The Steingenberger hotel is located on the west shore of Bodensee in Konstanz, a German town known colloquially as the “playground for the rich”.
I walked downtown in the evening on Saturday, and it seemed to me that the standard issue car here is a dark Mercedes G-Wagen, which sounds like a jet taking off, a car that is absurd which is precisely why I love it. It’s crazy that a decades old military box could rise to prominence among the glitterati who don’t even know what a differential lock is, much less how to engage one of the G’s triumvirate of them.
It was late night when I was sitting in my room on the 4th floor of the hotel thinking about something that got my attention recently.
Here it is.
Talks about Bitcoin tend get emotional because of the highly speculative nature of it.
People often ask: “is Bitcoin money?” Well, if you even need to ask that question it means it is not.
Is it a store of value? No, because it’s price gyrates wildly.
Is it a medium of exchange? Maybe.
Then you have the blockchain, the spine of bitcoin, the technology that makes it work. Blockchain is in essence a distributed ledger with a hash function that uses compression to create a fixed length output.
Which means that it will compress what I just wrote above in the same 256 bits length output like it would do with all the volumes of Tolstoy’s “War and Peace”. That way all the entries on the ledger are in the same format, regardless of the length of information provided. Pretty neat trick, but for the last ten years that blockchain is around I have yet to see a practical application of it.
When Chicago Board Options Exchange started to let people trade Bitcoin futures on December 10, 2017, it was greeted with enthusiasm in the crypto-bedazzled media. Within 24 hours bitcoin jumped by $2,000 to $17,382.
Then the Chicago Mercantile Exchange (CME) launched Bitcoin futures on December 18, 2017. But on that day the price of Bitcoin had already begun its epic collapse.
When it comes to impeccable market timing, few events can hold a candle to those two launch dates, asfutures trading can be used to bet on rising or falling prices.
These trading platforms gave investors the opportunity to bet against the ludicrous run-up of Bitcoin and now the bearish bets were the ones that made money.
There is an interesting concern rising from the too numerous exchanges for Bitcoin. A WSJ study has revealed that the market is being manipulated to create the impression that there is a $6 billion trading volume every day. This manipulation is all about boosting the image of volume using what is known as “wash trades” where the same party is buying and selling at the very same price.
Bitcoin may be an example of “pump and dump”, which professional market players love, but there is something new on the horizon that makes way more sense.
There is increasing hype and speculation regarding a Facebook Coin which is the polar opposite of Bitcoin. It will be pegged to a fiat currency, or perhaps a basket of currencies, held in Facebook bank accounts and it will use blockchain technology. It will not be possible to invest in it so it would not be a trading vehicle like Bitcoin. That means it would be more of a store of value. Clearly, Facebook is interested in a real-world market by creating its own payment network independent of Visa and PayPal, that would compete for deposits like banks, but globally. With Facebook’s immense user base, such a payment network would be extremely competitive in the banking world.
And Facebook’s total stock has a market cap of $463 billion is closer to 4 times that of the entire crypto market cap of $130 billion, so it’s an elephant waking up.
Still a brilliant, simple idea that makes you want to ask – what took you so long?
By the time I was done typing the stars lost the war and the red sunrise took over.