21,00,000 bitcoins.  That makes them exceedingly rare when they have to be shared by the world’s 7.5 billion people.  On January 1, 2017, bitcoin was valued at a little over $600.  At the moment, bitcoin is $6150.  Estimates range from $6000 to $25,000 for the value of bitcoin by the end of 2018.  Estimates range from $0 to $1,000,000 for the value of bitcoin at some point in the future.

Technology requires that there be a cryptocurrency.  Paper and coin, which replaced gold nuggets, isn’t flexible enough to work with computerized systems.  When we use debit or credit cards over the internet we are practically using a digital currency.  The only difference is that the banks, the exchanges, and the clearinghouses that handle the digital transactions are all involved.  The only role the cards are playing is acting like the account numbers for the banks to keep in their ledgers.  Each of those players must keep the information secret, and take responsibility for its being genuine.  There are long delays; often days are set aside while transactions are proven, settled and cleared.  Technology in the near future will require fast, reliable, secure, anonymous transactions.  Blockchain technology promises to deliver all of that.  In fact, blockchain is so well liked and reliable that most of the Fortune 500 companies are already using blockchain to secure all sorts of networks from financial to legal to real estate.  Why not currencies, too?

If you want to get a sense of how popular bitcoin is already, check out There the programmer has made a bubble for each bitcoin transaction with the size of the bubble equal to the amount of bitcoin.  The tone played gets lower with the size of the transaction as well.  You’ll be surprised.  There are hundreds of transactions per minute. Bitcoin is inevitable and it’s here to stay.

171025 Rumor: Amazon to Accept Bitcoin

10-amazon.w1200.h630I can’t think of anything that might boost Bitcoin more than an announcement from Amazon that it now accepts Bitcoin.  Maybe, if Goldman Sachs or Wells Fargo Bank said they now traded Bitcoin for clients, that might be a bigger plus, but maybe not.  Amazon taking Bitcoin would be huge.  It makes a great deal of sense for Amazon to do that, too.

Amazon can’t be too happy about the percentages that are taken by credit card transactions, nor the increased complications associated with those transactions.  Between the fees saved by both Amazon and its customers, the reduced fraud and the added convenience of Bitcoin transactions over having customers using a credit or debit card, Paypal or checks, Amazon could benefit monetarily as well as adding a convenience for customers.

An article on Tuesday in a German paper, Die Welt, reiterated the rumor that Amazon would be announcing Bitcoin acceptance. This is not the first time this rumor has surfaced. Normally, such announcements are made during its quarterly earnings report which happens to be Thursday, October 26, 2017, after the market closes.  Currently, Bitcoin is $5660, having fallen 8.5% from its record high set just a few days earlier. Bitcoin’s current weakness is attributed to the Bitcoin Gold and the upcoming SegWit2 forks.  This could be an excellent time to make a Bitcoin investment.

171022 Hidden Bitcoin Opportunities for Banks

Banks are missing the huge opportunity Bitcoin and cryptocurrencies afford them.  Take a look at the following chart published in Cointelegraph:

Screen Shot 2017-10-22 at 11.26.44 PM

The most preferred payment method is debit card, followed by cash, followed by credit card.  Digital payments are fourth.  Checks are fifth.  The chart is NOT about which is the easiest or most secure payment method.  The chart is about PREFERRED payment methods.  Even though digital is the easiest payment method and perhaps the most secure, debit cards, cash, and credit cards still win out.  So what?

This presents a huge opportunity for banks to facilitate cryptocurrency accounts for clients, while enjoying the security, ease-of-use and low overhead cryptocurrencies provide.  People are frightened, a little bewildered and uneasy about cryptocurrencies, yet most are curious, if not downright desirous, to start a cryptocurrency account or investment.  Why not provide them with the assurance they need while benefiting from continuing to be their financial advisors.  Banks are missing out on a huge opportunity.  If the banks continue only to view cryptocurrencies as undermining their business, banks will be left high and dry which the rest of the world cruises on cryptocurrency’s many benefits.

Most people are terrified by the security steps most cryptocurrency exchanges employ today.  Remember, too, most people are still not comfortable making purchases using a credit card online. If a Goldman Sachs or a Wells Fargo were to offer a Bitcoin account for savings and trading, people would jump at the chance to open a cryptocurrency account, while the banks offer them the ability to trade, send and receive cryptocurrency securely.   Instead of trying to hide and make cryptocurrencies go away, banks should be prospering by embracing the inevitable and fostering cryptocurrency’s growth.