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Theres' Something Fishy In The House Of Morgan, Pt. 2: Bitcoin Fear, Envy & Loathing

Reggie Middleton's picture





 

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">I've worked hard to establish a strong reputation - not only in terms of competence but in terms of integrity. For those who don't know of me, you can #99c24b; transition: color 0.2s linear;">view my media apearances and calls as well as my #99c24b; transition: color 0.2s linear;">Wikipedia page. You see, my mommy and daddy raised me to appreciate both aspects of success - not only one. With that in mind I'd like to address the recent report from JP Morgan slamming Bitcoin. Just so most know my viewpoint, the typical Bitcoin enthusiast and entrepeneur is primarily technologist leaning, thus may or may not see all of the aspects of the financial side of this new... "thing". In addition, and because of that, the financial guys often get away with some outrageous bullshit that they'd never even try under different circumstances. Let's apply this perspective to JPM's latest FX strategic outlook report, "#99c24b; transition: color 0.2s linear;">The Audacity of Bitcoin". I will refute this report, point by point, and in the process make the managing director whose name is on the report look downright ignorant and uneducated. This is not a personal attack or an attempt at sleight (hey, he may be a downright stand-up guy), I am simply calling it as I see it.

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Before we get to the report though, I want to address the foolishness of following these "reports" from the big name brand money center banks. Since JP Morgan is the name du jour, let's focus on that one shall we? On Wednesday, 27 April 2011 I penned a piece called #99c24b; transition: color 0.2s linear;">There's Something Fishy at the House of Morgan wherein I pointed out quite a few inconsistencies and made an educated extrapolation (my way of saying prediction without having to sound like a guruConfused). One of them was a marked spike in JPM's legal costs, despite a marked drop in the rate of reserving said legal expenses, to wit:

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;"> 

#666666; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; font-family: Arial, Helvetica, sans-serif; line-height: 16.46666717529297px;">#0033cc; transition: color 0.2s linear; margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; background-color: transparent; line-height: 0;">#cccccc; outline: 0px; font-size: 13.333333015441895px; background-color: transparent; vertical-align: baseline; cursor: pointer; display: inline-block; overflow: hidden; position: relative; float: none; width: 500px;"> 

#666666; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; font-family: Arial, Helvetica, sans-serif; line-height: 16.46666717529297px;">I have warned of this event. JP Morgan (as well as Bank of America) is literally a litigation sinkhole. See #0033cc; transition: color 0.2s linear; margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; background-color: transparent;" rel="bookmark">JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now Wednesday, March 2nd, 2011.

#666666; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; font-family: Arial, Helvetica, sans-serif; line-height: 16.46666717529297px;">Traditional banking revenues: manifest destiny as forwarned - #0033cc; transition: color 0.2s linear; margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; background-color: transparent;" rel="bookmark">Weakening Revenue Streams in US Banks Will Make Them More Susceptible To Contingent Risks

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;"> Was I right? Well, here's a list of JP Morgan's fines PAID (yes, paid) over just the last 6 months (this would be $31 billion on an annualized run rate, but whose counting?). Actually, I may be counting - after all you (the taxpayer) paid $30B to bailout Bear Stearns (bought by JP Morgan with US guarantees and financing, remember I warned about Bear Stearns in explicit detail months before the fact- #0033cc; transition: color 0.2s linear; margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 13.333333015441895px; font-family: Arial, Helvetica, sans-serif; line-height: 16.46666717529297px;" rel="bookmark">Is this the Breaking of the Bear?) as well as JP Morgan to the tune of at least $12B more. Oh well, back to that list...

    #666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">
  1. January 8th #99c24b; transition: color 0.2s linear; line-height: 1.6;">Scandals cost JPMorgan $1 billion in fines (various intergovernmental agencies)
  2. January 7th:#99c24b; transition: color 0.2s linear;"> OCC Assesses a $350 Million Civil Money Penalty Against JPM 
  3. January 7th #99c24b; transition: color 0.2s linear;">UNITED STATES OF AMERICA DEPARTMENT OF THE ... -vs JP Morgan
  4. October 16th #99c24b; transition: color 0.2s linear;">JPMorgan to Pay $100 Million Fine on CFTC London Whale Claim
  5. September 19th #99c24b; transition: color 0.2s linear;">SEC.gov | JPMorgan Chase Agrees to Pay $200 Million and Admits ...
  6. #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">September 18 $221 million - UK FCA
  7. #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Septembe 17 $300 million - OCC
  8. September 18#99c24b; transition: color 0.2s linear;">CFPB Orders Chase and JPMorgan Chase to Pay $309 Million
  9. September 18#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;"> $60 million - OCC
  10. July 30 #99c24b; transition: color 0.2s linear;">JP Morgan penalized $285 million for manipulating California electricity prices
  11. July 30 #99c24b; transition: color 0.2s linear;">JPMorgan to Pay $410 Million in U.S. FERC Settlement - Bloomberg
  12. Plus that $13 billion dollar WHOPPER!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">This is just the last 6 months!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Go to 12:28 in the video and realize why JP Morgan is a bit more desperate than many believe...

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">.

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;"> #99c24b; transition: color 0.2s linear;">Better Markets summarizes the past ten years of JP Morgan credibility better than I ever could, as follows: Highlights From A Decade of Illegal Conduct by JP Morgan Chase

    #666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">
  1. United States v. JPMorgan Case Bank, NA, No-1:14-cr-7 (S.D.N.Y. Jan 8, 2014) ($1.7 billion criminal penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-13-109 (Jan. 7, 2014) ($350 million civil penalty); In re JPMorgan Chase Bank, N.A., Dept. of the Treasury Financial Crimes Enforcement Network Admin. Proceeding No. 2014-1 (Jan. 7, 2014) ($461 million civil penalty) (all for violations of law arising from the bank’s role in connection with Bernie Madoff’s Ponzi scheme, the largest in the history of the U.S.);
  2. In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 14-01 (Oct. 16, 2013) ($100 million civil penalty); In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-15507 (Sept. 19, 2013) ($200 million civil penalty); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 13-031-CMP-HC (Sept. 18, 2013) ($200 million civil penalty); UK Financial Conduct Authority, Final Notice to JP Morgan Chase Bank, N.A. (Sept. 18, 2013) (£137.6 million ($221 million) penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-75, #2013-140 (Sept. 17, 2013) ($300 million civil penalty) (all for violations of federal law in connection with the proprietary trading losses sustained by JP Morgan Chase in connection with the high risk derivatives bet referred to as the “London Whale”);
  3. In re JPMorgan Chase Bank, N.A., CFPB Admin. Proceeding No. 2013-CFPB-0007 (Sept. 19, 2013) ($20 million civil penalty and $309 million refund to customers); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-46 (Sept. 18, 2013) ($60 million civil penalty) (both for violations in connection with JP Morgan Chase’s billing practices and fraudulent sale of so-called Identity Protection Products to customers);
  4. In Re Make-Whole Payments and Related Bidding Strategies, FERC Admin. Proceeding Nos. IN11-8-000, IN13-5-000 (July 30, 2013) (civil penalty of $285 million and disgorgement of $125 million for energy market manipulation);
  5. SEC v. J.P. Morgan Sec. LLC, No. 12-cv-1862 (D.D.C. Jan. 7, 2013) ($301 million in civil penalties and disgorgement for improper conduct related to offerings of mortgage-backed securities);
  6. In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-37 (Sept. 27, 2012) ($600,000 civil penalty for violations of the Commodities Exchange Act relating to trading in excess of position limits);
  7. In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-17 (Apr. 4, 2012) ($20 million civil penalty for the unlawful handling of customer segregated funds relating to the bankruptcy of Lehman Brothers Holdings, Inc.);
  8. United States v. Bank of America, No. 12-cv-00361 (D.D.C. 2012) (for foreclosure and mortgage-loan servicing abuses during the Financial Crisis, with JP Morgan Chase paying $5.3 billion in monetary and consumer relief);
  9. In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 12-009-CMP-HC (Feb. 9, 2012) ($275 million in monetary relief for unsafe and unsound practices in residential mortgage loan servicing and foreclosure processing);
  10. SEC v. J.P. Morgan Sec. LLC, No. 11-cv-03877 (D.N.J. July 7, 2011) ($51.2 million in civil penalties and disgorgement); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 11-081-WA/RB-HC (July 6, 2011) (compliance plan and corrective action requirements); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-63 (July 6, 2011)($22 million civil penalty) (all for anticompetitive practices in connection with municipal securities transactions);
  11. SEC v. J.P. Morgan Sec., LLC, No. 11-cv-4206 (S.D.N.Y. June 21, 2011) ($153.6 million in civil penalties and disgorgement for violations of the securities laws relating to misleading investors in connection with synthetic collateralized debt obligations);
  12. In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-15, #2011-050 (Apr. 13, 2011) (consent order mandating compliance plan and other corrective action resulting from unsafe and unsound mortgage servicing practices);
  13. In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-13673 (Nov. 4, 2009) ($25 million civil penalty for violations of the securities laws relating to the Jefferson County derivatives trading and bribery scandal);
  14. In re JP Morgan Chase & Co, Attorney General of the State of NY Investor Protection Bureau, Assurance of Discontinuance Pursuant to Exec. Law §63(15) (June 2, 2009) ($25 million civil penalty for misrepresenting risks associated with auction rate securities);
  15. In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-13000 (Mar. 27, 2008) ($1.3 million civil disgorgement for violations of the securities laws relating to JPM’s role as asset-backed indenture trustee to certain special purpose vehicles);
  16. In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-11828 (Feb. 14, 2005) ($2.1 million in civil fines and penalties for violations of Securities Act record-keeping requirements); and
  17. SEC v. J.P. Morgan Securities Inc., 03-cv-2939 (WHP) (S.D.N.Y. Apr. 28, 2003) ($50 million in civil penalties and disgorgements as part of a global settlement for research analyst conflict of interests).

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Now, how many bankers went to jail during this entier ten year period? 

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Then there's the actual financial fidelity of the bank itself, which so few call into question... JP Morgan's Derivatives Portfolio Was (and STILL MAY BE) VASTLY Inferior To That of Bear Stearns AND Lehman Brothers Just Before They Collapsed!!!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">JPM Lower Grade Derivatives#000000; font-family: Verdana, Helvetica, Arial, sans-serif; line-height: 19.200000762939453px; text-align: center; height: auto !important;" />

The oft used chart below was created in the 4th quarter of 2009. I'm sure it's worse now!

JP Morgan's Chart

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">So, have I demonstrated the nature of the entity that has issued said report "#99c24b; transition: color 0.2s linear;">The Audacity of Bitcoin" and clearly contrasted it to thine humble author (#99c24b; transition: color 0.2s linear;">media apearances/calls & #99c24b; transition: color 0.2s linear;">Wikipedia page)? This is not a credible institution. The same institution that penned and distributed "#99c24b; transition: color 0.2s linear;">The Audacity of Bitcoin" also #99c24b; transition: color 0.2s linear;">files patent for Bitcoin-style payment system but #99c24b; transition: color 0.2s linear;">JPMorgan's "Bitcoin-Alternative" Patent Was Rejected (175 Times)! 

#333333; font-weight: 400; letter-spacing: -1px; line-height: 1.2; margin-top: 0px; margin-bottom: 0px; padding: 0px; font-size: 30px; font-family: 'Open Sans', Arial, sans-serif;">The Sheer Audacity!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">JPM Audacity of Bitcoin pg 1

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">JP Morgan's John Normand says:

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">"Unlike other asset markets, FX rarely welcomes newcomers for the simple reason that launching a widely-used currency traditionally required creating a sovereign or supra-sovereign entity with a central bank to issue the unit and manage its supply over time.

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Hence the audacity of bitcoin: it is a stateless, virtual and peer-to-peer currency, so exists only digitally and is associated with no sovereign, central bank or bank payments system. It is also incredibly illiquid extremely volatile and often caricatured."

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Ignorant statement correction #1: B#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">itcoin is not a currency. It is a bifurcated system consisting of:

    #666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">
  1. #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Bitcoin - an open source peer to peer protocol that enables a fully distributed ledger of data (and not just financial data) that is agreed upon by networked consensus, thus eliminating the need for trust. No fiat currency can come remotely close to doing what it can do;
  2. #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">and bitcoin - a stream of data traveling along the fully distributed ledger mentioned above, manifested as a virtual currency that has an inherently native scripting language that fully qualifies it as a smart, programmable currency in stark contrast and direct contravention to "dumb" fiat currencies which have no programmable features whatsoever.

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Mr. Normand/JP Morgan also state: "virtual and peer-to-peer currency, so exists only digitally". This patent nonsense. Here is a physical bitcoin right here, compared to two other very popular physical manifestations of digital money:

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">digital currencies

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Mr. Normand and JP Morgan then go on to state: "For corporates, bitcoin’s appeal is two-fold: no or low transaction costs from a peer-to-peer payments system, and the potential brand recognition from trialing a new technology. These advantages must be weighed against extreme illiquidity and volatility, both of which impede risk management. All-in transaction costs may also be higher once the fees from transferring bitcoins to fiat currencies are included."

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Well, that's exactly what we're working on at UltraCoin. If you simply do the math you can find out exactly how much using Bitcoin will cost. What JP Morgan forgot to mention was the inherently safe risk management attributes that can come with using UltraCoin over bitcoin. UltraCoin effectively hedges and isolates the user from both credit risk and market risk, if the user is willing to pay the hedging costs. This makes the UltraCoin enabled bitcoin deal multiples safer than doing a similar deal with JP Morgan itself as the counter party. As a reminder, see the two charts above which illustrate JP Morgan's holdings then glance down to the flowchart below.

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">BTC swap  conversion cost flowchart1

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Tell me, would Greece have been better off dealing with me through UltraCoin and Bitcoin or JP Morgan and Goldman Sachs through their opaque swaps. As a reminder I bring you the BoomBustBlog article I penned a couple of years ago - #99c24b; transition: color 0.2s linear;">Smoking Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer Beware!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">#99c24b; transition: color 0.2s linear;">The Greeks (again)...

    #666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">
    1. According to people familiar with the matter interviewed by #99c24b; transition: color 0.2s linear;">China Securities Journal, Goldman Sachs Group Inc. did as many as 12 swaps for Greece from 1998 to 2001, while Credit Suisse was also involved with Athens, crafting a currency swap for Greece in the same time frame.

        Under its "off-market" swap in 2001, Goldman agreed to convert yen and dollars into euros at an artificially favorable rate in the future. This helped Greece to use that "low favorable rate" when it recorded its debt in the European accounts-pushing down the country's reported debt load.

      Moreover, in exchange for the good deal on rates, Greece had to pay Goldman (the amount wasn't revealed). And since the payment would count against Greece's deficit, Goldman and Greece came up with another twist: Goldman effectively loaned Greece the money for the payment, and Greece repaid that loan over time. And the two sides structured the loan as another kind of swap. So, the deal didn't add to Greece's debt under EU rules. Consequently, Greece's total debt as a percentage of GDP fell from 105.3% to 103.7%, and its 2001 deficit was reduced by a tenth of a percentage point in GDP terms, according to people close to Goldman.

      Another action that smacks of Hellenic manipulation, at least to the staff of BoomBustBlog: for years it apparently and simply omitted large portions of its military-equipment spending from its deficit calculations. Though, European regulators eventually prevailed on Greece to count everything and as a result, in 2004, there was a massive revision of Greek deficit figures from 2000 (a budget deficit of 2.0% of GDP in 2000 to beyond the 3% deficit limit in 2004), by then Greece had already gained entrance to the euro. As in my trying to prepare for the coming sovereign debt crisis, timing is everything, isn't it???

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">You see, these shenanigans are not possible when the swap is implemented with UltraCoin (the derivative layer that we overlay on top of Bitcoin). Remember "#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Ignorant statement correction #1": B#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">itcoin is not a currency. It is a bifurcated system consisting of #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">Bitcoin - an open source peer to peer protocol that enables a fully distributed ledger of data (and not just financial data) that is agreed upon by networked consensus, thus eliminating the need for trust. No fiat cur#3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 15px; line-height: 21px;">rency can come remotely close to doing what it can do;...

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;"> #3f4549; font-family: 'Helvetica Neue', arial, sans-serif; font-size: 14pt; line-height: 21px;">Because everything is accounted for in the Blockchain, you cannot double count, double deal, lie, cheat, steal or deceivingly overleverage - in other words the typical Wall Street bank business model is fractured!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;"> 

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">This means my potential inability to write artciles such as these: #99c24b; transition: color 0.2s linear;">Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! or #99c24b; transition: color 0.2s linear;">Once You Catch a Few EU Countries “Stretching the Truth”, Why Should You Trust the Rest?

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">To think, all of this wording... and I'm just getting to the bottom of the first page of this report! If you want me to address the rest, simply give me the heads up in the comment section below - and...

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">If you want to contribute to the further education of Mr. Normand and JP Morgan, contibute to the #99c24b; transition: color 0.2s linear;">UtlraCoin crowdfunding effort here. As you can see from this article, Reggie Middleton's UltraCoin is no mere alternative cryptocurrency. I fully intend to disintermediate the typical Wall Street bank through this technology by elimintating them as the unnecessary, full friction, inefficient and costly (where do you think those $20 million bonuses come from?) middlemen that they are. Remember, THEIR profit margin is MY business model! #99c24b; transition: color 0.2s linear;">Click here to crowdfund the disintermediation of Wall Street!

#666666; font-family: 'Open Sans', Arial, sans-serif; font-size: 16.666667938232422px; line-height: 30.22222328186035px;">Oh yeah, Mr. Normand, if you ever want to debate Bitcoin in public, I'm game. Let's dance! 

 


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Fri, 02/14/2014 - 13:44 | Link to Comment Toolshed
Toolshed's picture

Inquiring minds may want to check out this article:

http://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-seems-to-be-...

Thu, 02/13/2014 - 19:11 | Link to Comment teslaberry
teslaberry's picture

reggie i just emailed you regarding ultra-coin , i am trying to hook you up with investors from BA but it's just not easy tracking members of this 'group' down. I am in touch specifically with one major organizer lead of the group. Hopefully you'll hear from him soon. 

 

good luck!!!

and good reporting as usual.

Thu, 02/13/2014 - 18:41 | Link to Comment Infinite QE
Infinite QE's picture

As the ponzi unwinds Reggie, be a man and prepare an audit of all holdings in Bitcoin and Maxcoin so the world can see whether or not you have partaken in one of the greatest ponzi schemes of all times.

Thu, 02/13/2014 - 18:12 | Link to Comment Pee Wee
Pee Wee's picture

When do they rename JP Morgan to Racketeering Paid By Taxpayers, or just Racketeering Inc?

 

Thu, 02/13/2014 - 15:47 | Link to Comment SilverIsMoney
SilverIsMoney's picture

Bitcoin is horribly overvalued simply based on the fact no one can explain why its better than the other 83+ crypto currencies.

Just because it was first doesnt mean it should be valued 50x higher than the others. The speculators are going to crush the fools who got in post-Cyprus...

Physical gold and silver is your only salvation in this mess. Even bitcoin had counter party risk.

Thu, 02/13/2014 - 18:48 | Link to Comment Infinite QE
Infinite QE's picture

As we are witnessing, these are all about promotion. Nothing different than what GS, JPM or AIG did. Promote Promote Promote to the generally dumb public. Instead of it being the pension funds and local municiplatlies that the banksters fleeced, this fleecing is going on with those who Bitcoin was supposed to be for. The average person.

Thu, 02/13/2014 - 15:39 | Link to Comment sixbilliondollarman
sixbilliondollarman's picture

Blah, blah blah,

boo hoo hoo

words words words

pictures charts & other legit shit...

WHO CARES!

I'm tired of reading you shit...at first it was alright...but, now I'm busy.

Busy & illiterate.

I don't have time for BIG WORD & CHARTS.

Who care what Morgan thinks of SHIT COIN...the bag of shit you & Max [who I avoid watching now] got stuck with.

Take you loss...hook or crook BITCHCOIN is DONE.

whatever/whoever "took it out" proves it wasn't STRONG.

got a story on silver being held down by JP?

or is that too 90's for you?

CUT THE SHIT...the SHITCOIN

http://www.youtube.com/watch?v=bDbpzjbXUZI

Thu, 02/13/2014 - 15:26 | Link to Comment Lordflin
Lordflin's picture

So let me see if I get this. Bit coin belongs to the people.

That despite the fact that it is a pure digital fiat currency that carries with it a book that records every transaction ever made... Exactly the kind of currency that big government/ big banking has been trying to establish forever.

I am reminded of how the Fed came into existence. The Federal reserve act was offered as a control on the banks and an answer to the Aldritch Bill. Aldritch was a senator known to be in the pocket of the bankers... One bill was run through the Republican party, the other through the Democrat party, and a great debate took place, with the people believing their interests were represented with the Fed. Well, we all know how that turned out. The Aldritch was voted down, the Fed voted in, and the people were saved... or not.

Of course both bills were essentially identical.

So now we are to believe that the banks are opposed to Bitcoins. Really??

Give me a break...

Thu, 02/13/2014 - 17:33 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

The anonymity of the bitcoins is not absolute, IMHO. 

If you do it on the internet, they can track you. 

If you do it with frequency, they can find you. 

If they can find you, they can know who you are.

Thu, 02/13/2014 - 14:58 | Link to Comment philosophers bone
philosophers bone's picture

Reggie, I asked the question before and didn't get an answer (presumably I don't merit your time), but I'll ask again.  Where am I wrong or mistaken:

If you backed Bitcoin or whatever cc by 1 oz of gold (fully exchangeable by specifically bullion actually held), I presume it would trade at $1300 plus a slight premium for convenience.

If you backed Bitcoin or whatever cc by 1 oz of silver (full exchangeable by specific bullion actually held), i presume it would trade at $20.40 plus a slight premium for convenience.

Am I wrong or mistaken?  If so, why?  If not, then what is the "Bitcoin/cc" part worth?  An amount equal to the premium, which I presume would be slight or, in any event, way less than what BTC is trading for today?

Thu, 02/13/2014 - 16:48 | Link to Comment Jean Valjean
Jean Valjean's picture

You're not wrong or mistaken, you are just asking a very dumb hypothetical question which is probably why Reggie does not answer you.  You ask:  "If YOU backed Bitcoin...." without asking yourself: who is YOU?  Reggie? the US govt?  And WHY would anyone do what you are proposing?  You're basically telling "someone" to defend a cryptocurrency against gold.  That could get quite expensive.

Thu, 02/13/2014 - 19:53 | Link to Comment philosophers bone
philosophers bone's picture

Here is the hypothetical then: New cc backed by gold or silver. The owner of the BTC owns the bullion and when the transfer occurs, the ownership changes. Not hard to understand?

Fri, 02/14/2014 - 10:21 | Link to Comment Toolshed
Toolshed's picture

The crickets you hear are due to the fact that you are calling attention to the 1000lb gorilla in the room. Bitcoin is backed by zero, zip, nada. There is no honor among theives. Look what just happened on Silk Road 2.0. BTC is intangible and only exists in the ethereal world of internet villians and victims. Which are you? The only way to win is not to play.

Example:

Reggie Middleton, a once well respected financial analyst, gets involved in the Bitcoin scam, assuring everyone that he brings the trust, and proceeds to make a complete fool of himself. He doesn't seem to understand that the hardcore bitcoiners are deceitful shadow figures who fear and loathe the trust he offers.

Thu, 02/13/2014 - 14:42 | Link to Comment SmittyinLA
SmittyinLA's picture

bitcoin is a ponzi, they will be worthless when looter support is withdrawn

Thu, 02/13/2014 - 14:35 | Link to Comment ghostzapper
ghostzapper's picture

JPM is probably long BTC and wants to get longeeeeerrrrrrr BTC.  Is this that difficult to see?

 

I don't know if Reggie will end up being correct on every point but I tend to believe he will be pretty damn close.  It continues to amaze me that (my projection) a high percentage of ZHers likely feel that we need an entirely new financial system.  Yet, seemingly many ZHers (especially those that feel they are smarter than everyone else and smarter than the market) refuse to look at one very legitimate option for a new financial system and infrastructure staring them right in the face.  I know, I know phyzz is all that matters.  Well, who's to say BTC and Gold can't BOTH do very well and complement each other.

As for BTC this chart has gotten beaten up.  Long term uptrend is still well intact but it's got some heavy lifting to do before the next advance higher.  Did anyone think this would be easy?  I would expect the attacks on BTC to only increase from here . . . . . . yet it's still standing and gaining momentum aside from the current price action. 

 

Thu, 02/13/2014 - 19:32 | Link to Comment messystateofaffairs
messystateofaffairs's picture

I think the widespread ignorance and seeming irrational emotion so many ZH'ers display regarding bitcoin stems from both an ignorance of the nature of money itself and the technology and protocols that underpin the bitcoin money. So far independent people well versed in the technology thinks this system has a decent chance of survival, it's them I listen to. I fully well understand the nature of money but am not at all well versed in the underlying technology that bitcoin uses. Emotional rants by ill informed posters really shine no light on the future of this groundbreaking trend. I think once btc acquisition and transfer by joe sixpack becomes as effortless as internet surfing and the technology survives this establishment attempt to discredit it (obliviously because they can't technologically destroy it) its potential to change the world will start to unfold. No guarantees about that happening but I hope it does and think it probably can. Until then no amount of ignorant blathering or downarrows by those emotionally convinced otherwise will change that, it will be what it really is and has the potential to be.

Thu, 02/13/2014 - 14:58 | Link to Comment TheReplacement
TheReplacement's picture

BTC will only work for people who want or don't care if they are tracked at every move by the NSA.  BTC will only work as long as the power and the routers stay on and nobody puts in ACLs to block it.  Bitcoin is extremely reliant on other things to even exist.  Gold just is.  There is no comparison.  At best, bitcoion, or a variation, could be used as a currency but you still have the tracking issue.  At least you wouldn't lose wealth if the internet stopped working.

Thu, 02/13/2014 - 14:51 | Link to Comment Prisoners_dilemna
Prisoners_dilemna's picture

" Yet, seemingly many ZHers (especially those that feel they are smarter than everyone else and smarter than the market) refuse to look at one very legitimate option for a new financial system and infrastructure staring them right in the face."

Missed the Boat Syndrome

I hope they get over it soon. ZH is top notch info and I think the ZH readers assume the boat has sailed because they see the word bitcoin multiple times daily.

How unfortunate the intellectual vanguard at ZH have no idea they still have a leg up.

Thu, 02/13/2014 - 14:06 | Link to Comment SmittyinLA
SmittyinLA's picture

If JPM invested in JPM leveraged shorts would that be bullish for JPM? 

Thu, 02/13/2014 - 13:59 | Link to Comment GrinandBearit
GrinandBearit's picture

Bitcoin is so 2013.

This pet rock had it's 15 minutes of fame... it's over. 

For those who did not sell at $1240... cry yourself a river.

Thu, 02/13/2014 - 13:46 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

There's nothing fishy going on, Reggie: Bitcoin's bubble has burst & you made a bad call thinking otherwise. Sometimes that happens.

JP Morgan's another story... yet to be fully told.

Thu, 02/13/2014 - 13:52 | Link to Comment Reggie Middleton
Reggie Middleton's picture

How in the world can you say I made a bad call. The networks has proven most resilient against both a DDOS attack and one of its largest exchanges going haywire. If anything, that's bullish for Bitcoin. You obviously have not been viewing my videos. The prices of the virtual currency is absolutely irrelevant. Your comment is akin to saying the Internet was a bad call because the price of AOL has fallen by 40%.

The value is in the protocol, not the currency. I strongly suggest you view this entire playlist http://www.youtube.com/watch?v=r40QFDwXZ-Y&list=PL36ikfnnWcAHOt_cwahKMqP...

Sat, 02/15/2014 - 15:50 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

People aren't making money off the protocol, they're making or losing money off the exchange price.
By all means the DDoS hasn't destroyed bitcoin but the resilience hasn't translated into durable safety of cash-value put into it.
It's not "bad call" like "let's buy housing in 2006, it can never go down!"
but it's not "good"

The prices are absolutely relevant until volatility for bitcoin & other digital currencies can settle. It's what's having the largest benefit or damage to people's finances.

The blockchain remains a serious issue: a serious & efficient digital currency doesn't need a blockchain, doesn't need a record of transactions, and certainly doesn't need one that keeps getting so massively big soon the plebes won't be able to transmit it or store it.

I suggest you review how PGP , GPG works & the original "web of trust" concept built into PGP since 1992 or whatever year we all got it (I got it), it's key to transactional validation for a cryptocurrency.

If we can validate or revoke keys, vouchers (aka bitcoins) & even parties as trusted or never to be trusted, we can do something useful. Bitcoin isn't it.

This is very different than a comparison of AOL vs the Internet.

Thu, 02/13/2014 - 14:16 | Link to Comment Toolshed
Toolshed's picture

"The prices of the virtual currency is absolutely irrelevant."

Reggie makes statements such as the above, follows it with an absurd analogy, and yet somehow expects people to believe him.

Thu, 02/13/2014 - 14:12 | Link to Comment oddjob
oddjob's picture

You won't even admit shorting RCL was a ridiculously stupid call, so why start now.

Tue, 02/25/2014 - 05:02 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

wow, how about that, http://scharts.co/1k81yAN

I haven't had time to produce a scatterplot but I'm usually good now at eye-balling it. I'd say R2 would be at least 0.7 but probably not more than 0.9 comparing RCL to SPY, probably the same for QQQ, DIA. Given that I'd say one would only be wise in shorting RCL if one believed shorting the market indexes was equally wise and then before proceeding look at the power multiplier effect here, as if one was a leveraged ETF of the other.

IF a relation exists, exploit it.

5 june 2012, RCL = 22 , SPY = 124 (not to the penny), 24 feb 2014 close RCL = 52.53 & SPY = 184.91

the math:

log(184.91/124) / log(52.53/22) = 0.459115684476

inverse being 2.17810027802, ironically, nearly 4/5 e (off by less than 0.4%), but I couldn't tell you why.

This means RCL acts as a leveraged ETF to SPY like 2.18x or 2x that hasn't yet decayed, but not with great correlation. Since a real 2x ETF of SPY is DXSLX let's compare: http://scharts.co/1k86ENr

To me it looks like no more than 15% of the time (eye-balling this) you can expect RCL and DXSLX to go in opposite directions. So to choose one over the other 80% of the time is irrelevant. Mathematically to treat RCL as not a derivative of the main market indexes, of QE & market-rigging is an outright blind-spot. This is why real technical analysis is critical. Real technical analysis requires equations & charts.

To say charts are no good in manipulated markets is another blindspot.

Once you know a thing is manipulated & what that manipulation looks like everything else that looks like it is also manipulated until proven otherwise.

 

Thu, 02/13/2014 - 13:52 | Link to Comment madtechnician
madtechnician's picture

Bitcoin buble has burst ?

 

That call has been made every year by so called 'experts' since 2009 , what planet are you on ?

Sun, 02/16/2014 - 17:58 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

220 mtgox 534 localbtc 552 btce
MY QUATLOOS! They are FIREWALLED INSIDE MTQOX!! oh NOES

We'll be seeing 140 the SECOND time around very soon now.

BuhhhhBYYYYYYYEeeee

Thu, 02/13/2014 - 15:20 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

i am on the 3rd one from the Sun, the blue one.

Here, btc has been dropping all day...

 

Price drop on my planet:

High: 656.989 USD  Low: 601.0009 USD Last: 608.358 USD
What is the price on your planet?  Oh yeah, "btc is going to the Moon!"  Is that where you are?

 

Thu, 02/13/2014 - 18:15 | Link to Comment madtechnician
madtechnician's picture

For me it already did go to the moon , it may be back to around around half way but I am 100% confident it will be on Mars by the end of the year. I already been through 3 major gut wrenchers with bitcoin , I can say each time it's easier to bear , knowing that after each collapse the fucking thing pulls another double moon shot after a couple of months. Don't give a shit what you naysayers come out with any more , we were called idiots when the bitcoin 'bubble' hit 1 dollar.

Thu, 02/20/2014 - 14:31 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

wuzzUUUUUUP bit-bitchez?

Remember I said bitcoin would slam through 140, AGAIN?

Guess what: it's a done deal.

Bitcoin = EPIC FAIL

Thu, 02/13/2014 - 16:00 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

yep, on my planet the bubble burst: 

Last Price: 589 USD Low: 585 USD

 In a few hours the Chinese will wake up and panic!  

Saint Valentine's Day Massacre
Thu, 02/13/2014 - 18:34 | Link to Comment Pee Wee
Pee Wee's picture

Yours is the only comment worth reading.

The Chinese are responsible for the bitcoin bonanza.  Why everyone else bases their seemingly rational hypothesis on the irrational Chinese is beyond logic.

The problem with fraud fiat is power, he who controls it (bitcoin or the dollar) has the printed/virtual power.

Tangible is the only currency with power that matters.  The rest is for suckers who will blame government regulation or some other party for losing their collective asses.

Thu, 02/13/2014 - 13:17 | Link to Comment Prisoners_dilemna
Prisoners_dilemna's picture

1. I understand that TCP-IP came first. Then HTML, javascript, etc are "derivative layers that we overlay on top" of HTML.  Conceptually I understand this much about Ultracoin.

2. But this... "inherently safe risk management attributes that can come with using UltraCoin over bitcoin. UltraCoin effectively hedges and isolates the user from both credit risk and market risk, if the user is willing to pay the hedging costs." Makes no sense to me as I'm a financial simpleton. I think what you were saying is JP Morgan controls many derivatives, valued at more than the GDP of a few countries. They make a lot of money off these derivatives and pay themselves huge bonuses. With Ultracoin.....*crickets*

I like gold and bitcoin because they're scarce; but I'm a biologist with no education in finance except what I read here at ZH.

So I see promise in Ultracoin because of #1 above, but I can not explain or understand Ultracoin because of #2.

Maybe Ultracoin serves no purpose for someone like me. But It would be nice to understand it and perhaps open some opportunities for myself by learning this new system and finding ways to apply it.

I would help crowdfund if only I understood what Ultracoin is or does. I will look into it further when I can. If anyone can point me towards a simpler explanation I would appreciate the help.

Excellent documentation of Morgans legal woes and corruption. That alone made this article worth a read.

 

Thu, 02/13/2014 - 14:01 | Link to Comment Prisoners_dilemna
Prisoners_dilemna's picture

Satoshi Nakamoto is pseudonym for a group of technology companies whose businesses would benefit if the hegemony of the big money center banks were shaken some. While this is all conspiracy theory, I'm a conspiracy theorist who loves to eat the breadcrumbs he finds lying around. Let me sprinkle some back down for you... SA(msung)TOSHI(ba) NAKA(michi)MOTO(rola)

WOW!!!!

 

and this

Darest I say this is the age where individuals bailout out the state, and do so on their own terms? My, how things have changed!

I Love It!!

Thu, 02/13/2014 - 13:48 | Link to Comment Reggie Middleton
Reggie Middleton's picture

There's a very detailed explanation of what UltraCoin is and what it does on its crowdfunding site. Look here http://ultra-coin.com/index.php/fund/discover/21-software-developement/1...

Thu, 02/13/2014 - 12:37 | Link to Comment cro_maat
cro_maat's picture

Speaking of JPM I heard from a back office guy on the Street (equity B/D) that JPM's back office is in disarray. Specifically that they cannot provide trade confirmations or 1099s to this B/D. They are now clearing through another custodian as a result. Can anyone else confirm this?

Thu, 02/13/2014 - 12:36 | Link to Comment FieldingMellish
FieldingMellish's picture

$485 on MtGox. How many more exchanges will go the "Hotel California" route?

Thu, 02/13/2014 - 17:54 | Link to Comment Citxmech
Citxmech's picture

At my last look, Mt. Gox shows $457.00, but  BTC-E shows $592.00  

WTF?

Is there a $135.00 premium per BC if you want to be able to pull your money out?

Thu, 02/13/2014 - 19:58 | Link to Comment Reggie Middleton
Reggie Middleton's picture

Mt.  Fox is facing a run and the selling pressure I'd driving the price down.  Mt. Fox is not a reliable ndicator of BTC pricing. Mt. God also faces liquidity issues so the apparent arb opportunity is not what it seems. 

Wed, 03/05/2014 - 02:05 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

How do you feel about the spread for localbitcoins? It seems that the spread is sometimes larger than the actual price is above zero at the low-end, crazy numbers like 500 to sell buy 1500 to buy.

This link may not work ...

but what I see at this moment is a high of 2000 and a low of 453. Today alone.

That looks bad. Maybe this link will work if the other didn't.

ok, since I got no reply I'll edit and up the ante and see if a reply will happen.

$5.76 USD for 1 BTC happened 2014 feb 28 , 1800 GMT on localbitcoins. Lucy, you got some splainin' to do

Thu, 02/13/2014 - 12:33 | Link to Comment thorgodofthunder
thorgodofthunder's picture

Reggie Middlefinger,

Verbose is to you what Ashford is to Simpson.

You are a loud mouthed talking head and your PacMan tokens, I mean Shitcoins, I mean Bitcoins, will shortly disintegrate faster than the speed of light. $650 per coin? Why not $0.65 per coin?

Go away, fool.

Thu, 02/13/2014 - 12:12 | Link to Comment Seasmoke
Seasmoke's picture

I think TPTB like that Bitcoin takes dollars that would be buying Gold.  

Thu, 02/13/2014 - 11:47 | Link to Comment Fishhawk
Fishhawk's picture

Bitcoin poses the usual 'not invented here' problem, in that not only do the wrong people get credit for the idea, but the current financial fraud centers risk being cut out of all future deals, thus bitcoin is a true game-changer of mega proportions.  Thus the PTB have a major interest in discrediting it somehow, yet they see that it is going exactly where they intended to go (full cashless society), but without including their critical graft step in the loop.  So how to destroy bitcoin without also setting back their own fully digital system plans...

Just shows that the central planners do not have a lock on the future; they will always be one step behind the innovators, making it hard for them to take credit for the real advances.  

Fishhawk

Thu, 02/13/2014 - 11:58 | Link to Comment NotApplicable
NotApplicable's picture

There are always going to be disruptive technological advances to any system. They know it, and pull out the ole one-page playbook when it occurs.

First they ignore it.

Then they ridicule it.

Then they let it win (after co-opting it during the first two steps).

In other words, it's Gandhi meets Hegel.

Thu, 02/13/2014 - 11:51 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Why would they need to "discredit" cryptocurrencies when they can take any size position they like?

Thu, 02/13/2014 - 12:39 | Link to Comment centerline
centerline's picture

If they wanted to kill it, they could.  But they are not.

Thu, 02/13/2014 - 13:17 | Link to Comment Prisoners_dilemna
Prisoners_dilemna's picture

Russia banned bitcoin yet if you watch fiatleak.com, you will see bitcoin bought for Rubles.

I'm not convinced they can kill bitcoin even if they wanted to.

 

 

Thu, 02/13/2014 - 14:40 | Link to Comment centerline
centerline's picture

All it takes is to make it so damn volatile that no one wants to use it.  Stability is the key to any currency.  Is about confidence.  Big players with all the lobbyists, policians, etc. in their pocket could rock this thing and make money doing it.

 

Thu, 02/13/2014 - 17:09 | Link to Comment madtechnician
madtechnician's picture

FX Traders *love* volatility , they thrive on it , the more volatile it is the more they will be drawn in , the long term net effect of that will in fact be price stabilisation.

Do NOT follow this link or you will be banned from the site!