The Future of Money is Here: Zero Trust Digital Currency Contracts

Reggie Middleton's picture

BoomBustBTC contract BoomBustBTC contract

Note: New subscriber content available below.

I have created derivatives for Bitcoin that work exclusively on the Bitcoin network. They are capable of literally replacing the role of the large money center and investment banks. YES! This is a big thing. I will hopefully have a limited use beta example of the first product for the viewers of the show to experiment with. These products have been designed as zero trust contracts (meaning it was designed to eliminate the human judgment factor, thereby nearly completely automating the entire transaction). Currently, trust issues that the conventional OTC banking system products incur severely hamper free flowing capital markets. Greed begets inefficiencies. Digital zero trust contracts (as opposed to physical legal contracts) “theoretically” eliminate litigation and court involvement and expensive dispute resolution through means of the legal system. My BoomBust contracts allows anonymous parties to swap exposure in and out of Bitcoin from many widely traded currencies. (USD, EUR, YEN, CNY, etc.).


The state of the capitalist union today is ripe for Bitcoin activity to explode if knowledge of the platform spreads. Just to list of few catalysts:

  1. The lack of trust in the world’s reserve currency, the USD.
  2. The financial controls in the world’s most populous nations, India and China.
  3. The Pan-European sovereign debt crisis
  4. The confiscation of bank deposits in Cyprus (EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation) and Ireland (As Forewarned, Irish Savers Have Just Been "Cyprus'd", And There's MUCH MORE "Cyprusing" To Come) and eventually anywhere banks are overleveraged and/or undercapitalized.
  5. The billions of the great “unbanked” of the world, in both 3rd world nations and even in the most developed nations on earth, ex. right here in the US.
  6. The paltry returns on loans and bank deposits as well as the unsubstantiated bubble returns on risk assets – all stemming from the Fed’s unprecedented 6 year global ZIRP real time experiment. I commented on this back in 2008 (A real life, real time example of the Great Global Macro Experiment)and it’s still running strong.

Possible uses for the BoomBust contracts:

Simple investment/speculation

Those who want to gain exposure to a foreign or digital currency can easily enter into a swap to gain said exposure without actually having to purchase said currency (other than BTC, of course).


The swap can be used as a simple hedge for any party that has large exposure to BTC, USD, EUR, etc., such as a retailer with low margins and high volume, ex. Chinese widget manufacturer or smartphone OEM, that accepts bitcoin but wants to hedge out the volatility and market risk. The BoomBust contracts can be layered, levered and/or compounded to make more complex hedges as well.

Capital flight/mobility & Banking System Bail-in protection

Parties who are domiciled in free flowing capital hostile states that have tight capital controls, ex. China, India, and now France with its 75% effective wealth confiscation scheme, etc. that have banned or limited BTC trading by banks and/or individuals can take advantage of the BoomBust contracts to gain multi-currency exposure without explicitly violating the law. Take note that the systems with the tightest capital controls have been the one’s exhibiting the most aggressive stance to bitcoin. Unfortunately, they don’t seem to understand what Bitcoin is and what it can do. I stand to educate the masses. See below…

Cyprus banks closed on a Friday and announced confiscation of assets over the weekend. These BoomBust contracts could have been used to move monetary value outside of the Cyprus banking system assuming the participants had a store of Bitcoin (it is rumored that this is how some of the Russian money was removed over the weekend). Let’s assume a small businessman would like to purchase $1M euro worth of bitcoin, yet is concerned that the BTC volatility may cause more of a loss than the Cypriot capital controls. He buys the BTC then hedges his large BTC position into EUR. He proceeds to do that with a quarter of his monthly cashflows, building up a sizeable, fully hedged position in cyberspace (thus, effectively offshore) and outside of the fragile Cyprus banking system. The Cyprus banks pull the trigger to confiscate funds and the Russian bank depositor has significant funds mobile and ready to deliver anywhere in the internet connected world within minutes, even on a Sunday afternoon.

Another example of dealing with a company with tight capital controls would be India. India has extremely tight capital controls that have (IMHO) hampered its economic progress relative to China, despite having similar populations and the advantage of a large indigenous English speaking population stemming from British occupation (easier to do business with the larger capitalist nations when more of your constituents speaks the native tongue).

India has effectively outlawed trading in bitcoin, but Indians can still participate in the evolution of money by taking advantage of the liberalised remittances scheme of the Central Bank of India, a person can remit up to 75,000 USD offshore annually. These monies can end up in a Bitcoin friendly jurisdiction (amazingly enough, like the US), and be used to purchase BTC hedged, via BoomBust contracts, back into rupees or the currency of choice.

indian BTC programindian BTC program

This can also work the other way around, which would actually be quite advantageous to the Indian government and potentially make them rethink the real world practicality of capital controls. Even in a country that has capital controls and fears Bitcoin may threaten its banks, a decentralized near friction free currency exchange would be beneficial solely do to international remittances from expats in foreign workers. A real world example are Indians that I know who lose significant money because of PayPal and Western Union fees (not to mention bank wire fees). Indians can send BoomBust digital contract rupee locked BTC home on a deferred basis. The registered exchange or ATM in India however could only be one-way so that it only accepts BTC from the Indian general public in exchange for rupees and not the other way around.

Spread Arbitrage

On Dec 13th, the EUR/USD exchange rate was roughly .78x, thus if one were to have sold 1 BTC into EUR than purchased USD, a $10.66 spread could have been realized over buying the USD with EUR directly.

arbitrage opparbitrage opp 

Notice the differences in prices throughout the SAME MARKETS, contingent upon exchange.

BTC marketsBTC markets 

I am happy to discuss this with institutional and professional subscribers whenever possible.

All paying subscribers (click here to subscribe) can download this introduction to our institutional level report on investing in cryptocurrencies: File Icon Digital Currencies' Risks, Rewards & Returns - An Into Into Bitcoin Investing For Longer Term Horizon. There will be much more to follow in the upcoming days. Below is the brief summary as how we have computed the following ratios:

Excess Risk Adjusted Return

Excess Risk Adjusted Return is defined as returns over and above the required return on asset based on its risk characteristics. BITCOIN being a very volatile asset, the required return of the currency has been computed using the CAPM (Capital Asset Pricing Model) approach. CAPM equation requires a variable known as Return on Market Portfolio (a portfolio comprising of all risky assets, conventional as well as alternative assets like antiques, currencies, private equity investments, etc.). For equity investments, general Market Index shall suffice but in our case the investment is altogether different (Digital Currency) and the conventional market index will be a bad proxy. Best Proxy in our case shall be a diversified Currency Portfolio – comprising all global as well as digital currencies. As such there exists no known proxy/Index consisting all Currencies, We have approximated it by using MSCI – EM Currency Index. The Index comprises a basket of 25 emerging market currencies. 

Excess Risk Adjusted Return = (Return on Asset) – (Required Return on asset based on its risk characteristics)

Return on Asset (Ra) = Return on B ITCOIN for different periods like 3M, 6M 12M, etc.

Required Return on Asset = RFR + ? * (Rm – Ra)

RFR = Current US I year Treasury Yield

Beta = Covariance of (Returns on Asset & Returns on comparable Index) divided by Variance of (Index Returns)

Rm = Long term return on comparable Index, (in our case which is the Currency Index return comprising 25 Emerging Market currencies)

What's so eery is that now even Ben Bernanke and I actually agree upon something... 

“Digital currencies may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system. 

US Federal Reserve Chairman Ben Bernanke

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MeelionDollerBogus's picture

high%, perhaps 100% trust of digital local currency is what's needed.
a global zero-trust digital currency is a zero-value digital currency.
PGP signed vouchers for universally sized contracts in goods would do it.
Bitcoin can't.
Bitcoins are all unique yet universally equal: to zero.
PGP vouched items can be uniquely signed, original + web of trust.
Bitcoin can't & won't do this.
For this reason nothing acting like bitcoin is money to me or anything but an instant loss.
I'll never touch it & I will always be better for this decision.
An additional benefit to using pgp-signed messages backed by tangible goods is there's no reason to bid them up or down or create large volatility spreads on fiat exchanges.
There's no purpose or reason to bid up a pgp-signed message vouching for 1 oz of gold, for example any different than the ounce of gold itself.
Either it's good for delivery or it isn't.
if it is it's equal to the gold ounce as normal with premium for delivery & specific size.
if it's NO GOOD for delivery its value is ZERO as attested to by OTHER signed messages INDICATING IT'S NO GOOD from your own local web of trust.
That's what the web of trust is for & that's why bitcoin is a failure.

noob's picture

if bitconi is backed / priced in clown bux
and clown bux are backed by nothing
doesn't that mean that bitbaloney is backed by nothing as well ?

fundamentally ?


blindman's picture

the eternal frustration of authority is
that the basic unit is not of it's
domain yet it attempts to define and control
said same, the power of u, you.

harlanaladd's picture

Reggie, When's your Android app for buy/sell orders going to be ready in the Google Play Store? Let me suggest a name: Bitcoin Android Derivative App Selection System (BADASS)

Unfortunately, though, I bet WmBanzai is correct, and some lawyers are going to be inquiring....

Arthur's picture

Now if you invented bitcoins wouldn't you have kept a pile for yourself?

Who are those smart bastards and how much of the total bit coins generated did they skim?


Fíréan's picture

yes , the future of money is here and I have

  Zero Trust in Digital Currency Contracts


edited: because i fkt that up first time

steveo77's picture

Shark attacks in Hawaii going fully parabolic. The radiation impact on the food chain is a big contributor, the other is that Maui is "shitted out" on the west side, meaning cesspools, injection wells in Kihei, and boats dumping raw waste off Makena/Molokini. All that poop creates ciguatera which is a disease that makes critters go crazy and also die. So the sharks are hungry, and crazy, and humans are no longer considered "bad meat".

Non Passaran's picture

What a bunch of bullshit!
The real reason is global warming.

aleph0's picture

CrytoCurrency ... LOL

Watch this first :

CCC:  The Exploration and Exploitation of an SD Memory Card [30c3]

Backdoor Exploit-capable technology already waiting behind the curtain for the gullible that really believe there is Anonymity in the Digital World.

There is barely a device that is NOT exploitable via the backdoor .. the technology is already there and waiting.

jeffgroove102's picture

Since time is in relatively short supply for me, I choose to not watch your video, and I am not trolling you. Isn't the point of bitcoin mining to make it private? The only thing that I have heard that the NSA desperately wants to get its grubby hands on would be a quantum computer, which has not been invented yet.

aleph0's picture

I attended a lecture by a leading scientist who explained his  Quantum-Computer theory and fact. That was 10 yrs ago .. and I doubt that the NSA is even close to getting one.

The point of that CCC lecture was simply that encryption is useless as the spying equipmant is already inside your .. notebook; USD stick; SD-disk; harddisk and almost everything else.
You may be sending encryted data down the line , but as the data from every keyboard and mouse-click can already be captured up front .. what's the point.

tip e. canoe's picture

quantum computers are perhaps already here...and they're called plants.

 The work has culminated this week in the extraordinary announcement that these molecules in a marine alga may exploit quantum processes at room temperature to transfer energy without loss. Physicists had previously ruled out quantum processes, arguing that they could not persist for long enough at such temperatures to achieve anything useful.

jeffgroove102's picture

I think the other door that bitcoin opens, is that we as a species have long needed an ethical artificial intelligence type control to run things, that is congruent with the finitude of the earth that we live on, as well as our own lives.

The biggest problem with government that man kind has never adequately solved, is how do you keep non ethical sociopaths out of positions of power.

MeelionDollerBogus's picture

Easy solution: destroy all positions of power so no one can have them.

logicalman's picture

This is why I'm an anarchist.

tip e. canoe's picture

we as a species have long needed an ethical artificial intelligence type control to run things, so said Agent Smith...

snark aside, perhaps what we have long needed is an ethical foundation for our intelligence so that we can let things run more according to their nature?

jeffgroove102's picture

In a free market kind of way? I am definitely for that. From your agent smith comment, I can see how my comments could be skewed. I personally like isaac asimov's laws of robotics. Simple and to the point.

  1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
  2. A robot must obey orders given it by human beings except where such orders would conflict with the First Law.
  3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

I think the world would be better off with fewer people. It seems to me, the more crowded the city, the more agressive people tend to be. When more people are in comfort with fewer restraints and conversely fewer people, then an ethical foundation is more possible.

MeelionDollerBogus's picture

I really like how Asimov summed it up in an appendix or something I read years ago.
Just think of 'robot' as 'tool'.
You want the above-most important feature of the tool is that it is designed to avoid harming you, no matter what you're doing with it or not doing with it.
Then, given that is accomplished, you certainly want it to do WHAT YOU INTEND it to do (within the obvious limit of its design).
It's not really the tool's fault if you want a hammer to function as a screw-driver and it won't, any more than if you expected a robot that puts together cars to also act as your toaster or beer-bottle opener. It just isn't made for that.
And finally rule 3 to protect its own existence: obviously for a story's sake that's carried very far in the Robot & Foundation novels and various novellas / compilations in the spirit of Asimov but the summary for 'tools' given by Asimov boils down to: a tool should be designed to operate not to destroy itself, to have durability, and as before, so long as that doesn't make it unable to do its intended job (rule 2) and so long as it doesn't make it dangerous to you, the operator, or people in general (rule 1).

The crowding of HUMANS is not the ONLY kind of aggressive crowding.
Mouse utopia experiment: (youtube),(wikipedia)

logicalman's picture

Problem with robots is that fallible humans make 'em.

On a similar note.....

God isn't perfect, it shows in his work.

tip e. canoe's picture

yes, i like ike's laws as well, as well as free market kind of ways.   the issue with combining the both together is that one can never be assured that all the robots that are created adhere to those 3 laws in their OS.   so then you're going to need guardian robots to protect from the predator & parasite robots, which then begs the question of who watches the watchmen?   and we're back to square one again.

and yes, as a lover of nature in its rawest form, agreed, perhaps it would be better off with fewer people.    but how can it reach a more stable equilibrium while maintaining some sort of ethical foundation?   choose to believe that intelligent life has been in this position before and did not make the right choices, and thus here we are again, so to me, this is an essential question, perhaps more important than any other.

curious to hear your thoughts, no snark intended or implied...

MeelionDollerBogus's picture

the solution is obvious: make every part of every item, software too, open-source so that we all watch and they watch us too, so nothing is secret.

blindman's picture

"at the place where the envious and the gloating
meet to annihilate one another, there will be
ground for a new beginning." fortune cookie
that came with a home style bean curd dish.

jeffgroove102's picture

This is great, after all, since the reagan era, we have been in a bull market for public representative BS. I like bitcoin for 2 very major reasons.

1) Decentralized control.

2) Accountability with cryptographic encryption.

Thank you for introducing this Reggie. What alot of people don't realize is just how poor governments actually make everyone, contrary to their stated goal of serving the people. When prosperity is truly allowed, everyone benefits!

blindman's picture

What Do the Latest NSA Leaks Mean for Bitcoin?
By Kevin M. Gallagher
..”One pseudorandom number generator designed by the NSA, Dual_EC_DRBG, has been confirmed to have a backdoor. While the NSA does have a growing stockpile of cryptographic arms that can be used in cyber warfare, Maxwell thinks that “any break is so valuable they would dare not use it except in the most urgent cases.” Furthermore, certain attacks would only destroy Bitcoin itself—with the ensuing chaos effectively ruining its market value.

A key question is whether the computational capability and budget of any adversary would be enough to shut down the Bitcoin network or make it unreliable. With regard to the NSA, Green estimated, “If you calculate the cost of the mining hardware that would be needed to mount an attack on the Bitcoin network I bet you would get a number that today would be within their reach.””
the toll free car analogy is horrible,
shriek. think about it. there ain’t no free.
there are schemes and scams but there ain’t no free.
there is always someone looking to make
a killing and have someone else pay for it.
apologies for failing to sing in tune with the
new choir.
NRBQ – Ain’t No Free
peer to peer? that requires some thought where
the identities are all anonymous and no one knows
if the bulk of the system of bitcoin is owned by
the nsa, a fictitious mathematician, a columbian
child slave trader or norwegian health care
; or is it german drug lords and goldman sachs?
as much as i don’t like potentially infinitely
manipulated fraud fed notes i do not want to jump
from the pit into the fire …. again and again.
know your peers before you call them your peers
i say, otherwise you’re just talking smack.
no? people will consider the significance
concerning the question of identity and “money”
transfer and what “they” conclude and how “they”
resolve the question may be entirely disturbing
as it relates to this bitcoin-age experiment.
trust no man and certainly a grain of salt regarding
all his creations and technology.

tip e. canoe's picture

this creation (golem?) has definitely siphoned off any discussion/collaboration on true peer-to-peer currencies, whereby the foundation is trust between individual human living beings.    it seems that many believe that that trust can be sidechained and placed in abstractions, as long as the abstraction can overpower any attempt at cracking the abstraction.

and where is the trust between individual human living beings?   perhaps somewhere with Elvis, outisde the building.

coinkidink or no?

blindman's picture


AKA Grafitti Man - John Trudell


rich man's war ......

blindman's picture
John Trudell - Baby Boom Che.avi
thanks and happy new year to U !!!!!
it is getting better all the time,
that is the only way and the truth
that must be embraced!!
our joyous burden, you and I.
peace and dig jesse ed davis here.

gratefultraveller's picture

one-upped you for linking to John Trudell

The Duke of New York A No.1's picture

Hey Reggie .... in your first BitCoin video (BitCoin for Dummies) .... when you describe the benefits of BitCoin - how it avoids the toll roads, and can travel anywhere (starting at aprox. the 4:00 min. mark) ... it sounds like your describing some of the properties of Gold bullion.

blindman's picture

interesting how speculators in bitcoin assume the grid
and the internet "highways" will maintain themselves
at no cost to them. it is like virtual magical thinking is just
so much fun and the satellites will someday launch
themselves! and our babies will raise themselves and
houses require no upkeep and everything produced in
labor camps with recycled plastic will be designed to
be maintenance free.
i knew 2014 was going to be a great year!
there, i feel better, 2 minutes of hate works every time.
we can all live like this if we just work harder.
Out to sea, out of mind
by John Urry @johnurry January 4, 2014
The secret offshore world of the super rich
.."This offshoring world is dynamic, reorganizing economic, social, political and material relations among societies and also within them. Above all, it is secretive. This makes it a paradise for the rich, a vision of the world almost without government, taxes and laws, where only the powerful, their ships and their companies survive and everyone else is left — sometimes literally — to sink to the bottom.

Secret paradises

Offshoring is a key part of globalization. Throughout the 1990s, it was a widely held belief that the global movement of money, people, ideas, images, information and objects was economically, politically and culturally beneficial. Most aspects of contemporary societies were thought to have been positively transformed through increased borderlessness.

But the ’90s did not turn out to be the harbinger of an optimistic and borderless future. It turns out that there’s a dark side to constant movement. Moving across borders are many new risks, trafficked men and women, drug runners, terrorists, criminals, slave traders, smuggled workers, waste, financial risks and untaxed trillions — to name just a few downsides. They inhabit various secret spheres designed to enable movement out of sight. Central to these offshore worlds are the vast oceans." .....j.u.
merely eliminate any attempts a coherency, rule, law, regulation
and, magically, the future blossoms up roses for everyone? or is
the garden reserved for only a few and the working of the garden
the burden of the many? the many dumb adults with their dumb
jobs and dumb money, hilarious.
suspicion, bitcoin becomes the grounding vehicle for all the
fiat fraud, going through price gyrations in fiat nomenclature
and is then flushed, leaving a global asset redistribution
that is then used as a basis for another fiat money system
minus most of the debts on the books and with a digital component
figured into the initial and basic architecture. aka
evolution of legal tender into cyberville.
there are millions of jobs to be gained or lost in the
bureaucracy of the money system and the legal tenders.
perhaps it is a transition from accounting to crypto-
accounting to which i insinuate?
that was odd......
contrasting the coding and cryptography of the money
system to greater complexity and regulation with the
tyrannical nature of the super rich
predating on the societies, cultures and resources they
claim as their own but take no interest in preserving
or maintaining, other than eliminating "obstructionist"
populations when they interfere, intervene or exercise
their liberty (should they ever try it). but who needs a market
when you can just divine wealth from a press or an algorithm
and have a slave population work out the hardware details?
it is having your cake and eating it too and gloating
about it. i think the gloating part is the least attractive.
Billie Holiday - I Cover the Waterfront

logicalman's picture

If computer power is what's needed to 'mine' BitCoins,  let me just ask which group has the most computer power.

Just asking.....

MeelionDollerBogus's picture

If we had just used pgp signatures vouching for meetings, services & goods we could have had something a billion times better than bitcoin 20 years ago.
We could still do it now.

tip e. canoe's picture

nice rant, mr. p

agree with the gloating part

some things never change

steveo77's picture

Bitcoin is insanely stupid, it plays into the hands of the NWO bastards to simplify their skim operation off of all transactions.     

Somehow this is more secure than a piece of paper?    A fleeting electron is more secure than a piece of paper.....hmmmmmm

One World Mafia's picture

It doesn't matter to them the NSA has multiple backdoors to Bitcoin mining.  Of the three cryptocurrencies I looked at, all three have NSA backdoored mining.

It doesn't matter to them there are huge numbers of bitcoins in the hands of a few unknown entities.

Keep spreading the word anyway.  The msm will never talk about it.

TPTB_r_TBTF's picture

a fleeting electron trapped by a floating-gate transistor is

not a very-fleeting electron.

floating-gate transistors are quite capable of corralling those so-called "fleeting" electrons.

OpenThePodBayDoorHAL's picture

MESSAGE FOR REGGIE: the Contact Us link on your website is not working

Musashi Miyamoto's picture

Onion Stock Exchange Now Open - http://drfar5tik2x2ycwb.onion

Read it and weep Bitcoin haters.

sixbilliondollarman's picture

more complex garbage to muddle & befuddle the mind...i think I'll just buy an ounce of silver & use green trash for essentials. when green trash runs out -I'll get some more & use it up to zero. When my green trash is practically zero again then do it again! ...cuz it still works cuz !

if they "bail me in" they can have that  too as they'll get 3 bux from the bank.

it's "easier" to be poor sometimes. keep it simple.

ZeroPoint's picture

Profiting of a spread is hardly anything new.

tradewithdave's picture

Doing so from within a simulation was illegal... until now.  Don't you remember all the attempts to monetize game credits and such... same difference.  The blockchain IS a simulation, yet there's a gateway to the nonvirtual with a convenient public record (read means test).  I can't view it as anything but a self-imposed poison pill on the Fed.  What else could this be?  It's like a movie or something, but it's quite logical when you consider the other possible exits (read none). 

Three metaphorical questions.  Is the fuse lit?  I would answer that with a yes. 

Secondly... how long is the fuse? 

Finally... what's the burn rate? 

Didn't see it coming?  Gellin'


Marco's picture

Who holds the real currency to pay out these hedges when necessary? Someone has to hold it, it can't be the parties entering into them because then we'd have traditional counterparty risk. So is it you Reggie?

Rising Sun's picture

BTC is not a liquid market - makes for big swings and big spreads


Not the way large orgs want to run a business


So what happens to my BTC when my HD crashes?

logicalman's picture

Multiple back-ups should be SOP

CH1's picture

If you're frightened, go away, don't clog up the discussion, and never touch BTC.

Grosvenor Pkwy's picture

"If you're frightened, go away ..."

If your attitude is typical of Bitcoin proponents, I can predict a very short lifetime for this particular fad.

If Bitcoin usage is limited to experts in software engineering and computer security, it can never challenge the dominance of existing systems such as Visa. I don't have to be a computer expert to use a credit card.

Without widespread adoption by average users, Bitcoin has very little value, and addresses only a tiny niche market.