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Enter UltraCoin: It Is To Banks As Peer-to-Peer File Sharing Is To The Music Industry

Reggie Middleton's picture




 

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I'm rapidly unveiling what's been brewing in the BoomBust labs over the last few months - UltraCoin an intelligent derivative layer of smart financial contracts that sit on top of the Bitcoin architecture. In short, the recreation of the banking industry in software - without the trust and counterparty risk issues!

For those of you who are still skeptical re: cryptocurrencies, I please read the most excellent article by David Z. Morris, which also happens to grace the front page of Fortune magazine today.

Fortune Front CoverFortune Front Cover

I'll excerpt some choice snippets:

Some still doubt bitcoin's usefulness and durability, but 2014 may leave skeptics even further behind -- developers and entrepreneurs are already hard at work building features on top of the Bitcoin protocol that will allow for the decentralized execution of financial services, from currency hedging to loans to stock issuance to rental and purchase contracts...

In the long term, peer-to-peer finance threatens to weaken banks and other financial agents just as peer-to-peer file sharing did the music industry -- and some of the architects of this financial Napster seem gleeful about the possibility.

Ya damn skippy!!!

 That means loans without banks, contracts without lawyers, and stocks without brokers, executed and recorded across hundreds of servers at all corners of the earth.

__________________

Independent entrepreneurs are also working to build this infrastructure. One of these is Reggie Middleton, currently building a client called BTC Swap.

This will be marketed as UltraCoin! Wasn't completely ready for the interview, but will be shown live at the North American Bitcoin Conference in Miami Beach this weekend!

Middleton, gravelly voiced, dapper, and businesslike, doesn't fit the stereotype of woolly young bitcoin developers. But he slyly describes himself as "not quite an anarchist," and BTC Swap is a shot directly across the bow of the financial industry.

Believe it!

Still in early development, BTC Swap is planned to facilitate a variety of what Middleton calls "Zero-Trust Digital Contracts," which recreate financial functions in software code by matching offered and desired transactions between parties without the need for intermediary institutions. Because these contracts are automated, instantaneous, and executed with assets already represented in the Bitcoin blockchain, Middleton says they eliminate counterparty risk while also subtracting conventional banking and brokerage fees.

David was correct in that it was in early development when he saw it, but we've been busting our collective asses (analysts, financial engineers, software engineers, programmers, website designers, the whole crew) and we'll not only be demonstrating live but will be trading risk down in Miami, right in front of your eyes!

The most immediate function Middleton envisions for his system is for hedging bitcoin against existing national currencies. With bitcoin's valuation still showing huge volatility, Middleton claims the availability of distributed hedging will both ensure the value of bitcoin for individuals holding the asset and provide systemic stability. (Given persistent skepticism, there should be plenty of takers to short bitcoin against the dollar.) And the entire system relies on decentralization for its security and integrity: "My contracts are peer-to-peer," says Middleton. "If you hack my servers, there's nothing to get." Somebody call Target (TGT).

Somebody? Anybody? Target, drop me a line at reggie.middleton at ultra-coin.com if you want my assistance in getting in on this distributed, peer-to-peer bitcoin thingy. My next post will show how my UltraCoins can add 15% to Overstock.com's bottom line. That's pretty damn good if you ask me! As a matter of fact, it's pretty damn good even if you didn't ask me :-)

Such hedging functions have particularly unique promise because of the extremely low transaction costs of peer-to-peer currency. Bitcoin makes microtransactions ranging down to fractions of a cent viable, but Middleton says that "right now, if you do micropayments, the volatility of bitcoin can really take you out." Because of the low cost of Middleton's swaps, "I can let [payees] manage risk and decrease volatility at the micro-level."

Please pardon me for the heavy excerpts taken from this article, but it is really... just.. that.. good!!! And it gets even better. Check it out:

The functions that advocates say could be automated through the Bitcoin network seem nearly endless, including peer-to-peer investment funds, Kickstarter-like crowdfunding, binding arbitrations, and even non-financial transactions such as naming rights management and encrypted communication.

I actually have much of this stuff oven already. All I need is the funds to help accelerate development becuase "you know who" is likely to get their bonus pool panties in a bunch and start coming after me :-)

And all could be executed without a cut for intermediaries. Bitcoin partisans, from developers down to rank-and-file users, often seem to revel in the idea that they are threatening the control and profits of Wall Street institutions, who they see as rent-seeking fat cats. If it were limited to the loss of fees on payments and transfers, bitcoin's threat to existing financial institutions would still be substantial. But with a full array of commission-free financial services on the horizon, there is even more reason to take heed.

Oh, and I love this part...

Middleton sounds a bit like an 18th-century pirate striking back against the Empire when he declares that "what I'm doing right now is a direct threat to fiat merchant banking." For him, excitement over value fluctuations in the bitcoin currency is missing the point: "It's not a threat as people sit there and ponder whether bitcoin is a bubble or not. But if people go through the protocol and use their imagination, the existing system is threatened."

And here comes the rain on the parade :-(

However, there is a substantial obstacle to this coming revolution. Despite the emergence in 2013 of entities like Coinbase that have drastically streamlined the process, it is still difficult to exchange bitcoin for national currencies in a quick, reliable manner. It's unclear how Middleton's automated dollar-bitcoin hedging will work without a lightning-quick and reliable dollar-bitcoin exchange platform.

UltraCoin was in early beta stage when David saw it. It'll be ready to strut much of its stuff in Miami, making things much clearer.

So, the true "automation" of bitcoin functions that integrate with the economy as a whole may require a reconciliation with existing trading platforms.

Oh, I wouldn't bet the farm on that one.

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Tue, 01/21/2014 - 15:52 | 4352658 putaipan
putaipan's picture

go reggie go reggie

Tue, 01/21/2014 - 18:01 | 4353244 wintermute
wintermute's picture

Are you having an Ultracoin IPO?

Tue, 01/21/2014 - 15:50 | 4352645 q99x2
q99x2's picture

Good luck. As long as it is open source it might just work.

Tue, 01/21/2014 - 15:36 | 4352574 Laughing Stock
Laughing Stock's picture

RM isn't the smoothest interview-ee

But he's one smart MF'er

Well done RM!

Tue, 01/21/2014 - 15:28 | 4352529 Fuh Querada
Fuh Querada's picture

(Counterparty risk)^n

estimates of n invited

Tue, 01/21/2014 - 16:42 | 4352911 palmdetroit
palmdetroit's picture

Counterparty risk?!? heathen!

Tue, 01/21/2014 - 17:07 | 4352958 Boris Alatovkrap
Boris Alatovkrap's picture

In Soviet Union, Politburo is understand "Counterparty Risk", so is eliminate other party.

Tue, 01/21/2014 - 18:03 | 4353258 wintermute
wintermute's picture

Just ask Leon Trotsky!

Tue, 01/21/2014 - 19:06 | 4353472 Boris Alatovkrap
Boris Alatovkrap's picture

Leon Trotsky is suffer impalement of Mexican Ice Pick, maybe cannot answer inquiry.

Tue, 01/21/2014 - 16:07 | 4352703 Skateboarder
Skateboarder's picture

Pokeball, Great Ball, Ultra Ball, Master Ball  ~ Bitcoin, GreatCoin, UltraCoin, Coinye

p.s. n = liquidity index. Guesses for axes welcome.

Tue, 01/21/2014 - 16:51 | 4352925 Boris Alatovkrap
Boris Alatovkrap's picture

<-- Advantage of BitCoin, no central authority

<-- Disadvantage of BitCoin, no central authority

Problem with BitCoin is no backing. One day is not exist, 2 year later is gain popularity, but where is derive value? Scarcity alone is not create value. Boris' gaseous flatulation has unique odor and according to family is extremely rare, but Boris is still wait for first customer of bottled version. Only value is people pay $USD or Euro, but then $USD or Euro is become backing. Famous quote from Superman is "Do not to worry Lois, Superman is hold you" to which Lois is ponder loud, "But who is hold Superman!?" BitCoin is same for problematic.

Near bigger problem is lack of central authority. How does Boris know BitCoin is authentic and unique? Where is Boris check? $USD, for example, is codify in law ("Federal Reserve Act of 1913"... "This note are legal tender for all debt pubic and private"). Reason bankster is hate Gold ("Barber Relic") is because gold is compete with Federal Reserve Note. This is why FDR is declare Banking Holiday and seize gold in 1933 (1929 according to genius vice president Uncle Joe). In Soviet Russia, Ruble is effigy of Lenin (enough said in totalitarian regime). How is BitCoin compete for value against "Ultra Coin" or "Pokeball" or "Ben Dover Coin"?

Boris is predict Rothschild bankster class is very to dislike BitCoin or competition and mount two fork attack. While Secret Service (Law Enforcement arm of Federal Reserve and agency responsible for keep puppet-in-chief restrain) is chase BitCoiner for illegal creation of coinage, Bankster is introduce multiple competition for cryptocurrency. Maybe you are cannot make more BitCoin than mathematical limit, but you are can create more form of currency to accomplish same dilutive effect. Remember, BitCoin is token of no underly value.

... but what is Boris know?

Tue, 01/21/2014 - 18:11 | 4353296 dark pools of soros
dark pools of soros's picture

one day as green energy replaces fossil fuels the petrodollar fades away.... and the kwattbitcoin emerges as all the world is forced to pay for electricity in bitcoins!!!

 

might not happen for another 200 years though so plenty of time to get in early!!

 

Tue, 01/21/2014 - 19:06 | 4353475 Boris Alatovkrap
Boris Alatovkrap's picture

"Green" energy, yes? What heck is "green" energy? If is like "green"vodka, Boris is no thanks to you!

Tue, 01/21/2014 - 19:54 | 4353654 dark pools of soros
dark pools of soros's picture

green energy = smoke it and shake it bitchez!

 

http://www.youtube.com/watch?v=2cB3GZO2d6Y

 

 

Tue, 01/21/2014 - 17:52 | 4353221 vie
vie's picture

I'd take Bitcoin over government fiat or credit cards any day.  No one is recommending you store all your wealth in Bitcoin.  No one is saying you shouldn't buy Gold, Bullets, etc.  If we're going to use pieces of paper or digits on a computer to keep track of who owes who what, we might as well try Bitcoins, it's cheaper and provides some competition to the Central Banking debt and death paradigm.  Right now I give my risk of storing money in the bank and loosing 80% of it's purchasing power vs storing it in Bitcoins and loosing 80% of it's value at some point about 1:1 odds.

Personally, I might try to sneak a few oz. of gold through customs up my sphing-sphing when I have to flee the country, but I'd rather just memorize my BTC key.

ps. keep up the awesome.

 

Tue, 01/21/2014 - 19:05 | 4353468 Boris Alatovkrap
Boris Alatovkrap's picture

Be careful, Boris is know "guy" in Sevastapol is take your credit card "any day". If take credit card, he is also free access you are bitcoin "wallet". Even slow mind USSA security consultant is can take 70000 name and data from Healthcare.gov in 4 minute, so Andrei can to take in 2 minute!

Tue, 01/21/2014 - 17:03 | 4352998 madtechnician
madtechnician's picture

Bitcoin is currenly superior to all other cryptographic currencies and it will stay that way for a very long time. Next best crypto is litecoin. litecoin requires around 10,000 x more electricity to process at the equivalent hash transaction rate as bitcoin. If litecoin goes mainstream every street will require power station to run servers. It's even worse for the other crypto's , so the dilution affect will be reduced as crypto goes more mainstream and the market decides on the most efficient crypto currency.

Tue, 01/21/2014 - 21:12 | 4353912 caShOnlY
caShOnlY's picture

Bitcoin is currenly superior to all other cryptographic currencies

Bitcoin is currently a distraction to keep the masses off of GOLD while providing an alternative to those who fear holding dollars. 

Something this powerful, growing this quickly is clearly a threat to the FED controlled FIAT and would have been shutdown and destroyed by now.   Notice the guy who was making "real" bitcoins with the encryption embedded into them was put out of business, while the virtual still exists?   Wake the fuck up.

 

Wed, 01/22/2014 - 09:37 | 4354970 madtechnician
madtechnician's picture

Oh yeah the old bitcoin is a destraction from gold story - well the bitcoin market would be the size of a flea on the back of a donkey (gold) - at this point.

Tue, 01/21/2014 - 21:55 | 4354068 peak.singularity
peak.singularity's picture

If by "real" bitcoins you mean Mike Caldwell of Casascius, then he was not put out of business, he just stopped selling pre-funded coins (for now at least, due to regulatory concerns). There was never any additional encryption embedded into them, they still used the bitcoin system, it's just that the private key necessary to redeem the bitcoins from their adresses was hidden behind a tamper-proof hologram.

Tue, 01/21/2014 - 19:01 | 4353458 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is entertain argument...

Is $USD better than is Ruble or Yuan? What is backing? Ruble is back by natural resource of Russia, Yuan is back by productive output of China. $USD is back by what, ability of USSA citizen to consume? By prowess of financial institution (= strong arm of bankster cabal)?

Yet $USD is more strong currency...! How is this be!? Because USSA is most powerful navy and army? Because USSA is owe every body so much money is hold earth hostage? Perhaps USA is have constitution and rule of law, but now is shredding of constitution and arbitrary rule of government. Maybe $USD is cleaner shirt in laundry receptacle, but is still dirty and reckless wanton government of Bush and Obama is destroy last vestige of "Faith and Trust".

So, why is Bitcoin of superior cryptography? Why are assume better cryptography is not create for "new" virtual currency? Why are assume same cryptography is not use for new currency? What is prevent "Bitcoin 2.0", "3.0" or "infinity"...!? Federal Reserve is create QE1, QE2, QE3, why cannot is competition no enter of market? Maybe Boris is make new crypto currency on computer tonight. What then?

... but what is Boris know?

Tue, 01/21/2014 - 18:19 | 4353332 peak.singularity
peak.singularity's picture

Wait, I thought the main advantage of litecoin was that it was easier to mine? How come it requires 10k times more electricity? And isn't the difficulty automatically adjusted anyway so that bitcoin-type currencies mining is almost as expensive in electrical cost as the profit you get from mining?

Tue, 01/21/2014 - 20:55 | 4353844 Matt
Matt's picture

Litecoin is easier for the common man to mine, since you can do quite well with a $400 video card, compared to spending several thousand to barely make money with Bitcoin.

As for the difficulty adjustment, yes, if the USD exchange value of bitcoin remained static, the rise in difficulty would eventually result in the best available equipment generating a few percent annual return over expenses.

Tue, 01/21/2014 - 19:32 | 4353549 madtechnician
madtechnician's picture

Mining is irrelevant. Transactional Scalability is what is important. Why use 10,000 x more electricity to process the same number of transactions ? That is the reason most Alt-Coins including LTC will eventually die. Winner takes all .....

Tue, 01/21/2014 - 19:09 | 4353484 Boris Alatovkrap
Boris Alatovkrap's picture

Brilliant strategy! Employ electrical energy and human time to create currency. This is how different from Petrodollar? Wealth is come to existence by create item, good, or service of human utility and desire. This is just more distractive waste program.

Tue, 01/21/2014 - 22:01 | 4354087 peak.singularity
peak.singularity's picture

You would have to compare the energy spent to secure the bitcoin network to the energy spent by the regular banking system to offer the same service (scaled to the number of transactions of course).

I actually wouldn't be surprised if someone proved that the bitcoin system is the most efficient possible for providing this kind of service.

Tue, 01/21/2014 - 20:58 | 4353858 Matt
Matt's picture

The benefit is that anyone who chooses to mine can recieve the new money as it is created, as opposed to the central bank system where the common man gets the new money last. Bitcoin has utility and desire. You can transfer money around the world for 0.1%, instead of paying Western Union or waiting a week for an untraceable (for the end user) bank transfer.

Tue, 01/21/2014 - 17:33 | 4353148 Bindar Dundat
Bindar Dundat's picture

 Bitcoin will be the wealth transfer mechanism and Ripples and Nxt will be credit  tools for smaller transactions and limited risk. Ripples and Nxt will be traded in  bitcoin becuase they will add fast transaction times to compliment the Bitcoin security.  I love it when a plan comes together.  Crypto curriencies can change the world.

Tue, 01/21/2014 - 19:03 | 4353172 madtechnician
madtechnician's picture

Agreed  , technically some crypto's could add secondary blockchain branches away from the main bitcoin branch with the bitcoin blockchain acting as the primary checksum chain. When these systems take off this will be nothing short of absolute financial revolution. We are witnessing the largest transformation of global finance since the collapse of the Roman Empire. I feel very fortunate to be witnessing this event.

Tue, 01/21/2014 - 19:11 | 4353496 Boris Alatovkrap
Boris Alatovkrap's picture

No need for secondary branch, why not creation of new crypto-currency to compete? What is prevent? This is dilutive effect. You are require to think outside of container, because you must trust, bankster and scheister is already one or two step forward moving.

Tue, 01/21/2014 - 19:34 | 4353540 madtechnician
madtechnician's picture

Network Effect baby .... And Supriority of Protocol. Most Alt-coins will die fast because they cannot scale up , the ones that can scale equivalent to bitcoin hash / transaction speed & volume will require so much server electricity that the market will drop them.

Whoever developed bitcoin already anticipated clones and technically beat them in advance on every point.

Tue, 01/21/2014 - 19:59 | 4353652 Boris Alatovkrap
Boris Alatovkrap's picture

Who is developer of Bitcoin? Fictitious Japanese Boy? Only similar crypto expert can vouch for superiority of protocol, but same crypto expert can obviously also create NEW crypto currency.

Is only one criteria for token instrument of barter, that future counter-party is accept tomorrow token at value of today, and is only two way to back token instrument of barter, physical value of limited scarcity (e.g. Gold, or maybe perhaps Copper:), or "Faith and Trust". Physical is more reliable than is "Faith and Trust", particular to when issuer of "reserve" currency is too busy lie and choom to observe simple rule of law.

When America citizenry is fully perform castration of bankster class squid (not is necessary for Congress or current occupancy of White House who is obvious void of any testicular fortitude), then maybe re-constitute NATIONAL central bank govern by law and constrain math, like cryptography, not will of man and arbitrary crony relationship.

... but what is Boris know!?

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