171101 Bitcoin Isn’t Doing Its Thing Yet

Bitcoin is the currency of the future. But the future isn’t here yet. Bitcoin should be the workhorse that facilitates trading.  It should be the currency to use for all online purchases, for transmitting value across borders and great distances, for storing value in troubled times, for making trusted trade between strangers possible, and growing one’s nest egg. However, it is at present, a speculative bubble.  Its skyrocketing valuation is breathtaking and not for the faint-hearted.  How can anyone looking to invest, purchase something that is 137% the price it was just four months ago?  A Bitcoin, in June, was $2450, and on November 1, 2017, is $6650. If tomorrow morning we woke up to Bitcoin prices at $5800, down $850 or -13% from today’s stratospheric prices would we still consider Bitcoin a good investment?  No. Yet, here we are.

For things to right themselves, more of bitcoin’s real potential must materialize.  People have to recognize that Bitcoin is here to stay, has no intrinsic worth but for its ability to facilitate trust, help accomplish the conveyance of wealth, and its ability to be converted to any other acceptable form of currency.  This morning there was an article about an Amazon subsidiary purchasing the domain names amazonethereum.com and amazonlitecoin.com.  Amazon already has owned amazonbitcoin.com since 2013.  If Amazon were to announce its acceptance of Bitcoin as a payment method option on its website, that would be huge and go a long way to improving Bitcoin’s worth.  The value of Bitcoin would grow as significantly as if JP Morgan Chase were to announce their acceptance of Bitcoin as a currency.

The marketing of Bitcoin would instantly see 2X growth.  Bitcoin going to $13,000.00 would happen immediately.  Visa and Mastercard would take a big hit as their fee-based transactions gave way in favor of feeless Bitcoin payments.  Businesses which work on tiny margins, such as the grocery business, would rush to become Amazon vendors.

There are laws on the books which prevent merchants from displaying two-tiered pricing.  Nowhere in the United States will you see merchandise displayed with two-tiered pricing: one price for cash purchases and another for purchases with credit cards except, of course, at the gas pump.  There are Merchant/credit card/bank agreements which prohibit that.  It’s a matter of semantics.  Purchases must not have a credit card surcharge.  However, it’s ok to have a cash discount, if that law is understood correctly.

3-tier pricingImagine three-tiered pricing: Bitcoin, cash, or credit.  Bitcoin would be cheapest.  Ask any merchant if they’d rather have their employees handling Bitcoin transactions or taking cash for 2% more.  Bitcoin means instant payments, no fraud, no theft, no loss, no credit card/debit card processing, no bank fees and no delays.

There is much to be done before we get from here to there, but we’d best begin.  Don’t get me wrong.  I love when my investments jump 15% overnight.  But I’d rest a whole lot better knowing Bitcoin’s price was based on its being used to facilitate trade and add trust, than as a speculative bubble.

 

171031 CNBC Recommendation

There will be a quantum leap in the speed and size of Bitcoin investments when big money Wall Street investors decide to invest.  However, as of yet, no big bank has declared a willingness to trade in Bitcoin using client money.  There have been no Wall Street investment firms buying or selling Bitcoin for customers.  Fidelity has started a Bitcoin mining operation but that is a far cry from trading bitcoin.  Quite the contrary, Jamie Dimon, CEO of JP Morgan Chase declared that bitcoin is a “fraud,” and, he would fire anyone in his firm that traded bitcoin.  Other big bank CEO’s are not as negative but remain on the sidelines and are cautiously optimistic about Bitcoin’s prospects.  This might change very shortly.

Along with Chicago Mercantile Exchange’s (CME) announcement that they would begin trading bitcoin futures by the end of the year, CNBC’s Brian Kelly, who has been a cryptocurrency advocate for several years, today recommended Bitcoin as an investment.  This is huge. This could open the floodgates.

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:

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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.

171003 JPM’s John Normand: Bitcoin is like Airmiles

JP Morgan Chase’s John Normand has been writing about Bitcoin for many years.  He called Bitcoin “a retail novelty,” back in 2014 and essentially has the same opinion today. He acknowledges, though, the huge change in scale Bitcoin has achieved.   Trying to avoid calling Bitcoin a Ponzi, he likened it to “Airmiles,” as though Bitcoin’s added value is something like a bonus in the same way as Airmiles is an added value bestowed upon credit cards.  Wow.  That’s as basic a misunderstanding of the value of Bitcoin as you can get.

The underlying blockchain technology gives Bitcoin the trust and reliability that makes it part of an ever growing network of value.  In the future Blockchain technology will be used wherever a secure database is required.  Contracts, property deeds, vehicle registration information, stocks, and bonds are going to be using blockchain technology.

171003 Goldman Sachs Said to Be Exploring Bitcoin

Bloomberg, yesterday published the first mention of Goldman Sachs exploring how they might venture into the world of cryptocurrency.  This is good news for Bitcoin.  Unlike JP Morgan Chase’s Jamie Dimon’s strategy to demonize Bitcoin as company policy, Goldman Sachs is looking for ways to service customers who wish to trade Bitcoin.  It seems from news reports that JP Morgan Chase customers have already been trading Bitcoin.

The market cap for Bitcoin is $70B with 16M active Bitcoins. If Goldman Sachs customers were to bring one billion dollars into the Bitcoin marketplace, that would raise the price per individual Bitcoin $63.00.  Imagine if another ten brokerages brought their customers into Bitcoin following Goldman Sachs over the next year and another $40B entered into the Bitcoin marketplace.  That would raise the per Bitcoin price by $2409.  At today’s price of $4246, Bitcoin would trade at $6655. Not bad for a year’s appreciation.

170914 Not For the Faint-Hearted

jamie dimon

Not for people who like safe and familiar things, investing in Bitcoin can be a nerve-racking, scary experience.  As of this writing, Bitcoin in $3387.86, down $1226.17 from twenty-four hours ago.  It’s no fun watching 25% of your investment vanish in less time than it takes for a check to clear.

But if you’re a believer, this is a time to buy.  Bitcoin has only ever fallen this far, this fast, a couple of times in its nine-year history.  News of the Chinese government cracking down on new cryptocurrency IPO’s and threatening to stop the trade in bitcoin all together, coupled with Jamie Dimon’s, CEO of JP Morgan Chase, a pronouncement on CNBC that bitcoin is a fraud, there’s no wonder that bitcoin will react violently.  This is a good test of its vitality.  Any investments made here are going to be fruitful.  With blinders on, you just have to dive in.