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An Executive Summary

Informational Presentation: To get the most out of such a dense offering, be sure to make use of the interactive table of contents on the 2nd slide, and please click through all of the videos, links to download the various documents and take your time to read and understand what Veritas is and is not, and what Veritaseum is and plans to be.

Veritas Product Purchase Agreement

Terms & Conditions of the Veritaseum 2017 Veritas Sale

Veritas 2017 ICO Purchase: Step-by-Step Tutorial

 If you haven't heard, we're giving out free, fully smart contracts as a 5% rebate to anyone who purchases any of our research packages above the introductory novice $50 level. This is not your Daddy's rebate! The rebate actually gets larger as DB goes down in price. For those who may be coming late to the party, we can offer a 5x long gold (or even a long gold, short DB) smart contract rebate as well. Of course, the bulk of our research targets banks and entities other than DB, but I thought we'd make DB the subject of the rebate to drive the point home. Below is an actual contract crafted off of the price of a single share of DB for about 2 weeks.

Click here to explore and subscribe to our research. You will have to be willing to fully identify yourself and comply to the terms or our program (in essence, promise not to use the package for anything other than our rebate) in order to qualify for the rebate. Once the subsciption is paid for, email us to get started.

Oh yeah, if you haven't heard...

An Analysis of Deutsche Bank's Likely Recapitalization - German Tax Payer Bailout or German Bank Depositor Bail-in?

Deutsche Bank is going to need some money, and it's going to need some quite soon. The next two or three articles that I write will focus on why there is such a need. In a concerted effort to reduce or potentially eliminated the risk of taxpayer-funded bail-outs of European banks, the EU implemented a new “bail-in” regime beginning on January 1, 2016. As such, rules which require banks and certain systemically significant market participants in EU member states will have to write-down, cancel, convert into equity or otherwise modify certain unsecured liabilities if such steps are required to recapitalize the institution. What is the most bountiful unsecured liabilities of a bank? Read more...

Our next article will continue to hammer home the liklhood that DB will have to recapitalize, and where they probably WONT'T be getting the money from, as well as the likelihood it will come from someone who really didn't plan on giving it up (Ahem, depositors/savers/checking account holders). For those who are not yet convinced, peruse these related items...

The research and knowledge subscription module "European Bank Contagion Assessment, Forensic Analysis & Valuation" contains a full report of a very large European Deutsche Bank counterparty that faces a full 27% downside from current levels. It appears as if no one suspects a clue. It also contains much, much more (including at least 3 to 5 suspect banks). We can break this apart a la carte, if requested.

As excerpted:

The Macro Scene for Italian Banks

• Italian Banks:The Impact of Rising NPLs
   

   

  2m 45s

  
• The IMF has always been overly optimistic when it comes to Italy
   

   

  1m

  
• European banks' exposures to oil and gas
   

   

  2m

  
• Impact of Negative Interest Rate Policy
   

   

  15m

  
• Domiciles That Don't Look Good
   

   

  5m

  

This Bank as Ground Zero

• Putting the Ground Zero Bank into Perspective Re: Germany and the EU
   

   

  5m

  
• Ground Zero & It's Counterparties - Contagion Risk
   

   

  5m

  
• Ground Zero's Adverse Counterparty Risk Movement
   

   

  5m

  
• Systemic Risks
   

   

   

  

Susceptible Bank 1: Strong Country, Suspect Global Bank - Key Performance

• Negative Interest Rate Come to More Banks
   

   

  30m

  
• Susceptible Bank 1: Common Equity Returns
   

   

  4m

  
• 2Q2016 Basic Financial Results
   

   

  3m

  
• 2Q2016 Division-wise Performance
   

   

  5m

  
• 2Q2016 Net Interest Margin & Fee Income
   

   

  4m

  
• 2Q2016 Funds Under Management
   

   

  1m

  
• 2Q2016 Performance by Geography - Europe
   

   

  4m

  
• 2Q2016 Performance by Geography - North America
   

   

  2m 30s

  
• 2Q2016 Performance by Geography - Asia
   

   

  3m

  
• 2Q2016 Performance by Geography - Latin America & MENA
   

   

  1m

  
• 2Q2016 Gross loans and advances Personal/Consumer
   

   

  4m

  
• 2Q2016 Gross loans and advances Corporate/Commercial
   

   

  4m

  
• 2Q2016 Gross loans and advances Financial Loans
   

   

  1m 30s

  
• 2Q2016 In Summary
   

   

  45s

  

Susceptible Bank 1: Financial Modeling

• Susceptible Bank 1: Forensics,Valuation & Contagion Risk Assessment
   

   

  40m

  

Enter Italy's "Bear Stearns" 2Q2106

• The Metrics
   

   

  5m

  
• The Subprime Bank That Puts Bear Stearns to Shame
   

   

  5m

  
• Breakdown by sector of “off-statement of financial position”
   

   

  3m

  
• Parallels to Bear Stearns Before it Popped
   

   

   

  
• The Notional Value Argument Often Used By Entities Taking Large Losses
   

   

   

  
• In closing, excessive leverage brings us right back to 2008 again…
   

   

  3m

  

Enter Italy's "Lehman Brothers"

• Income Statement – 9M2015 vs 9M2014 – A short analysis
   

   

  2m

  
• Net Interest Income Analysis
   

   

  3m

  
• Customer Loan Quality
   

   

  3m

  
• Financial Assets
   

   

  3m

  
• Financial Derivatives
   

   

  3m

  
• Fair value adjustments in hedge accounting: details of income items - Banking Group
   

   

  2m

  
• Fair value adjustments in hedge accounting: details of income items
   

   

  2m

My thoughts on today's financial climate. ..

I have been in discussion with one of the world's largest banks, a US domiciled bank, with over 200 million customers and clients worldwide. After my second meeting with the American FX group, I was referred to one of their biggest clients as it was understood that there were significant synergies to be had between their global operations and our UltraCoin ecosystem which allows counterparty and credit risk free value trades. This particular aspect of our product was, as fate would have it, not only extremely pertinent to the topic at hand but arrived just a few days too late. I was scheduled to meet with one of the original founders of this FX brokerage firm yesterday, but earlier that morning the Swiss National Bank decided to remove thier much publicized and promised floor from their Swiss francs from the euro. Carnage ensued, as I promised that it would.

@zerohedge CME Just Doubled Swiss Franc Margins http://t.co/VU2Gt7ANar This is what I warned about this morning, BOOM http://t.co/Ktp1Fl0jGH

— ReggieMiddleton (@ReggieMiddleton) January 15, 2015

Of course, this guy was much too busy to meet with me. His firm is now all over the news (there are several firms that could fit the bill, but I will not mention the firm to keep it anonymous nonetheless) as nearly all of the specialist currency brokerages face insolvency issues - the very thing that UltraCoin was designed to prevent! Yesterday Bloomberg reported Casualties From Swiss Shock Spread From New York to New Zealand and today we find members of this group have lost up 90% of thier share price, as per Business Insider: Foreign Exchange Brokers Are Going Bankrupt In The Swiss Franc's Surge

UK FX broker: 

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. 

That follows New Zealand's Excel Markets, which made the same statement earlier, according to the Financial Times.

Brokers can go out of business on big moves like this because they give their clients access to leverage. For example, an account holder might have $1,000 with the broker, but hold positions worth $10,000 in currency markets. That doesn't matter so long as the holder's losses are covered by the initial amount. But on Wednesday, for at least two brokers, that wasn't the case for a lot of those clients.

Our solution for these brokerages is to give the leveraged return of $10k but to have contract unwind when his principal and collateral are exhausted. There are NEVER negative equity situations.

New York-based FXCM, one of the world's biggest foreign exchange brokers, says that it may be in breach of rules on capital requirements and that it is owed $225 million by clients who are now in negative equity. FXCM shares are down by an astonishing 90% ahead of the US open. 

IG Group, a publicly listed UK-based broker said yesterday that its losses would not exceed £30 million ($45.7 million)...

http://static3.businessinsider.com/assets/images/back_gradient_20x40.png?1421356676) repeat-x;">Investing.com, Business Insider

As of 11:30 a.m. GMT (6:30 a.m. ET) the franc is currently looking more settled, down 3.9% at 1.016 against the euro.

Veritaseum's UltraCoin was designed specifically to avoid solvency issues by:

1. Forcing all participants to prefund their accounts with full principal and optionally additional collateral (margin);
2. Forcing all participants lever up (via actual loans) outside of the system, leaving the system sacrosanct;
3. Enabling implied leverage by gearing the returns upon mutual consent of the parties, or using levered securities as price fees (ex. Proshares Ultra);
4. and most importantly, replacing all counterparies in the trade with the blockchain, which essentially removes all counterparty and credit risk.  

This is what a sample contract looks like before being submitted to trade:

I'm thoroughly convinced that this is the trading model for, and of, the future and this week's carnage should go a long way in convincing banks, brokerages and regulators to agree with me. Insolvency can be one hell of a motivator.

Even those who aren't facing insolvency issues still have to deal with the structural decline in big bank profitabilty. I have answers for that as well, right fellas?

• Goldman Sachs Posts Lowest Annual Trading Revenue Since 2005
• Goldman Sachs Pay Ratio Slips to Second-Lowest Level Since IPO
• 3 of the 4 largest U.S. banks reported falling profits and revenue below analysts’ estimates  

Those who follow me know that I don't agree with many of Goldman Sachs recommendations, primarily because I know that Goldman considers their clients to be "muppets" and use said muppets as profit springboards for trade setups. Of course, I can be wrong, but remember that we have ex-Goldman partners who support this thesis with personal experience, reference "Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients":

An executive director at Goldman Sachs has explicitly corroborated what I and many in the blogosphere have been crowing for some time now, and that is... 

The whole video can be seen here on the Max Keiser show, starting from about 19:00 minutes in where I discuss risk vs reward in GS and how they outperform eventhough risk outweighs reward. Those who like numbers and charts can see where I actually demonstrated in For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks:

As in “When the Patina Fades… The Rise and Fall of Goldman Sachs???“, we can reminisce over the fact that Goldman BARELY earns its cost of capital on an economic basis, and that’s before considering the potential horrors which may (and probably do) lay on the balance sheet (for more on BS horror, reference Reggie Middleton vs Goldman Sachs, Round 2) .

And now we have supporting evidence from the inside... From the NYT:

"TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. I can honestly say that the environment now is as toxic and destructive as I have ever seen it."

"To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."

"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."

" I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave."

 "How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym."

"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all."

"It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen."

Well, anyway.... This piece was not intended to reveal the inner workings of Goldman Sach's business model. It was intended to illustrate how our UltraCoin system can be used to monetize global macro trade ideas, even if they are from the vampire squid! According to Forbes:

Goldman’s first non-U.S. trade recommendation revolves around an expectation European stock markets rise in 2015 as the impact of ECB money-printing makes its way into the real economy. Goldman recommends investors go long a December 2015 Eurostoxx 50 call spread, buying a Dec. 2015 strike call at 3,150, and selling a Dec. 2015 strike call at 3,450. “The (nearly) at-the-money 3150 call costs 170.6, while selling the 3450 call costs 69.10 (both priced as of the close on November 19), giving this position a maximum potential 2-to-1 payout,” notes Goldman. The firm sees two reasons European stocks will move higher: regional growth simply accelerates, or disappointing inflation readings force the ECB into added action. Both scenarios, Goldman believes, augur well for European asset prices.

First, let's put this in a form that can be traded via UltraCoin. To go long the Eurostoxx 50, we'll receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE)  and we will pay exposure to the ProShares Ultra Euro ETF (ULE) seeking to provide twice the exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE by going short). It should also be noted that leveraged ETF products usually seek to match the return of the euro against the dollar over a single day. Due to this and the compounding of daily returns, the returns of the product may deviate from long term return rates, suggesting that investors need to monitor their holdings closely if they are going to be in for a long time period. It should also be noted that this is a materially more advanced trade setup than that recommended by Goldman, for it captures potential euro downside movement relative to the dollar AND potential european equity market upside -which, according to the Goldman hypothesis, are tightly linked. One would think that Goldman should start recommending trading with UltraCoin, no? 

My take on this? Well, it's obvious that the euro will see some pressure from central bank machinations, but its not so obvious... or maybe its too obvious that that is an automatic plus for the eurozone economies in general. Remember, what's good for stocks short term is not necessarily what's good for the economy medium term. The eurozone is a confederate of 27 (or so) countries with widely disparate economies, equity markets, macro situations, fundamentals and financial situations. This is far from a one size fits all situation. This should be obvious to all (and is how I called the Pan-European Sovereign Debt Crisis 5 years ago). In Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! I illustrated how inaccurate the many calls for European growth actually were, to wit:

Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side. Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad...

The EU/EC has proven to be no better, and if anything is arguably worse!

Revisions-R-US!

and the EU on goverment balance??? Way, way, way off.

It's not just Greece either...

And what about Italy???

This is Italy's presumption of economic growth used in their fiscal projections:

If the IMF was wrong, what in the world does that make the EC/EU?

Now, for sure, there are some eurozone nations that will benefit mightily from the debasement boost, but those countries are not representative of the entire eurozone. The reason why debasement and QE are almost a forgone conclusion is that Japan has thrown the gauntlet down and the ECB feels it has little choice. You see, there is a stark difference between how the Japanese economy (despite 34 years of a lost decade) and the EZ economies are put together, and a currency war will bring those differences starkly to the forefront. I posted series of tweets on this topic a few days ago...

In 2010, debasement warriors were the US and China, today's currency debasement war is between Japan & the EU, global debt-to-GDP leaders.

— ReggieMiddleton (@ReggieMiddleton) November 25, 2014

Currency Debasement makes international debt interest payments more expensive if denominated in a foreign currency, ex. some Euro Zone debt

— ReggieMiddleton (@ReggieMiddleton) November 25, 2014

Assuming international currency debasement tax on debt service, can profligate EU periphery states afford a devaluation battle with Japan?

— ReggieMiddleton (@ReggieMiddleton) November 25, 2014

The short answer to my own self-imposed query is "No!" Japan & its citizens hold most of its debt denominated in Yen. Euro-periphery doesn't

— ReggieMiddleton (@ReggieMiddleton) November 25, 2014

Draghi meets Japan's challenge and devalues through QE, PIIGS will suffer as they have little export engine benefit yet imports prices spike

— ReggieMiddleton (@ReggieMiddleton) November 25, 2014

Of course, if one wanted to take the opposite side of Goldman's views, simply click the switch button in the trade setup screen of UltraCoin to reverse the exposures. Download the UltraCoin client for free, and start trading for free without banks, brokers or exchanges.

Correction: the improper ticker was initially used in the trade setup. We intended to communicate going short the euro, which is what the words said, but the original ticker and desciption was for the Proshares ultra short euro ETF, which would have had a net long effect (shorting the short). The ticker has been corrected to reflect the Proshares long euro ETF, which one would be shorting through the UltraCoin client.

Management apologizes for the editing error. 

Why is Bitcoin dangerous and of little intrinsic value? Because my local Central Banker Told Me So!

In my last post titled "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests" I told the tale of my trip to the UK to strum up interest in Veritaseum's UltraCoin (see excerpt at end of this post). During the dinner that was arranged for the prospective investors, of which I was the keynote speaker, several of the diners questioned the value of bitcoin as a "virtual' currency. In particular, they asked why should they believe that a bitcoin is really worth $375 or 280 pound sterling. I replied, "Let's look at this way, what is the pound worth?". I got back, it is worth 1.26 euro. Then I fired back, but if you accept that the pound is worth 1.26 euro, how do you have a problem accepting that bitcoin is woth 304 euro, or 371 US dollars? It is that circular logic that is somehow permitted in the evaluation of fiat currencies that is prejudiciously lacking on the valuation of cryptocurrencies. 

The crowd then went on to say, well the pound and other fiat currencies are backed by the government. I said, "Very much like the bank insurance scheme of Cypriot bank account holders, or Zimbabwe currency or Argentinian pesos? Many people oft put too much faith in the 'full faith of the government'!" As you can guess, this really sparked this room of brainy people as I dared them to start thinking outside of the fiat box! Bitcoin is backe by math! The reserve currency is backed by the biggest guns on the globe (yes, it is and it always has been, looked it up if you don't believe me). Other fiat currencies are backed by faith! Faith can be quite fleeting and ephemeral, trust me. As a matter of fact, you don't have to trust me... I'm about to show you.

Friday, the Wall Street Journal ran a piece called Bring On the Currency Wars, of which I would like to quote a few choice lines, to wit:

Central bankers struggling against weak growth and falling inflation have come up with a cunning plan: shift the problems onto someone else. Finding it hard to stimulate domestic demand through cheap credit in a world of rock bottom interest rates, the next best solution central bankers have settled on is to generate growth by boosting net exports. And the way to do that is to devalue their currencies.

Now, the US has performed this stunt like a champion, but over the last few weeks I must admit, we've been outdone!

The Bank of Japan has been the most aggressive at pursuing this policy, driving the yen down 15% against the dollar over the past year. The currency effects have been relatively slow at registering in Japanese trade numbers, but they’ve finally started to show up in the data. Japanese exports jumped 9.6% on the year in October, more than double market expectations.

Other central banks have noticed.

The European Central Bank has announced a number of policies over the past six months designed to boost its balance sheet. The more assets a central bank holds the more liquidity is available to the wider economy and thus cheaper credit–or so goes the theory. But even when interest rates are at rock bottom levels, massive central bank asset purchases by the Federal Reserve and BOJ have “led to a significant depreciation of their respective exchange rates,” noted ECB President Mario Draghi in a speech on Thursday. Implicitly, he was saying: if they can do it, so can we.

Then, on Friday morning, the People’s Bank of China launched its own measures, cutting its one year lending rate by 0.4 percentage points to 5.6% and its deposit rate by 0.25 percentage points to 2.75%. Ostensibly, the cuts were a response to domestic factors, namely falling inflation, a weakening economy and sliding house prices. But it seems clear that the underlying reason was the renminbi’s appreciation relative to the yen.

As one economy devalues, the impact is to force deflation onto its neighbors. With Japan putting downward pressure on the yen, the question now is how long can other Asian economies hold out from their own devaluations.

The currency devaluation game is relative, and its zero sum. If you devalue to increase your imports to another country, you do so at the expense of some other country. Contrary to popular Keynesian math, you really don't get something for nothing. 2 minus 1 does not equal 2, my dear friends. With this concept in mind, let's take a look at the headlines from around the world:

China ready to cut rates again on fears of deflation 11/23/13: This would be the second time in as many weeks.

(Reuters) - China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making. Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.

Draghi Urgency for ECB Action Gets Final Reality Check: Economy

Mario Draghi is about to find out just how urgent his call for action has become. One week after the European Central Bank president vowed to revive inflation “as fast as possible,” policy makers will receive a glimpse on just how feeble cost pressures are now. Economists forecast euro area data on Nov. 28 will show price growth matching the weakest since 2009, which would add to the drumroll for a stimulus debate at the Dec. 4 meeting. Bond yields from Spain and Italy fell to record lows and stocks gained today on speculation the ECB will buy sovereign debt. Draghi has stoked pressure toward purchases as panels of officials study possible new measures and prepare to cut their economic outlook. 

What is the result of all of this devaluing? Well, the next time someone asks you how much is bitcoin worth, you should just say, "In a Currency War, more than the yen, yuan, pound sterling, and euro!"

The lasting message from the highly Centralized, Centrally Planned, Central Banks of the World? "We think, so you don't have to!"

As exceprted from "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests""

After a couple of more meetings I headed over to the Cavalry & Guards Club on Piccadilly for the dinner. An interesting, old money club that is steeped in English military history. 

The dinner began with quick tutorial on the history of the club and its importance re: the battle of Waterloo, etc. The dinner included over 40 extremely interesting people. Here's the place setting before we got started - each and everyone of the invtees placed at the table appeared. Standing room only - and all to hear what yours truly had to say about Bitcoin's investment potential.

The room was packed with brainpower - packed! Since they are big on privacy, I will not reveal names, but I can reveal statistics. Over $35 Billion dollars of assets under management directly controlled by the people sitting in those seats. Over $1.2 Trillion controlled by the corporate entities that they represented. Industries included banking, asset management, insurance, real estate, telecomm, energy, commodities trading and medical. Nearly half were successful serial entrepeneurs in their own right, with several having had their own multiple liquidity events. Even a member from the Bitcoin foundation was present. The vast majority were bitcoin skeptical. As for my presentation??? Let's say there's some big money, some olde money, and some money that many thought would never flow into this space any time soon that is quite anxious to investigate crashing the party.

On October 17th I penned Reggie Middleton's Open Letter of Commoditization and Disintermediation to Wall Street: Pay Attention Jamie Dimon! Here's an excerpt from the intro of a letter written to the CEO iof a bulge bracket bank included in said missive:

...this is my more fleshed out missive detailing what I see as the inevitable commoditization of your industry. Wall Street in general (and XXXXXXXXXXX in particular) is about to become “MP3’d” (disintermediated), just as the music industry did along its 75% slide in revenues over a 10 year period. Our goal is, in no uncertain terms, to expedite this disintermediation. In essence, our job is to cleave at least 75% of the revenues off of Wall Street banks!

Hopefully, I’ve gotten your attention. Let’s discuss the opportunity - and the threat - to XXXXXXXXXXX in more detail as I present a clearly laid out roadmap to either your firm’s relative failure, or resounding success.

The Challenge to Wall Street and XXXXXXXXXXX

“In the next 10-20 years, 58% of financial advisors will be replaced by software robots and AI.”Frey and Osborne, Oxford University

This is not grandiloquence. We can show our venture alone cutting over 3-4% off of XXXXXXXXXXX’s non-interest revenues and up to 30% of net income attributable to common within 8 to 12 quarters of gaining traction. This is accomplished by removing your pricing power in your most lucrative businesses – transactions, fees and commissions.

In Banking Risk, Reward and Demise - The Age of Programmable Currencies, I posted a most telling graphic...

This drop in revenues and profitability is extreme when viewed today. The effect of "robots" (cloud based streaming services powered by algorithms [robots]) as reported by Wired Magazine today, and as excerpted [emphasis added]:

Consider the fact that it takes roughly one million spins on Pandora for a songwriter to earn just $90. Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.

The streaming services and their cloud based "robots" are hurting more than just songrwriters. Record companies are forced to see that graphic above, which was exacerbated by streaming services as they usurped control from MP3 download services that started the decline, which was exacerbated by the iTunes business model. Now, even iTunes is facing the heat from streaming services as its margins and revenues are pressured, forcing them to by the Beats music streaming service (along with the headphone/hardware operation for a gross $3.2B).

Veritaseum's UltraCoin is a potent brew consisting of a combination of:

1. the ULTIMATE CLOUD - the BLOCKCHAIN;
2. the ULTIMATE ROBOTS - Scripted money and "SMART CONTRACTS"
3. and the same peer to peer technology that precipitated the fall of the record industry - ALL WRAPPED UP IN ONE PRODUCT AIMED AT WALL STREET!!! 

The letter to that bulge bracket bank CEO referenced at the beginning of this post ended like this:

One simply cannot stuff the technology genie back into the bottle. Even before critical mass in adoption is achieved, the bulge bracket banks (XXXXXXXXXXX included) will witness a structural decline in margins. Despite this margin compression, there will be a small contingent of banks who will emerge as winners because they will cannibalize the revenues of their competitors adopting and embracing the forces behind this paradigm shift. Doing this will require not only sufficient vision, dexterity and entrepreneurial expertise (the type seldom found in multi-billion dollar global institutions), but exceptional execution to be among the first movers. Money center banks can try to figure this out on their own (good luck being entrepreneurial and first movers), or they can team up with us.

We are a startup, and we’re the first movers! To maintain our advantage, and to gain traction quickly, we’re soliciting established distribution partners. Teaming with us can essentially be boiled down to whether you are the disintermediators - or the disintermediated!

Our Advantage

UltraCoin provides, with full transparency, universal access to any publicly traded financial instrument, on any exchange, at a fraction of the cost of bulge bracket and even many deep discount brokers.

Our patent-pending (we are confident that we’re the first to file, meaning the rest of the Street must come in behind us) products provide access to over 75,000 tickers in all major asset classes from exchanges and bourses from around the world in an innumerable combination of pairs and combinations – not merely just the traditional, binary, long and short. This is not an idea, or mere concept, or whitepaper. This is a tangible product that is available right now and already making significant waves in money center bank circles (download here). Below is a screenshot of my active wallet on my tablet as I type this. 

How do we get started? 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

I offer you in gift wrapped packaging - the “first mover advantage”!

Yesterday, I attended (and apparently partially disrupted) the Bitcoin Law: Regulatory and Transactions Symposium at the New York Law School yesterday morning. See pics below, and make no mistake about it... the world is putting serious intellectual capital into the bitcoin economy now. There's no turning back!

This panel presided over a discussion of payments and transactions...

Needless to say, the topic of Apple and Apple Pay came up. All of a sudden... BOOM! The RDF appeared out of nowhere and filled the room. Apple is this, Apple is that, Apple is so great as compared to Google. My regular readers and followers know the routine.

My regular readers and followers also know that I couldn't just sit back and let the Apple RDF simply disrupt everything true, factual and real, so I stepped in and... well, I disrupted :-). Unfortunately, I didn't get video of it since I was the one disrupting so I decided to put a little home made video in after the fact. Enjoy!

Those who wish to try our new trading platform to go long or short Apple or Google, or both - simply download the client and the quickstart guide, and let 'er rip! Remember, this is the only place you can trade at this level - peer to peer, without banks, brokerages or exchanges and the counterparty/credit risk and privacy issues that they introduce.

The following is a reacted letter that I just sent to a rather influential person in one of the bulge bracket banks of Wall Street.  I decided to simply be frank and tell it like it is. AFter all, why play games or beat around the bush. It is what it is, right?

(Name redacted for the sake of privacy and professional courtesy), this is my more fleshed out missive detailing what I see as the inevitable commoditization of your industry. Wall Street in general (and XXXXXXXXXXX in particular) is about to become “MP3’d” (disintermediated), just as the music industry did along its 75% slide in revenues over a 10 year period. Our goal is, in no uncertain terms, to expedite this disintermediation. In essence, our job is to cleave at least 75% of the revenues off of Wall Street banks!

Hopefully, I’ve gotten your attention. Let’s discuss the opportunity - and the threat - to XXXXXXXXXXX in more detail as I present a clearly laid out roadmap to either your firm’s relative failure, or resounding success.

The Challenge to Wall Street and XXXXXXXXXXX

“In the next 10-20 years, 58% of financial advisors will be replaced by software robots and AI.”Frey and Osborne, Oxford University

This is notgrandiloquence. We can show our venture alone cutting over 3-4% off of XXXXXXXXXXX’s non-interest revenues and up to 30% of net income attributable to common within 8 to 12 quarters of gaining traction. This is accomplished by removing your pricing power in your most lucrative businesses – transactions, fees and commissions.

Drilling Down On XXXXXXXXXXX’s Unique and Particular Vulnerabilities - or-  Why You Should Be Paying Attention

XXXXXXXXXXX derives more than 95% of its total revenues from non-interest earning transactions/businesses. This comprises revenues from Investment Banking, Asset Management & Investment, Brokerage Commissions & Fees. Let’s analyze the percentage of business that could be impacted the year after traction of our value transaction system by assuming a certain percentage reduction in fees. We have assessed the potential impact on the bank’s annual revenues and profitability as follows:

1. XXXXXXXXXXX could see around 3-4% decline in its non-interest income. The bank’s net interest could fall by 7-8% off compression in its net interest margin.

2. Now, the firm could very well see lower expenses on account of compensation benefits for employees (due to decrease in variable pay, reference the “58% of financial advisors will be replaced” quote above from Oxford), however, this impact is not going to be significant enough to offset the likely decline in revenues. On a more personal level and more to the point, it represents a ~58% chance of you getting fired. The compensation heavy Wall Street culture is ill fitted to battle the disruptors we are bringing to bear during a major technology paradigm shift!

3. Net Income could drop by a significant percentage ~ 30%.

Who We Are and What We Are Doing

Our core product, UltraCoin, is at the intersection of the Bitcoin protocol software, robotics, and financial services. It is already recognized as a driving factor in the full scale disintermediation of Wall Street:

“The disintermediation caused by Middleton’s UltraCoin has the potential to disrupt the brokerage industry.” AlleyWatch

“… a direct threat to fiat merchant banking.” Fortune

“… the perfect storm of disruption, as it renders trading fees, brokerage fees, and those infamous Wall Street bonuses obsolete. The sheer scale of disruption this technology brings with it makes it something to watch.” The Hash Report

The Bitcoin blockchain threatens to dramatically reduce the ability of financial services companies to charge for transactions - all transactions. We have, through our UltraCoin wallet,  enabled synthetic versions of nearly all of the financial assets XXXXXXXXXXX deals with, and enabled them to be traded peer to peer (meaning without an exchange or broker) via the blockchain. These new age tools look very similar to what XXXXXXXXXXX currently sells to its clientele at a significant, and now, ephemeral premium. Our stuff looks no different from your stuff, yet is dramatically cheaper, more flexible and more capable. As a result of being blockchain-based, we’ve also reduced the default/counterparty/credit risk to effectively zero.

XXXXXXXXXXX’s Opportunity - a partnership where you benefit from our rapid development tech and we benefit from your distribution network

Let’s be frank and upfront. The banking hegemony as we know it is about to undergo a dramatic, disruptive structural change. Pretending you are immune simply guarantees you to be the one stepped on in lieu of the one doing the stepping. The same is true in taking too long to act, or acting by moving in the wrong direction. I referenced the record industry and MP3s as a prime example. The assertion that regulation will protect banks from technology where it didn’t for the record industry is a straw man’s argument, at best. Try as they may, at the end of the day - regulators cannot, should not, and probably don’t even want to regulate software and prototcols. It’s a new day and age.

One simply cannot stuff the technology genie back into the bottle. Even before critical mass in adoption is achieved, the bulge bracket banks (XXXXXXXXXXX included) will witness a structural decline in margins. Despite this margin compression, there will be a small contingent of banks who will emerge as winners because they will cannibalize the revenues of their competitors adopting and embracing the forces behind this paradigm shift. Doing this will require not only sufficient vision, dexterity and entrepreneurial expertise (the type seldom found in multi-billion dollar global institutions), but exceptional execution to be among the first movers. Money center banks can try to figure this out on their own (good luck being entrepreneurial and first movers), or they can team up with us.

We are a startup, and we’re the first movers! To maintain our advantage, and to gain traction quickly, we’re soliciting established distribution partners. Teaming with us can essentially be boiled down to whether you are the disintermediators - or the disintermediated!

Our Advantage

UltraCoin provides, with full transparency, universal access to any publicly traded financial instrument, on any exchange, at a fraction of the cost of bulge bracket and even many deep discount brokers.

Our patent-pending (we are confident that we’re the first to file, meaning the rest of the Street must come in behind us) products provide access to over 75,000 tickers in all major asset classes from exchanges and bourses from around the world in an innumerable combination of pairs and combinations – not merely just the traditional, binary, long and short. This is not an idea, or mere concept, or whitepaper. This is a tangible product that is available right now and already making significant waves in money center bank circles (download here). Below is a screenshot of my active wallet on my tablet as I type this. 

How do we get started? 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

I offer you in gift wrapped packaging - the “first mover advantage”!

 I sat down with about a dozen or so (legal, executiuon, KYC and AML) higher level executives of one of the world's largest banks today. It was a fruitful discussion. The following is the document that was given to serve as a guide to the discussion.

It is interesting to notice how many truly competent individuals and companies truly believe that new technologies are what disrupts industries and markets. Trust me, it is not! Broad disruption occurs at the hands of astute operators that manipulate new (and often not so new) technologies to leverage an innovative business model that strikes at the weakness(es) of the extant market leaders