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Longtime readers will recall that I am not a fan of Bitcoins. The entire market, nay concept, seems silly to me. Bitcoin is an answer to a problem that stems from complexity. Bitcoin enthusiasts want access to a currency that is easier to negotiate than the U.S. dollar. Bitcoin comes with a friend, The Blockchain. This is a decentralized, open ledger that makes Bitcoin transactions possible. However, a centralized ledger and the U.S. dollar exist as answers to a whole other set of problems. Tossing them aside sort of ignores the original problems. It would be like buying cats to get rid of mice, and then buying dogs to get rid of the cats. Eventually you buy elephants to get rid of your mountain lion problem and find yourself remembering the days when you only had to worry about a couple little mice.

Anyway, people think we will have a Bitcoin ETF soon. Specifically, Don Wilson of DRW Holdings.

“Once a derivative is launched, a bitcoin ETF will follow,” Wilson said in an interview… “That’s the common wisdom.”

Ah, err, maybe. I’m willing to agree that it’s a common thought. I’m just not sure it’s wisdom. Let’s talk about what an ETF is, and why it exists. It used to be hard to buy every stock on the S&P 500. You would have to buy a newspaper, look up the stocks that comprised the S&P, look up their market capitalizations, then go online and purchase weighted positions in 500 different securities. By the time you finished your research and trades, you would be several days behind the original positions. Enter ETFs. You can buy one position and instantly own the S&P 500. Someone else is doing the math and providing it to millions of people. ETFs make buying things easier.

So why buy a Bitcoin ETF? Probably because it’s a super big pain in the rear to actually buy Bitcoins and not have them stolen. But why invest in the currency in the first place? Ultimately, you must believe that Bitcoin will have greater value and adoption. Hence, you believe that more people will use Bitcoin. So, when you buy a Bitcoin ETF you are essentially supporting the argument that Bitcoin should NOT be adopted. The need for a Bitcoin ETF is the main reason we shouldn’t have a Bitcoin ETF.



Here is the story of Evan Prodromou, a young man that developed Evancoins. Evancoins can be traded in for one hour of Evan’s time. If your first question is “Why would anyone want an hour of his time?” you’re missing the point. The point is, Evancoins give us the opportunity to read things like this:

“As of this writing, each Evancoin, representing an hour of Prodromou’s attention, is worth about $45 (That’s well below his usual consulting rate).”

No! Bad Evan! Not true! Listen, either the Evancoin is not worth $45 or Evan’s time is not worth more than $45. Both can’t be true. IF (and that’s a big if) this is a currency, then it is only worth its market value (you know, its exchange rate for goods and services). Try replacing Evan with Thad and Evancoins with dollars:

As of this writing $45 will buy you one hour of Thad’s time. Thad’s hourly rate is well above $45. Nope.

It could sort of go the other way:

As of this writing $65 will buy you one hour of Thad’s time. Thad’s hourly rate is well above $45. This works but you will sort of expect Thad to give you $20 after your meeting.

You also get to read this:

“(Evancoins are) a kind of money, so you can also bank them for the future.”

This is great, just don’t, you know, try to do it with an actual bank. Because they will have you arrested.

“Evancoin could gain or lose value depending on how it’s traded.”

Please, please, please, send me an Evancoin ETF!!!

But don’t just listen to me, let’s see what Evan says:

“My friend and colleague Kevin Fox, who designed the original Gmail interface at Google, said, ‘Everyone should have their own personal currency.’ Of course, I immediately went out and registered”

Yes, of course! I hope this catches on and more people develop a personal currency. If I book a meeting with someone and they give me Kevincoins to trade in when we hold the meeting, then I know I don’t need to meet with this person. It could really save me a lot of time.



GOP is divided

Google is building an anti-Amazon alliance

HSBC trader phone calls

Don’t invest with a psychopath

Self-learning machine

Can we have a better stock bubble?

Robots want your job

Board games inspired LinkedIn founder

Risk Perception vs Risk Profile

Blackrock is the Amazon of Investing



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Categories: Industry Ideas, News, The Market

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