Change is inevitable

Tuesday, 18 September 2018
Melbourne, Australia
By Ryan Dinse

  • A Trojan horse is delivered

In 1923, a very important meeting was held at the Edgewater Beach Hotel in Chicago. In attendance were seven men who had made it to the very top of society.

They were exceedingly rich.

In fact, they controlled more wealth than the entire United States treasury. In the heady decade of the ‘roaring twenties’, the media lauded them as beacons of success.

Who were they?

There were the two industrialists. Charles Schwab — president of the largest independent steel company, and Samuel Insull — president of the largest utility company.

And the superstar investors, Arthur Cutten — the great wheat speculator, Richard Whitney — president of the New York Stock Exchange, and the greatest ‘bear’ on Wall Street, Jesse Livermore.

The big financiers were there, head of the world’s greatest monopoly Ivar Kreuger (The ‘Match King’), and president of the First National Bank of New York and the Bank of International Settlements, Leon Fraser.

As well as a member of President Hoover’s Cabinet, Albert Fall.

A prestigious bunch of folk if ever there was. Men who had solved the secret of making money. A lifetime of success was inevitable, you’d think.

Well, apparently not…

Within two decades, two had died stone-broke, one was serving life in prison for fraud, three had committed suicide and one died while under investigation for embezzlement.

The lesson?

There are a few. We’ll discuss those after the markets.


Overnight the Dow Jones Industrial Average closed down 92.55 points, or 0.35%.

The S&P 500 lost 16.18 points, or 0.56%.

In Europe, the Euro Stoxx 50 index finished up 1.48 points, or 0.44%.

Meanwhile, the FTSE 100 fell 0.02%, and Germany’s DAX lost 27.92 points, or 0.23%.

In Asian markets, Japan’s Nikkei 225 is up 360.33 points, or 1.56%. China’s CSI 300 is up 0.21%.

In Australia, the S&P/ASX 200 is down 29.70 points, or 0.48%.

On the commodities markets, West Texas Intermediate crude oil is US$68.59 per barrel. Brent crude is US$77.59 per barrel.

Turning to gold, the yellow metal is trading for US$1,200.80 (AU$1,669.08) per troy ounce. Silver is US$14.21 (AU$19.75) per troy ounce.

One bitcoin is worth US$6,265.15.

The Aussie dollar is worth 71.93 US cents.

Most of the men above were destroyed by their own greed. No amount of wealth was ever enough. The old adage to be ‘careful what you wish for — you just might get it’, springs to mind.

But the broader lesson is that change is inevitable.

It stops for no one, no matter how powerful they may seem.

Cryptocurrencies are a huge change to the financial fabric of the world.

Those who think they can stop it, ignore it or control it will learn the hard way that they can’t.

In my opinion, there’ll be two sides to society in the future. Those who got on the crypto wave in time…and those who didn’t.

And although another lesson from the story at the start is that riches don’t guarantee happiness, I can’t help but paraphrase a famous quote from Mae West, a fellow socialite from the roaring twenties…

‘I’ve been crypto rich and miserable, I’ve been crypto poor and miserable. And let me tell you: crypto rich is better!’

A trojan horse is delivered

There was some exciting news out last week in the crypto world.

The Winklevoss twins, infamous for their legal wrangles with Facebook founder Mark Zuckerberg, announced the creation of a regulatory approved ‘stable coin’.

A stable coin is a cryptocurrency that retains its fiat value.

There are a number of ways to do this but Gemini — the Winklevoss company — has taken the obvious route and used an audited, federally approved US bank account as collateral for the crypto stable coin.

So, each Gemini dollar will be pegged to an equivalent US dollar held in the bank.

The benefits of a stable coin are clear. It allows the superior rails of blockchain to transfer value without the inherent volatility that makes most cryptocurrencies unusable as a medium of exchange right now.

The current option — tether [USDT] — which fulfils the same function, has been mired in controversy for a while, as the dollar backing of the issued ‘tethers’ has been doubted by many.

And as an unregulated stable coin, it’s been difficult to get accurate information one way or the other.

Gemini’s product — with its regulatory approval and US bank account jurisdiction — promises to be a lot more transparent.

The Gemini dollar is built on Ethereum [ETH], which is promising news for ethereum.

But this new stable coin might also benefit other crypto projects. Prediction market coins like Augur [REP] and Gnosis [GNO], are likely to attract a lot more participants who can place wagers on the platforms with stablecoins, rather than bitcoin or ethereum.

People can place their bets on future events and not have a second worry about the value of the crypto they used to bet with.

Gemini co-founder, Tyler Winklevoss said in the release:

The Gemini dollar is part of our mission to build the future of money… It is the missing link between the traditional banking system and the crypto economy.

Make no mistake, this is huge.

And in the long-term, I think that it’s a trojan horse for the entire crypto movement. A way for crypto to infiltrate the traditional markets while the technology and permanency of the underlying cryptocurrencies can work their way towards more stable equilibrium values.

Rather than a surrender to the power of the dollar as some might think this is, I think it’s more of a stepping stone.

Stable coins should drive more user adoption into cryptocurrency platforms. And then over time — as they become more entrenched and the economic benefits become clearer — I think people will switch to crypto.

Leaving the dollar in the dust.

To learn more how to get on board with crypto investing now before these changes begin to drive a new wave of gains for the sector, check out crypto expert Sam Vokering’s latest research here.