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You Can't Seriously Expect Your Banker to Tell You About This

Freaking Heck's picture




 

By Chris at www.CapitalistExploits.at

Years ago I had the misfortune of sitting adjacent a colleague who was a pretentious moron. We were both young and of no real importance at the investment bank which had hired us. This particular guy became so entranced with the absurd things that rich people with more money than sense can fall victim to.

A pair of £20 jeans which should have just been picked up at the Sunday flea market instead had to be bought for £200 from some peculiar store in Notting Hill, run by a strange woman who fussed over you as if you were a 5-year old. All of this was immensely important to this colleague.

The absurdity ran deep. Hosted parties no longer offered anything to eat. No sausage rolls, no little snacks that a human could identify. Snapped peas stuffed with yoghurt made from the breast milk of an Australian mongoose and the like. It was meant to be sophisticated but it just fell into the absurd. These sort of affairs drove me nuts. I'd rather have walked the streets of Brooklyn with an "I hate blacks" t-shirt.

I was reminded of this colleague just yesterday when I received a message from an old workmate who found the website. Turns out the pretentious moron is now heading some unit in the bank focused on "disruptive threats" to the business or something of that nature. If he's anything like the dunce he was years ago - and my friend assured me he is - then his ability to identify anything other than an Armani suit made specifically for pedophiles is vanishingly thin.

So why am I telling you all this, you might wonder?

Consider that in 2008 hotel executives around the world where sipping Evian, scanning the landscape to see who their competitors were. Not a single one of them identified a website which allowed people to list, find, and rent accommodation.

Today Airbnb eats hotels' proverbial lunch. It operates in 34,000 cities, 192 countries and has nearly 2 million listings.

Marriott vs Airbnb

Massive change is coming but don't expect your local banker to identify it coming and let you know. The list of ways to make the financial services industry better could rival the magna carta. High fees and endless hours waiting for automated call centres in Mumbai are just the tip of the iceberg. In fact, recently I wired money to someone in the US from an Asian bank and it took 4 days to get there. It would have been faster to take it myself. That's due to change.

A while ago I read an article from a banker who does understand the change coming to the industry. The former CEO at Barclays, Antony Jenkins, summarizes it nicely:

"We will see massive pressure on incumbent banks which will struggle to implement new technologies at the same pace as their new rivals."

The banks have been looked after very nicely indeed with taxpayer-funded bailout packages and sweetheart financing deals from the central banks and it is ironically this which may well aid in their downfall. It's made them fat and lazy.

Lurking just on the horizon is a technology which we believe will see their business models turned upside down. And as they scramble to adjust to a new reality, there will be no bailouts to save their overweight behinds this time around.

That new reality involves the blockchain, the technology underpinning Bitcoin. I wrote about this recently in this report. If you've not read it yet I recommend doing so as a short primer.

Though we've discussed the topic before in these missives, the futurist Peter Diamandis does an excellent job in distilling some of the core features and a smattering of the industries at risk of major disruption:

"At its core, bitcoin is a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things. Most importantly, it is an "exponential currency" that will change the way we think about money. Much the same way email changed the way we thought of mail. (Can you remember life before email?)"

The bitcoin evolution is gathering momentum. We are involved with and constantly looking at companies in this sector. One thing is for sure: there will be a dramatic improvement in customer experience, making peoples' lives better, and this will drive user adoption. When this takes place Moore's law kicks in and before you know it the world is a different place. Consider the evolution of the publishing, taxi, music, and hotel industries which have already seen disruptive technologies shake their world.

It all starts with a few early adopters, and once decent user interfaces are built then adoption skyrockets and the world changes forever. We're on the brink of this now.

Next week I’ll talk about potential USD alternatives. It's probably not what you're expecting and it's certainly not mainstream thinking.

Have a wonderful weekend!

- Chris

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Mon, 12/14/2015 - 14:15 | 6922261 Deez Nuts.
Deez Nuts.'s picture

Love seeing all the old farts bash bitcoin. So many luddites that can't take the effort to learn something new. I don't mind of course. More BTC for me to grab up.

 

Bitcoin, gold, and silver... TO THE MOON!

Tue, 12/15/2015 - 00:20 | 6924584 . . . _ _ _ . . .
. . . _ _ _ . . .'s picture

"...take the effort to learn something new."

I've got some unanswered questions above, if you would care to educate me.

 

 

"O, be some other name! What's in a name? that which we call an old fart. By any other name would smell as sweet; So a Luddite would, were he not a Luddite call'd,"

Mon, 12/14/2015 - 21:35 | 6924015 logicalman
logicalman's picture

The mathematics underlying BitCoin is certainly ingenous. The problem I see is that, given almost all on-line activity is tracked, it is hard to claim anonymity. Given the likely reaction by governments to anything they can't control, using BitCoin is likely to be similar to walking around with a 'kick me' sign on your back.

As for the term 'Luddite'...

Based on the way you use the term, you are using the term without understanding what the Luddites actually stood for. It's more interesting than you may have been led to believe.

I'm an old fart, by the way. Thing about old farts is they've seen a lot more than young farts and had more time to think about what they've seen

!

 

 

 

Mon, 12/14/2015 - 12:37 | 6921818 colddirt
colddirt's picture

Bitcoin is taxable, and you know what happens to people who don't pay their taxes....................

Mon, 12/14/2015 - 11:40 | 6921578 Skiprrrdog
Skiprrrdog's picture

They did away with the gold standard years ago so that we have worthless fiat paper backed by nothing, and look how well that worked out for us. Now they want to cram 'virtual money' down our throats, ostensibly created, managed by the very same people who ran our country into the ground, who I would not trust to set up security on a doghouse? Ill have to take a pass on that...

Mon, 12/14/2015 - 10:14 | 6921039 Grandad Grumps
Grandad Grumps's picture

Good article:

I am amazed at the amount of worthless overhead traditional companies are required to layer on top of layer just to comply with and maintain "the system". It is all, of course, for the greater good mind you and Harvard, the NGOs and the government are telling us how it is absolutely necessary. (in fact, only necessary for those in real power to maintain control and to decrease independency as they shape THEIR world).

As to your first point. The vast majority of us are just slaves. We are slaves to earning money for our continued existence under the illusion of control ... instead of being slaves to the whip, we are slaves to money.

An interesting aspect of this is that the slaver can really only control the slaves body and only in a limited way. The slaver, would love to be able to control the slaves mind, heart and soul and has for years been finding increasingly more effective ways to have the slave surrender his mind, heart and soul to the slaver. The elitists are enslaved themselves under the illusion that they must at all times maintain their superiority to the masses. Ego and fear are very difficult things to overcome. It is easy to enslave someone who wants many things. It is impossible to enslave the heart, mind and soul of someone who wants nothing.

Mon, 12/14/2015 - 10:27 | 6921158 Grandad Grumps
Grandad Grumps's picture

Upon considering this article further, I am re-evaluating my reading of Machiavelli's "The Prince" (although several years ago now and my memory fades).

It is not so much Machiavelli's advice to the Prince.
1. Do not lose the will of the people
2. Surround yourself with elitists, and make them dependent on you since they are always corruptable.
3. Kill the uncorruptable because they are a threat to control

It is more a consideration of Machiavelli himself, as inferred from the writing. He is old. He is a sage. He has no ambitions of power. I believe that he realizes that he is a slave and while advising the prince of how to maintain and increase power, it is not something he aspires to, could do or would ever do himself. Interesting... he may be making a subtle personal statement against the folly of power (in a much greater context) as much as providing a temporal guide to it.

Mon, 12/14/2015 - 08:44 | 6920866 . . . _ _ _ . . .
. . . _ _ _ . . .'s picture

If I can trade fiat for bitcoin, bitcoin must have a relative value. That value is variable, is it not? What is to prevent someone (a group) who can afford more and better processors from manipulating the value as has been done in every other market? What is to stop them crashing the market and buying it up for next to nothing? What is to prevent someone eventually owning (nearly) all of it?

Not being sarcastic or facetious, sincere questions looking for answers.

Mon, 12/14/2015 - 09:22 | 6920943 BitchezGonnaBitch
BitchezGonnaBitch's picture

If you can trade fiat for bitcoin, and the value is variable, woud it not equally imply that it is the fiat currency side that fluctuates in relative value? 

As far as blochain ledger is concerned - it does not allow you to falsify the number of units in circulation because there are potentially millions of "witness" nodes who hold account of all transactions within the total pool of currency. 

Bitcoin is only one of the manifestations of blockchain ledger. People like to take the dump on Bitcoin (fad! fraud! look how much you've lost!) but they don't seem to understand that it is the concept of blockchain, distributed ledger that makes all the difference - it lets everyone keep the score for everyone. There's not really anywhere to hide.

 

EDIT: as for the cornering of the bitcoin mining market - it is a very valid concern. However, there is nothing stopping you from forming a larger group and mining bitcoin on a larger scale. In fact, there is nothing stopping your local council doing the same either. Or even the central bank. There can never be a monopoly so long as there are no entry conditions, really.   

Mon, 12/14/2015 - 11:11 | 6921362 . . . _ _ _ . . .
. . . _ _ _ . . .'s picture

Thanks BGB.

Whether the fiat fluctuates or the BC does, unless BC is the only game in town, there is a relative value which can increase, decrease, or be manipulated. The total is not of any concern as there is a fixed amount of gold, yet the value of gold can be wildly influenced.

Keeping score isn't my main concern. If I can form a larger and larger group, could not the elite do so, as well? And with their better resources (and probable head start) would their lead not increase, and exponentially grow, at that?

Not only could the value of BC be manipulated, but if that value is tied into fiat, large moves in the BC market could be used to devalue or revalue fiat as well. Central banks with lots of BC could play one against the other to their advantage, and to our detriment. It would be like having two chequing accounts that write cheques to each other to cover the cheques written, you see?

Ultimately we can use gold to short the Fed. But gold can be confiscated. Cryptos make this (tentative) balance into a three-body problem, the consequences of which are impossible to determine.

I hope I am expressing myself cogently as I am trying to understand what this will do to global finance. Is BC not just a shadow tool of control (by influencing fiat) when cash is made illegal?

Mon, 12/14/2015 - 02:48 | 6920598 surf@jm
surf@jm's picture

I always thought the best internet business, would be to have paying subscribers to a website that gives info on the best of internet.....With every category of internet business, information, news sites, free movie sites, free music sites, and also an index of valid websites and valid domains.....

Search engines, are geared to advertise the highest bidder, not the best result......

Mon, 12/14/2015 - 00:21 | 6920333 kedi
kedi's picture

According to the Hotel and Lodging Association, there are 4.8 million rooms in the U.S. Rough estimates are 17.5 million rooms in the world. These are hotels. The sort of thing a lot of users prefer. AirBnB comes in a wide, wild variety, that a large majority of folks are just not into dealing with. So AirBnB offers about 4% of the number of rooms other hotels do, to a smaller percentage of potential customers. I think they will always have a small percentage of the customer base, but will not grow very much in relation to standard hotels, beyond the initial influx.

The artical ridicules how some inovations are missed by the established players. This does indeed happen. But lately I think too many overestimate the impact, viability and worth of a lot of new inovations.

Mon, 12/14/2015 - 09:48 | 6921048 Angelo Misterioso
Angelo Misterioso's picture

kedi - yep - too much research required to stay at a BNB place - so many hotel reservations are for a single night or two and the research required to stay at someone's house is just too much - and don't forget location - I can walk out of the major flag hotel and be where i need to be in about 5 minutes or I can take an Uber from some suburb or outer borough - just not happening...and we haven't even discussed safety and cleanliness....

Sun, 12/13/2015 - 23:28 | 6920184 Duc888
Duc888's picture

 

 

 

"recently I wired money to someone in the US from an Asian bank and it took 4 days to get there."

 

Crazy. Xoom does it in under 90 seconds.  Cash.  Ready for pick up.

Sun, 12/13/2015 - 23:09 | 6920121 Equalizer
Equalizer's picture

First the banks ignored it, then they closed banking services for the bitcoin sector and now they are embracing it.

Mon, 12/14/2015 - 00:37 | 6920371 Axenolith
Axenolith's picture

Of course, after the "how to f*** the consumer and record their deviances" part of the chain is perfected.

Lawful Money bitchez, use it or lose it...

Sun, 12/13/2015 - 22:47 | 6920032 DOGGONE
DOGGONE's picture

Stocks and homes are assets priced in U.S. dollars. Therefore, their
soundly shown price histories are inflation-adjusted ("real").

But such are seldom seen, because: Well apparent therein are our
nation's serial, massive mispricings. I do this
http://showrealhist.com/yTRIAL.html
in order to combat deception by omission done to our citizenry.

"The public be suckered" is both this track record and keeping it unseen.

Sun, 12/13/2015 - 22:41 | 6920016 logicalman
logicalman's picture

You can't seriously expect your banker to do anything other than fuck you over.

FIFY

Sun, 12/13/2015 - 22:16 | 6919905 slightlyskeptical
slightlyskeptical's picture

"We are involved with and constantly looking at companies in this sector"

So basically we are just changing what we call banks?

Mon, 12/14/2015 - 04:52 | 6920677 Freaking Heck
Freaking Heck's picture

Let me clarify. Blockchain...it encompases much more than just payments/asset transfers. Think custody, record keeping, exchanges....

Mon, 12/14/2015 - 04:52 | 6920676 Freaking Heck
Freaking Heck's picture

Let me clarify. Blockchain...it encompases much more than just payments/asset transfers. Think custody, record keeping, exchanges....

Sun, 12/13/2015 - 21:08 | 6919609 dumdum
dumdum's picture

 

 

Forget Bitcoin, it's a FAD.

Gold at $1000.00 is a good buy.

If it gets to $700.00 buy more.

If it gets to $500.00 buy much much more.

Sun, 12/13/2015 - 18:34 | 6919063 Mat Cauthon
Mat Cauthon's picture

This is part of the reason I quit my corporate job and built vocations from the Net.  I saw the future of commerce coming a mile away from some Futurist authors who recognized the power of the Internet, and the end of corporate model business.

Amazon > Walmart

Airbnb > Hotels

Online gaming > Vegas

Affiliate Marketing > Retail Sales and advertising

Alternative Media > Corporate Media

Uber > Taxis

etc....

 

Dovie'andi se tovya sagain (It's time to toss the dice)

The Daily Economist 

Mon, 12/14/2015 - 10:24 | 6921161 Dugald
Dugald's picture

 

Mongoose are not found in Australia but in Southern Eurasia and mainland Africa, Fiji, Puerto Rico, and some Caribbean and Hawaiian islands, where they are an introduced species.

Sun, 12/13/2015 - 21:17 | 6919667 Grave
Grave's picture

openbazaar > ebay/amazon/etc

Sun, 12/13/2015 - 13:59 | 6917878 Market Pulse
Market Pulse's picture

TPTB will never allow a "currency" that they don't control absolutely.

Mon, 12/14/2015 - 09:52 | 6921064 Vendetta
Vendetta's picture

SDRs seem to be the central banks form of bitcoin weighted on quasi-arbitrary criteria

Sun, 12/13/2015 - 21:20 | 6919680 sgt_doom
sgt_doom's picture

So you think a centralized file like blockchain technology will save the day??????????????????????????????????????????

Color me highly skeptical!

Mon, 12/14/2015 - 04:55 | 6920679 Freaking Heck
Freaking Heck's picture

Please educate yourself. Blockchain is decentralized

Sun, 12/13/2015 - 21:52 | 6919800 stacking12321
stacking12321's picture

it is not centralized, it is de-centralized, that's the whole point.

skepticism is good, let's see how things play out.

the technology has a lot of potential, it may well end up changing everything.

Sun, 12/13/2015 - 20:43 | 6919531 exartizo
exartizo's picture

I second MP.

BitCoin is a toy to governments.

When they whimsically decide it has outlived it's usefulness they will get rid of it by simply legislating the outlaw of its use.

BitCoin (or any other non-government sanctioned digital currency) will not survive government marginalization.

Sun, 12/13/2015 - 21:49 | 6919786 stacking12321
stacking12321's picture

lol!

they will get rid of it by outlawing it?

the same way they are getting rid of drugs by their "war on drugs", getting rid of terror with their "war on terror", getting rid of poverty with their "war on poverty"?

you sure do have a high opinion of the abilities of self-important bureaucrats.

they can outlaw whatever they like, i am not bound by their royal proclamations, i am a free man.

 

Mon, 12/14/2015 - 09:51 | 6921060 Arnold
Arnold's picture

Wow, I've never met a hipster before.

Tell me, that little spot on your chin that you missed when shaving this morning, is it significant?

Mon, 12/14/2015 - 11:45 | 6921602 Skiprrrdog
Skiprrrdog's picture

said the slave, who is too stupid to know he is a slave...

Sun, 12/13/2015 - 14:30 | 6917997 crazytechnician
crazytechnician's picture

... bitcoin does not need permission to function.

Mon, 12/14/2015 - 03:03 | 6920607 delacroix
delacroix's picture

maybe they'll destroy it, by embracing it.

Mon, 12/14/2015 - 04:13 | 6920647 commander gruze?
commander gruze?'s picture

Let's destroy islam by embracing it /sarc.

Sun, 12/13/2015 - 13:37 | 6917779 Sudden Debt
Sudden Debt's picture

Bitcoin isn't a currency as it doesn't have a identity.

It's just a OTC instrument being pushed by idiots who still believe it will be worth a million dollars a piece soon.

After all these years, it's not even used. A basic for a currency.

 

Sun, 12/13/2015 - 18:08 | 6918941 mendigo
mendigo's picture

Firstly: pets.com.

Secondly: I am surprised there is debate about this. Bitcoin has already experienced its first corrizine event.

It is a trap for nonconformists. Probably works to evade capital controls for the moment. But no a place to store wealth. I think.

Sun, 12/13/2015 - 13:50 | 6917833 crazytechnician
crazytechnician's picture

220,000 transactions per day and growing linearly says you are wrong.

Sun, 12/13/2015 - 19:36 | 6919293 TurnwiseWiddershins
TurnwiseWiddershins's picture

That's all? 

I'll bet there are more transactions than that per day, on average, in a typical city of 50,000-75,000 people.  And that's a conservative guess.

Sun, 12/13/2015 - 14:12 | 6917934 Sudden Debt
Sudden Debt's picture

Not wrong, just that there's plenty of people who are dumb enough to buy the air.

It's only kept alive by those morons and the mayority of the bits is owned by a select few who will dump it on you goons once you think it's a lottery ticket.

Tell me:

What's the difference between a OTC stock and Bitcoin?

 

Sun, 12/13/2015 - 17:43 | 6918825 Jerky Miester
Jerky Miester's picture

I like the way the proponents of BitCoin think that it's totally untouchable out there in the "Internet."  There are a few groups like Anonymous, Russian and Chinese black ops and other hacker groups just waiting for the chance to take this "untouchable" data currency down and brag about how omnipotent they are.

Mon, 12/14/2015 - 09:27 | 6920985 BitchezGonnaBitch
BitchezGonnaBitch's picture

Dude... even the way you talk about it shows you have very little understanding of the concept of blockchain ledger. Don't mean to be harsh but your comment is pretty ignorant of how the entire process works. Never fear, though, here you go:

http://www.investopedia.com/terms/b/blockchain.asp

Sun, 12/13/2015 - 15:14 | 6918177 ebworthen
ebworthen's picture

Sudden Debt - you'd have the same luck if you had a time machine and tried to talk people out of throwing all their money into Black Tulips or South Seas Company shares. 

Bitcoin has become a quasi-religion based on "math", an offshoot of the worship of science.  "Bring out the Holy Calculator!" Uhm-hum.

Sun, 12/13/2015 - 17:58 | 6918892 Dick Buttkiss
Dick Buttkiss's picture

What is it about math and science that you don't understand.

No, wait . . .

http://www.merriam-webster.com/dictionary/everything

Sun, 12/13/2015 - 18:48 | 6919125 ebworthen
ebworthen's picture

Math and science are human constructs of what already exists.

Being a human construct with humans involved = fallible and fungible.

It also requires the Interent, and nothing on the Internet is secure.

Mon, 12/14/2015 - 09:28 | 6920988 BitchezGonnaBitch
BitchezGonnaBitch's picture

Maths is fallibe? Jesus... 

Mon, 12/14/2015 - 04:50 | 6920674 crazytechnician
crazytechnician's picture

Math is not a human construct. If the universe had a spoken language it would be math.

Mon, 12/14/2015 - 04:16 | 6920651 commander gruze?
commander gruze?'s picture

> It also requires the Interent, and nothing on the Internet is secure.

Nothing on the Internet that doesn't use public key cryptography is secure. There, fixed it for you. It's good thing bitcoin does.

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