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Friday, 05 June 2015 00:00

Update on the State of "Intelligent Money" As Wall Street Moves Into Space That We've Staked A Claim In Almost 2 Years Ago Featured

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The Exponential Finance symposium has just ended, and although I didn't attend, Blythe Masters apparently had the hardest hitting presentation. For those who don't know, up until last year she was number two
or three at JP Morgan and is the creator of the credit default swap (CDS). She is now the CEO of a Digital Assets (a Bitcoin technology company). Two quotes, a) "you were the most powerful woman on Wall Street", b) "How Serious should you take this? About as serious as you should have taken the Internet in the early 1990s!"

She is accompanies by many others who are pouring money into this space:

  1. Goldman a Lead Investor in $50M Funding Round for Bitcoin
    startup Circle (founded by Jeremy Allaire, the guy who create cold fusion programming language)
  2. NASDAQ Details Upcoming Use of Bitcoin's Block Chain Tech
  3. Ex-Chairman of Citibank and Larry Summers (ex. Secretary of the Treasury)
  4. Gene Sperling, ex-economic advisor to the POTUS
  5. TeraExchange, represented at the CFTF session on digital currencies has taken former New York Stock Exchange CEO Duncan Niederauer as an advisory director
  6. Sheila Blair, former chair of the Federal Deposit Insurance Corporation has joined New York based itBit exchange on their board. A formal announcement on the subject is expected in the next several days.

Other Wall Street entities investing: NYSE into Coinbase, BBVA, etc. Each and every money center bank has a working group studying this stuff. This is all very good news because Veritaseum got a very strong foothold in 2013.

We’re the first to develop financial asset value trading through the blockchain with a working prototype available since December 2013, and it’s been in constant alpha and beta use by actual traders ever since then. We applied for IP protection that is well over a year old. This is one area where first mover advantage has its perks. I will attempt to delineate a few. 

I believe we pioneered the default risk-free and counterparty risk-free model as applied through the blockchain. Wouldn't it be amazing if a small startup in Brooklyn founded by the loudmouth blogger that predicted bank collapse and European sovereign debt default beat the entire street to the punch? Well, it's looking pretty good thus far. Remember, my strength is seeing fundamental, technological and macro trends before the analytical crowd does. This one is a biggie, trust me on that. For those who don't understand zero trust systems and how they're safer than the current way of doing business, reference "Bitcoin 1.0 vs 2.0 – or – A Comparison of Legacy Exchanges & Veritaseum's UltraCoin".

This is actually a very good time for institutions to invest in this space. I truly don't believe the professional early stage investors (VCs) get it yet, reference The Evolution That Is Veritaseum: Benchmarking It To Venture Funded Competition. The guy is in capturing actual value in the trade, not tokenizing the value just to have it run throuh the legacy system. It's akin to the difference between trading IOUs and actual money. When these guys do get it, Fintech startup valuations (at least those who are on the right track) will explode. OF course, you've got to be in it to win it, right. Reference Bitcoin 2.0 Investment Will Trump the Risk Adjusted Returns of Early Movers In Digital Currency Space - VC's Enter Vertitaseum aka The Truth!

I found a way to simplify things for those who are new to this. Another name for a hosted bitcoin wallet is a bank. Banks keep your digitial money in digital wallets (bank accounts). Blockchain technology allows you to keep you wallet (bank account) in your pocket, your computer at home, on your phone - yes, you get to be the bank now - with more security and more transparency. This is called autonomy. The way the banks do it now is called heteronomy - the polar opposite.Regulation in the financial services industry (both on the state and federal levels) is aimed primarily at the protection of the consumer. This is a good thing, both for the consumer and the industry in general, for a consumer that can't trust its vendors is a consumer that won't use it's vendors. This is the reason why the big(ger) bitcoin exchanges, money tranmsitters, etc. are getting regulated - as as to comply with the laws and appear more acceptable to the financial mainstream. The problem with this approach is that they are taking a decentralized, autonomous system of value transfer and attempting to shoehorn it into a centralized, legacy system created hundreds of years ago.

autonomous financial transactions 

Bitcoin 1.0 is where most of the VC money is flowing, but Bitcoin 2.0 is where the true value extraction - the next Google/Apple/Facebook (Veritaseum) will occur. This is all but guaranteed.

In "The Revolution Will Not Be Televised. It Will Not Be Decentralized, But It Will Be Distributed" I diagrammed this for all to see. 

The world of Financial computing used to be highly centralized, with powerful companies basically owning and controlling everything. The advent of the internet brought topological decentralization, but that decentralization is nominal and in name only because the most important aspects, the thing that really needed to be and stay decentralized is centralized and becoming increasingly more so. That thing is... control of the data! Remember, nearly all fiat money is now used as digital currencies. Count the number of physical dollars/euros, etc. in your pocket vs in your electronic bank account - hint: If you didn't realize that banks are some of today's largest data companies, read "Who Are The Three Biggest Data Companies In the World? 1) Google 2) the Fed 3) JP Morgan/ECB"

Many, if not most, are lulled into a false sense of security as they've been led to believe that since they have access to all of this information and all of these financial services, they live in a free and decentralized world. The fact of the matter is, they, you, we have access, but we have sold our control over our own data and capital for said access. That access that all enjoy - meeting friends of Facebook, storing files for later retrieval on Google or Dropbox, or even accessing your coin on Coinbase or money through a regulated bank - all, entail giving up control and data to a centralized data center. He/(she) who hath the (centralized) data center, has the control.

Centralized (A) is how the financial system looks today. Large regulated entities are at the venter of a bunch of other entities who freely send their capital and relinquisih full control of their monies to these central entities in order to access financial services for said capital. This risky for said centralized entities can collapse (MF Global), get hacked (JP Morgan, Citibank) or defraud (Madoff). These are major reasons why regulation is present and needed in such a system. Despite the fact that the flaws are evident, prevalent and pervasive in such a system even with superior solutions invented, this is where the VC money is going today. Veritaseum has multiple patents pending and a fully functional platform that moves us from Centralized (A) to Distributed (B). With Veritaseum, everyone becomes their own bank (without bankers), their own exchange (without brokers or centralized exchanges) and execute and enforce their own contracts (without courts and lawyers).  We can do this with similar or materially better functionality seen in the legacy system (reference "The Unbundling of a Money Center Bank") without anybody having to trust anybody else, whether it be a centralized institution (regulated or not) or a counterparty. This is all done through distributed, consensus driven software.

For more information, see the Veritaseum presentation deck here. We are aggressively looking for financial partners and strategic partners. Anyone who is interested and has intellectual, financial and social capital to bring to bear should reach out to me at reggie at veritaseum dot com.

Things are about to get interesting as those in the know and their early investors battle it out for for supremacy in the world of Internet 2.0!

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