There’s literally a ‘token’ called F*ck that’s up 370% in the last 24-hours

By Simon Black – Soverign Man.

I vividly remember having a conversation several years ago with a woman about her real estate investments in the United States.
It must have been around 2005 or 2006… the peak of the property bubble.
She was a psychologist from somewhere in the midwest, telling me about how she was flipping off-plan condominiums in Florida.
Basically she would put money down to secure a condo unit in a building before it broke ground, then sell her contract to someone else at a higher price when the building was closer to completion.
I remember as she told me this story she was practically cackling at how quickly and easily she was doubling and tripling her money, and at one point said, “It is just soooo easy for me.”

Those words stuck.

I remember thinking, “Investing isn’t supposed to be easy. There’s supposed to be risk and hard work involved.”
But she wasn’t alone. Legions of amateur investors were piling into the market doing exactly the same thing.
Everyone seemed to be flipping condos. And everyone seemed to be making money.
It didn’t add up.
I remember one investor explaining to me how he would flip his condo contract to someone else when the building was 30% complete. Then that buyer would flip the contract to another investor when the building was 60% complete.

Then another sale when the building was 80% complete, etc.
“But who is the person at the end of the line?” I asked. “Someone has to eventually live in all of these condos and be willing to pay the highest price.”
“Oh there will ALWAYS be plenty of people who will live here,” he told me.
To these investors it was a foregone conclusion that required zero analysis: there will
always be buyers, no matter how high the price gets.

One of the marks of a good investor is learning from his/her mistakes; when an investment performs poorly, a good investor will try to figure out WHY, and incorporate those lessons into future decisions.

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Government Coming to Make Your Money Safer

By Tyler Jefferson – Money Morning.

Breathe a deep sigh of relief. There’s nothing to worry about. The government is here to help.

If that last sentence sent a shiver up your spine, you aren’t alone.

After Commonwealth Bank of Australia’s recent scandal, questions have been raised about how much we can trust Australia’s banks. And how much we can trust the authorities to regulate them.

In case you’ve missed the story, Commonwealth Bank is accused of failing to report 53,000 potentially suspicious transactions. It was all due to a glitch in CBA’s ‘Intelligent Deposit Machines’. A glitch that went undetected since the machines were first rolled out in 2012.

Potentially suspicious’ means deposits of over $10,000 cash. CBA should have been informing AUSTRAC (Australian Transaction Reports and Analysis Centre) about each of these. AUSTRAC is responsible for investigating money laundering and terrorism financing. So, not a small deal.

It’s impossible to know how much criminal activity went unnoticed due to this failure. Presumably, the majority of these ‘potentially suspicious’ transactions were perfectly innocent. But these issues came to light largely due to Australian Federal Police arresting a number of money launderers. Launderers who had been working for international drug traffickers.

CBA’s reporting failure went unnoticed for years. Unnoticed by CBA, at least. There’s no knowing how many criminals cottoned on to this. Sure, the Federal Police arrested a few. The glitch has been discovered. But who knows how many slipped under the radar before that happened? Remember, we’re talking about more than 53,000 transactions.

This week, the federal government announced that it would be strengthening laws that target money laundering in a bid to counter financial terrorism…and to regulate bitcoin.

What exactly do bitcoin and other cryptocurrencies have to do with CBA’s failures? Or with the criminals who exploited them?

Nothing at all. But that’s not the point. The government argues that bitcoin is used for money laundering, and so needs to be monitored. They’re likely right. And packaging the laws up with banking regulation, during a time when many are angry at and suspicious of banks, will make them easier to pass. If CBA’s scandal isn’t enough, there are plenty of other stories in recent years about big banks being fined for failing to report drug cartels, terrorists and other criminals washing their money. Who could disagree?

But, while the blame has rightly been laid at CBA’s feet, it isn’t the only responsible party. It’s worth noting that regulatory authorities like AUSTRAC already exist, and did so for the entire period of CBA’s negligence.

So what form will the government’s new regulatory powers take? Greater fines and punishments for failure to comply? That may incentivise banks to make sure they’re compliant. But from all appearances, CBA’s failure was a monumental mistake, not an active attempt to break the law. Harsher punishments would have been unlikely to change that.

If our existing regulators took years to spot a massive error in a relatively simple smart-ATM, how can anyone expect them to keep up with the every-changing revolution that is cryptocurrency? This is a world that is constantly redefining and reinventing itself. Crypto experts like Sam Volkering will tell you that many of cryptocurrency’s greatest achievements haven’t even been thought of yet.

Cryptos like bitcoin are already revolutionising the financial world. But more recent entrant Ether isn’t even intended as a currency for spending. Instead, ether is more like an energy source for the next stage in the internet’s evolution.

(If that doesn’t make a lot of sense to you, you should check out Sam’s Secret Crypto Network. He’s been reporting on cryptocurrencies since their early days, and he understands their uses and potential better than anyone else I know.)

If we haven’t even thought of some of the most important uses for crypto yet, how can regulators possibly hope to control it?

Of course, that doesn’t mean they won’t try. It’s inevitable that government will stick its nose in.

The world of cryptocurrencies will keep innovating and evolving. It will be years before government can catch up, and begin to understand or effectively regulate this world. That comes with freedom, but also with risk. If you’re considering dipping your toe into the world of cryptos, and trying to get a piece of the incredible gains being made there every day, you need a guide.

TenX To Release Crypto Visa Card.

 … – Money Morning.

Every day, cryptocurrencies edge closer and closer to mainstream acceptance.

Now, TenX, a Singapore-based start-up, is set to release its own crypto Visa card.

Check this out…

Source: Bloomberg

According to Bloomberg:

TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards.

This is the birth of a financial revolution. You must be blind not to see it.

Cryptocurrencies are ‘future money’…and the greatest investment boom you’ll see unfold in your lifetime.

Which is why I’m telling all my readers (and you)…


Look, you don’t want to end up as the investor who missed a shot to climb all over Amazon when it first listed…watching it rocket 57,500% over the next two decades!

The chance to buy Amazon shares at 1997 prices will never come around again.

My gut tells me that you’re looking at the same scenario with cryptocurrencies today.

You’re feet-first at the crossover point where digital currencies penetrate mainstream consciousness…sparking the next mad rush into the biggest and best cryptos on the market.

Laying down a small amount of money on the best cryptos now could rank as the smartest investment decision you’ll ever make.

I’m not the only one who thinks this.

Fan Yifei, deputy governor at the People’s Bank of China, said in September 2016: ‘The conditions are ripe for digital currencies…

The New York Times called it, ‘A new virtual gold rush…

A New Solution to the Enigma of Money

By Bill Bonner – Bill Bonner’s Diary.

‘Dad, last week I made another $20,000 off that NEO cryptocurrency I bought.

And last night, I made another $5,000 on my other cryptocurrency investments.’

Our in-house crypto expert was either boasting or pulling our leg; we weren’t sure which.

Stumbling toward tomorrow

I bought into NEO with just $2,000. I’ve already taken out $20,000. The account probably has about $80,000 in it now.’

What’s neon?’

The best thing is that I’m now playing with “house money.” I’ve gotten back all of my original investment…and much more. And it’s NEO, not neon. It’s the Chinese version of another one of the big cryptocurrencies, Ethereum.’

Day by day, we stumble toward tomorrow. And as usual, the future casts its shadow backward…onto the wayfarers.

Our children, with more spring in their steps, move along quickly. They buy cryptocurrencies in anticipation.

There are now more than 800 different cryptocurrencies competing for our business. That’s five times as many as the number of conventional currencies.

It’s really a free-for-all,’ continued our in-house expert. ‘New coins are starting up every day. Most are scams or jokes. Some are both. But something is happening here that we can’t afford to ignore.

Our whole business is based on trying to understand the world of money. This is the biggest thing to happen in the financial world since the discovery of gold. If we don’t understand this, we don’t understand anything.’

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Freeing Yourself from the Tyranny of Central Bankers

By Shae Russell – Markets and Money.

Bitcoin has caught the mainstream off-guard.

The idea behind the cryptocurrency was simple. A monetary system without a ‘trusted’ third party overseeing it. A digital currency that can’t be controlled, manipulated or printed; one whose value is determined by the market alone — the opposite of the fiat currency system we have today.

Appetite for Crypto is Growing

Yet, as of Friday last week, bitcoin is now up 227% year-to-date. And it’s only August.

The growing consumer appetite for all things crypto can no longer be ignored. The mainstream has no choice but to jump on the bandwagon.

However, the rise of cryptocurrencies causes headaches for central banks. To date, Japan is still the only country that has accepted bitcoin as legal tender. There are whispers that Russia will make moves to embrace cryptocurrencies as money in the future too.

But what about Down Under?

Australian banks and the government continue to distance themselves from any digital currency. They label them as ‘untrustworthy’ and ‘volatile’.

Yet perhaps cryptocurrencies aren’t unstable or untrustworthy. Perhaps, instead, they are just working out their place in a world where fiat money reigns supreme.

Bitcoin price index

Source: CoinDesk
[Click to enlarge]

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Get Ready for a Boom in Cryptocurrencies.

08.08.2017. Ryan Dinse – Money Morning.

For all the hype out there, I know very few people who have actually bought any cryptocurrency.

Try the experiment yourself. See if you can find three people in your social circle who have bought any form of cryptocurrency. Two? One even?

People are interested, but not invested. That’s my experience, anyway.

Even the people I help better understand cryptocurrencies very rarely actually go on to buy any.

The reason?

First, I tell them it’s an unregulated market where they could lose their entire stake. That can put a handbrake on their interest.

But then I explain it’s like a 50/50 bet that could potentially make 1,000% or even 10,000% returns in five to 10 years if it fulfils its promise. Or a 100% loss if it doesn’t.

Most people’s interest perks up again after this!

The real problem for people seems to be the ‘how-to’ when it comes to buying cryptocurrencies: understanding private keys, wallets, public addresses, navigating through types of storage and getting your head around a whole host of new terminology that comes with a cryptocurrency investment.

The second problem is that there are so many cryptocurrencies (over 900 at last count). How do you choose between the good and bad ones?

It all becomes too hard.

The moment passes, and the interest wanes…

But this could be a very costly mistake.

In fact, buyers today could be the ones to benefit from the very thing that is stopping wide-scale buying.

Because, when it does become easier to get around these two problems, we could be ready to enter the third stage of the cryptocurrency boom…

A ‘euphoria stage’ boom coming?

Economist Hyman Minsky identified five stages of a credit bubble that can be applied to any sort of asset boom.

The Displacement stage is when investors start to get interested in a new innovation. For cryptocurrencies, this stage would be the first big price rises in late 2013.

The Boom stage is where we are at now. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be a once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold.

The third stage, the Euphoria stage, is where I think we’re going next. During this phase, caution is thrown to the wind and asset prices skyrocket. We might have reached this stage by now if not for the fact that most people find it hard to buy cryptocurrencies.

But that is set to change. There are numerous plans to make it easier for investors to buy into the crypto asset class without the technical hassles you currently have to endure. At last count, there were 20 funds and ETF products looking to launch later this year.

When the big banks start offering cryptocurrencies in their portfolios, you can be sure we are in the fourth or fifth stage.

Those are the final stages of a boom, resulting in Profit Taking and then Panic as the euphoria dies down and the boom turns to bust.

That’s how I see it playing out.

Bear in mind, though, crypto investing is a high-risk affair. You do not want to have a significant portion of your portfolio in cryptos. There is no guarantee we will reach the euphoria stage, or even that we’re not already in this stage!

But, if I am right about this, a little bit of effort now might pay off big time in the near future. The potential rewards on offer are unlike anything we’ve ever seen. You’ll find everything you need to know about getting started in the exciting world of cryptocurrencies here.

Billionaire Founder Oaktree Capital – ‘Bitcoin Nothing but an Unfounded Fad’

By Simon Black – Soverign Man.

Howard Marks … is the billionaire founder of Oaktree Capital.
His regular investment memos are highly insightful, and on Monday we told you about the latest commentary in which Marks cast a stark warning to investors.
Marks plainly states in his latest commentary that market valuations are at their highest levels in history…
… that complacency is at record levels, i.e. investors seem to think that the good times will last forever…
… that risk levels are quite high, while returns are incredibly low…
… and that investors are engaging in some damn foolish behavior.
Among them, Mark cites multiple examples of how investors are lining up to buy bonds issued by bankrupt governments.

In June, for instance, Argentina issued billions of dollars worth of bonds with a 100-year maturity.
Bear in mind that Argentina defaulted at least five times on its debt in the previous 100 years.
So it seems likely that the miniscule return investors will receive completely fails to compensate them for the risks they are taking.

Marks also wrote about cryptocurrency as an example of foolish behavior.
On the topic of Bitcoin, ether, etc., Marks states simply, “They’re not real!” and “nothing but an unfounded fad.”
And so… my friend Ben Yu took the liberty of emailing Howard Marks to engage him on the topic of cryptocurrency.
Ben was polite, but incisive as always, saying that Bitcoin is “no more or less real than any shared concept of money. . .”
His point is that the dollar isn’t “real” either. It’s merely a concept that people believe in.
Plus, over 90% of all US dollars in circulation, in fact, are already in digital form.

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This asset has outperformed the Tulip Bubble, Mississippi Bubble, and dot-com Bubble

By Simon Black – Soverign Man.

This morning I had the pleasure of spending an hour of my life tracking down a missing wire transfer that had been sent to a large, multinational bank more than two weeks ago.
I’m sure you’ve been there, being passed around various departments like the village bicycle, each time having to re-explain the entire situation to someone brand new.
Finally someone found the missing funds, and the person told me me they would release the money later today. But that it would still take 3-5 business days for the funds to hit the recipient’s account.
This is infuriating. It’s 2017. Seriously. It’s not like they have to load a pallet full of cash onto a cargo ship and float it across the ocean.
Banking is completely digital now, and transfers should be instantaneous. At most it shouldn’t take longer than a few hours.
As we hung up the phone I thought, “I can wait for cryptofinance to put you guys out of business.”

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Central Banks Are Driving Many to Cryptocurrencies

By Demelza Hays – Mises Institute.

Two years ago, Bitcoin was considered a fringe technology for libertarians and computer geeks. Now, Bitcoin and other cryptocurrencies, such as Ethereum, are gaining mainstream adoption. However, mainstream adoption has been propelled by financial speculation instead of by demand for a privately minted and deflationary medium of exchange. After the Fed’s rate hike this week, Bitcoin and alternative cryptocurrencies, such as Ethereum and Dash dropped in value instantly. Bitcoin, for example, dropped by approximately 16% in value while other coins dropped by approximately 25%. However, Bitcoin’s price recovered to the previous high within 18 hours.

The reaction of the cryptomarket to the Federal Reserve announcement provides evidence that cryptocurrencies are seen as a safe-haven investment during times of significant fiat currency dilution. As I wrote for Forbes Austria in April, this is why the demand for Bitcoin is going up in countries that are demonetizing their fiat currencies, such as India and Venezuela. Following the demonetization of the 500 and 1,000 rupee banknotes in November of last year, the price of Bitcoin on India’s largest Bitcoin exchange, Unocoin, shot up to $818 while American exchanges quoted the exchange rate as $709 per Bitcoin. Similarly, Surbitcoin, Venezuela’s largest Bitcoin exchange, saw an increase from 450 accounts in 2014 to over 85,000 in 2016.

Reacting to Fed Policy

However, if the Fed continues to raise rates, then the demand for cryptocurrency may decrease. When the Fed closes the faucet on newly printed money, there is less newly printed money that can flow into asset classes such as real estate, stocks, and cryptocurrencies, etc. Therefore, investors will have less demand for assets that hedge against inflation.

Bitcoin Inflation

Contrary to popular belief that Bitcoin is deflationary, the currency currently has an annual inflation rate of approximately 4%. The reason that Bitcoin allows investors to hedge the expansionary monetary policies adhered to by central banks is because the demand for Bitcoin is growing at a pace that is higher than the increase in the supply of Bitcoin. As explained in a Mises Daily article written by Frank Shostak in 2002, the term inflation was originally used to describe an increase in the money supply. Today, the term inflation refers to a general increase in prices.

If the original definition is applied, then Bitcoin is an inflationary currency. However, as I discussed in the 2017 edition of In Gold We Trust, the supply of newly minted Bitcoin follows a predictable inflation rate that diminishes over time. Satoshi modeled the flow of new Bitcoin as a Poisson process, which will result in a discernible inflation rate compared to the stock of existing Bitcoin by 2020. Every four years, the amount of Bitcoin minted annually is halved. The last programmed “halving” occurred in June of 2016. Therefore, the next halving will occur in 2020. The inverse of the inflation rate, the StFR, also indicates the decreasing flow of newly minted coins into the Bitcoin economy. The stock to flow ratio (StFR) of Bitcoin is currently 25 years; however, the StFR ratio will increase to approximately 56 years. This means that the StFR of Bitcoin should surpass gold’s during the next five years. Prior to January 3, 2009, no Bitcoin existed. Therefore, Bitcoin’s StFR was effectively zero. However, the rapid reduction in the amount of Bitcoin mining over time results in an increasing StFR over time. By 2024, only 3.125 Bitcoin will be mined every ten minutes resulting in a StFR of approximately 119 years.

If the new meaning of inflation is applied, then Bitcoin is deflationary because the purchasing power of each unit increases overtime. When I began investing in Bitcoin in 2014, a Model S Tesla worth $70,000 cost 230 Bitcoin. Today, a Model S Tesla worth $70,000 costs 28 Bitcoin. On June 11 of this year, the price of Bitcoin reached a new all-time high above $3,000 after trading at approximately $2,300 two weeks ago. Furthermore, Bitcoin’s market capitalization of $40 billion is expected to rise further as the uncertainty surrounding this technology decreases. Bitcoin’s price data only covers the past six years, which means there is basically no data available for statistical analysis.

Risk Assessments

The Ellsberg paradox shows that people prefer outcomes with known probability distributions compared to outcomes where the probabilities are unknown. The estimation error associated with forecasts of Bitcoin’s risks and returns may be negatively biasing the price downward. As time passes, people will become more “experienced” with Bitcoin, which may reduce uncertainty and the subsequent discount it wields on the price of Bitcoin.

An economic downturn occurs approximately once every ten years in the US, and it has been a decade since the 2007/2008 financial meltdown. If the economy cannot handle the increase in rates, and the Fed is forced to reverse their decision, the price of Bitcoin and other cryptocurrencies are likely to respond positively. Although the cryptocurrency market took a steep plunge after Janet Yellen’s second rate hike of 2017, prices fully recovered within a day. The quick rebound underscores the lack of assets that allow investors to accumulate wealth safely. Negative interest rates in Europe and fiat demonetization in developing countries are still driving demand for Bitcoin and alternative cryptocurrencies. Although Bitcoin was initially ridiculed as money for computer nerds and a conduit for illegal activity, investors are beginning to see the potential for this technology to be an integral part of wealth management from the perspective of portfolio diversification.


You won’t believe this stupid new law against Cash and Bitcoin

By Simon Black – Soverign Man.

This one is almost too ridiculous to believe.

Recently a new bill was introduced on the floor of the US Senate entitled, pleasantly,

“Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.”

You can probably already guess its contents.

Cash is evil.

Bitcoin is evil.

Now they’ve gone so far to include prepaid mobile phones, retail gift vouchers, or even electronic coupons. Evil, evil, and evil.

These people are certifiably insane.

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