Joined May 7, 2012
196 Blog Posts

Introduction to Bitcoin

For those of you interested in a primer on Bitcoin here are two great resources. I’ll answer any questions the best I can.

First, here is a speech (video and text transcription) by Andreas Antonopolous on Bitcoin. He wrote Mastering Bitcoin and The Internet of Money.

Andreas hits on several comparisons for Bitcoin including: the earliest writings were spreadsheets (a primitive blockchain), the next generation won’t understand 3-5 days to clear a banking transaction, the network effect, Bitcoin security (be your own bank) and also that money gets created in every social circle. Even Kindergartners. And yes, some of them eventually figure out how to take the other kid’s money.

Second is a link on Zerohedge from Raoul Pal. There are some incredible claims made in that article including Bitcoin at $1,000,000 per coin. It’s still a good read.

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Bill Gross on Bitcoin, Blockchain

Bloomberg reports Bill Gross has the following to say about Bitcoin:

New financial technologies such as bitcoin may become increasingly attractive to investors as a protection against central bank low- and negative-interest-rate policies that threaten capitalism, according to billionaire bond manager Bill Gross.

“Bitcoin and privately agreed upon blockchain technologies amongst a small set of global banks are just a few examples of attempts to stabilize the value of their current assets in future purchasing power terms,” he wrote. “Gold would be another example — historic relic that it is. In any case, the current system is beginning to be challenged.”

Billionaire bond managers are usually pretty smart guys. Most of them stick to what makes them money, traditional financial services, until they see something as inevitable in which case they get ahead of the adoption curve for profit and protection.

Let’s say there is a currency collapse. What’s going to be tradeable? Gold coins or digital tokens that are easily divisible  to .00000001 (one hundred of a millionth) and immune to counterfeit like Bitcoin? Bill is saying he sees the current system being challenged and Bitcoin is a way to hedge, if not outright profit. Bitcoin is an “example of attempts to stabilize the value of their current assets in future purchasing power terms”. In other words, your money is going to shit, says a fucking billionaire.

By the way, Gold got hammered today. Bitcoin was unchanged.

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Bitcoin ETF deadline and Auctions

The SEC deadline to approve the Winklevoss Bitcoin ETF is October 12. This has been in process for almost three years.

Why a Bitcoin ETF? This would open Bitcoin to Institutional investors and Joe Stocktrader. Tell your Uncle about Bitcoin at Thanksgiving and he could buy it Monday in his 401k.

“If a Bitcoin ETF brings additional capital to bitcoin, it would likely push the price higher and drive an increase in hashing power and funding for development – both of which would serve to further improve network security which, in turn, further enables all the use cases that make bitcoin great.”

Why not $GBTC? $GBTC is a scam. Every share represents .9 of a bitcoin which at $90/share means it’s almost 50% overpriced.

While waiting on the SEC the Winklevoss twins have been busy launching their daily auction of Bitcoins via Gemini in mid September.

Gemini tweets updates on the auction that occurs at 4PM daily.


Gemini has been averaging ~$1M/day in their auctions. Not too bad for a couple of Facebook rejects.

Note on ETF: It is much better to own your Bitcoin than to own an ETF based on Bitcoin, even if the ETF accurately represents Bitcoin’s price. Think of it like owning Gold vs a Gold ETF. If the ETF custodian has problems what do you really have? Nothing. However, if owning Bitcoin in your 401k is only accessible via an ETF then I would consider it.

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Everyone remain calm

When the Titanic hit the iceberg the Captain told everyone to remain calm while the wealthiest passengers were loaded onto lifeboats.

If (when) DB fails what happens next?

Bail out? Nationalization? Bankruptcy?

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Apple punches Fitbit in the kidneys

$FIT is off almost 10% on news that Aetna is reimbursing policy holders for purchasing Apple Watches due to studies showing owning an Apple Watch improves health.

“Beginning this fall, Aetna will make Apple Watch available to select large employers and individual customers during open enrollment season, and Aetna will be the first major health care company to subsidize a significant portion of the Apple Watch cost, offering monthly payroll deductions to make covering the remaining cost easier.”

EDIT: As I published this OA posted $FIT as a buy.

Maybe this was a masterstroke by Apple to jump ahead in the health wearables game. The Apple Watch has not exactly been flying off the shelves. With Apple’s cash hoard they can easily put down a competitor like Fitbit and this would be a way that is aligned with Apple’s culture of not competing on price. The price of the watch to Aetna is not disclosed. Apples gains a huge user base for their ailing product and now they can push out a competitor.

It’s not all doom and gloom for Fitbit. They have an agreement to supply watches to Target:

The difference? Target and its employees are funding their purchases. Aetna is the first major U.S. insurer to pick up the tab, turning it into a big win for Apple. And, if this becomes the new norm, it’s going to turn into an even bigger win for the consumer-tech company.

Again, pointing to Apple subsidizing the Watch to Aetna to secure the win over Fitbit. Aetna is not picking the most expensive wearable in this race.

And then there’s this:

Why would Aetna opt for novelty technology that also performs some basic health-related functions over a more cost-effective tool built from the ground up to monitor and improve health? It simply looks bad.

The answer is apps.

The Apple watch, when in sync with an iPhone, can provide several tools, all aimed at assisting users to live healthier. In so doing, one of the biggest flaws of the Fitbit wearable (and hurdle for FIT stock) comes to light. That is, at the end of the day it’s just an activity tracker, whereas Apple’s smart device is a true assistant that can improve outcomes even beyond monitoring.


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$TWLO catching a wave

Possibly in Wave 5 of this structure. Price limited to ~$80 max before we’ll enter corrective phase.



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Breakout in $ILMN and $NOW

ServiceNow $NOW breaks out of Triple Top and resistance going back to January. Conservatively wait till 80 or $81 or build a small position today sub $80. Stop at $73.


Illumina $ILMN breaks quadruple top and resistance going back to January. Stop at $164.


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BHP Billiton to use Blockchain

$BHP to use Ethereum and a custom Blockchain to track mining information.

BHP Billiton revealed at the second annual Global Blockchain Summit that it will use blockchain to record movements of wellbore rock and fluid samples and better secure the real-time data that is generated during delivery. According to BHP geophysicist R Tyler Smith, the new system will enable benefits for its internal efficiency while allowing it to work more effectively with partners.

“With blockchain, we would share data between the vendor and ourselves, and have a constant understanding of where it is,” Smith told CoinDesk, adding:

“Everything right now is being tracked through spreadsheets.”

BHP’s use case does not involve moving Ethereum for transferring monetary value. BHP’s use case is based on routing real time information using a combination public Blockchain and private Blockchain.

Because right now they are using fucking spreadsheets.

Blockchain is a revolutionary technology. An immutable, real time, public (or private) ledger opens new possibilities. Add in features like smart contracts, optional anonymity for transactions and zero Central Bank control and the fintech world has major changes ahead.

I, for one, welcome our new blockchain overlords.

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Whales Welcome at Winklevoss Bitcoin Exchange

The Winklevoss Gemini Bitcoin Exchange daily auction went live this week.

This article highlights the benefits of their daily auction for Bitcoin to fill large orders without moving the price. It’s a place whales can feed in peace.

How Does Auction Work?

All eligible orders will be filled at the final auction price at 4:00 p.m. ET. The final auction price of each Auction is determined by finding the price at which the greatest aggregate buy demand and aggregate sell demand from all participating orders can be filled (i.e., the price at which the largest quantity can trade). The mechanics of this auction are very similar to the closing auction (or closing “cross”) on the major electronic U.S. stock exchanges (e.g., Nasdaq, NYSE Arca, Bats). For a more detailed discussion, please see Marketplace.

Buying large quantities of Bitcoin is often done off exchange but it requires connections. I am reading this auction as a way Whales can buy/sell Bitcoin without price slippage in a controlled and supposedly trusted environment.

It’s another feather in Bitcoin’s cap and potentially opens Bitcoin up to VERY deep pockets.

Side note: I hope they did their homework on security because this site will be a big target.

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Bitcoin, the Reserve (Crypto) Currency

BitMEX is out with an article on Bitcoin as a Reserve Currency for Cryptocurrency traders.

The holy grail for many users is a cryptocurrency that has a growing market cap, and falling price volatility. A large market cap helps improve liquidity and reduce transactions costs. Falling volatility means that Bitcoin can retain its value for longer periods of time. That helps facilitate its adoption in online commerce and as an asset used as a savings vehicle.

Bitcoin’s march towards reserve status is not welcomed by all. Many speculators, who account for a significant portion of trading volumes, prefer very volatile cryptocurrencies. Short-term trades with high leverage can yield stupendous returns. As Bitcoin’s volatility falls, it becomes boring and speculators search for the next hot altcoin.

The Cryptocurrency market is becoming a three horse race with: Bitcoin, Ethereum and Monero. Traders trade in and out of Ethereum and Monero using Bitcoin. Bitcoin has become the reserve currency in this market.

Bitcoin illustrates that for any coin to be successful, speculators must be attracted first by high volatility. The coin may be illiquid, but that is exactly what produces the wild price swings that keeps traders captivated. Volatility is the best form of advertising. A coin that is not volatile has either died, or is on the path towards reserve status like Bitcoin.

Calling Bitcoin stable is a bit of a stretch, but in comparison to other Cryptocurrency markets Bitcoin is the sanest choice in an insane world. As volatility decreases Bitcoin’s attractiveness as a store of value increases. This could be a feedback loop to drive price up over time.

All Eyez on Bitcoin:


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