The Future of Bitcoin

Quote of the Day

Decisions we make affect more than one billion people. Here, you shed your clothes and your inhibition.”

Gopi Kallayil, chief evangelist of brand marketing at Google, singing the praises of the Esalen Institute. The famous retreat center helps Silicon Valley entrepreneurs loosen up and let it all hang out.

Market Snapshot

  • Financial stocks rallied in response to the Senate passing the tax bill.
  • A sell-off in tech dragged the S&P lower.
  • European markets surged after news of the U.S. tax bill.
  • Bitcoin inched closer to $12,000 before settling back down at $11,500.



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The Future of Bitcoin Is Bitcoin Futures

Chicago’s got itself an entirely new subway series, with the city’s largest derivatives exchanges (CBOE and CME) racing to list Bitcoin futures contracts first.

Yesterday, CBOE beat its competition to the punch, marking its calendar for December 11th—a week before CME’s listings will hit the market.

Here’s how it’ll work: CBOE contracts will be priced by Gemini (the crypto exchange run by the Bitcoin billionaires themselves...Cam and Tyler Winklevoss).

Then? Hungry Wall Street investors will pour millions into short and long positions, betting on the direction of cryptocurrency.

And for a lot of investors, it’ll finally be their chance to bet against Bitcoin

Everyone from your grandma to hotshot hedge fund managers like Mike Novogratz has helped inflate Bitcoin’s price to ~$11,800. If you invested just $1 back in 2010, you’d have about $1.4 million now.

And while Novogratz believes this is just the beginning, Wall Street’s thinking more along the lines of the Jamie Dimons, Warren Buffetts, and Mark Cubans of the world:

“short...short...SHORT.”

Critics of the cryptocurrency argue there’s nothing intrinsically valuable about Bitcoin. Put it this way: would you rather invest in a stock that generates earnings and pays you dividends, or an overpriced asset that offers you neither?

All-in-all, some investors see it as the economy’s best short since the dot-com bubble.

But there are always two sides to the coin

Those who don’t want to watch the crypto burn have high hopes for futures.

  • They offer more legitimacy to a currency with practical economic applications (the tech allows for faster transaction speeds and cleaner back-end paperwork for big institutions).
  • They open the door to other financial instruments (like Bitcoin ETFs).
  • A regulated exchange could stabilize the daily mood swings of the currency.

So either way...whether you hate it or you love it—Bitcoin’s here to stay.

Things Get Chippy Between Broadcom and Qualcomm

Broadcom (-2.93%), in an attempt to acquire its fellow chipmaker, is proposing a wholesale swap of Qualcomm’s (-1.42%) board: 11 of theirs out, 11 of ours in.

How’d it come to this? Qualcomm swatted away Broadcom’s initial monster bid of $105 billion, and instead of upping the price (for now), Broadcom is appealing straight to Qualcomm’s shareholders.

Here’s its pitch:

  • The combined company would rank as the third-largest supplier of semiconductors.
  • For Broadcom, the acquisition would boost EPS by 40%.
  • Broadcom has a much better relationship with a mutual customer, Apple, than Qualcomm (that’s not saying much).

Qualcomm’s not buying it, calling the proposal a “blatant attempt to seize control” of the board (some real sleuthing there). It still feels low-balled by the offer, and seems content with its strong position leading the 5G revolution.

If the two don’t come to the table, it could set up a semiconductor showdown at Qualcomm’s annual meeting on March 6th. We’ve already ordered pay-per-view.

Facebook Tackles Messaging for Kids

Facebook (-2.07%) released Messenger Kids—a new app that allows parents to monitor and approve their kids’ online communication.

And with nearly 93% of children ages 6-12 using tablets and smartphones...kids are talking online. And not always with the right people.

For instance, Snap’s been a virtual breeding ground for pedophiles looking to hide their identities through the platform’s disappearing messages.

So for Facebook COO concerned mother Sheryl Sandberg, creating a parent-controlled messenger app that customizes everything from friends, to GIFs, to detection filters for sexual and violent content, was a no-brainer.

But of course, it’s also a strategic play. Snap’s recently overtaken Facebook in popularity among teens. Zuck’s solution?

Get those tweens hooked before they’re teens.

Apple Runs Out of Luck in Ireland

Apple’s (-0.73%) free ride in Ireland is over, now that it’ll pay $15.4 billion in back taxes starting in 2018.

But what a ride it was. From ’03-’14, Apple paid the Irish government at a rate of .005% to 1%—essentially avoiding taxes on all European profits. That didn’t sit so well with the EU, which ordered Apple to reimburse Ireland last year (although both Apple and Ireland appealed the decision). Hold on a sec...wouldn't Ireland want Apple to pay up?

Not necessarily.

Ireland’s favorable tax structure has made Dublin feel like home for major foreign companies—we’re talking the likes of Google, Facebook, Twitter, LinkedIn, and many others. Seriously, an entire neighborhood is known as “Silicon Docks,” which is like its California counterpart, but with more bootstrapped leprechauns.

So if Ireland starts losing its luster as a tax haven, tech companies could bolt to the nearest, business-friendliest city. Nuuk, Greenland is pretty nice this time of year.

What Else Is Happening…

  • Roark Capital has a bigger appetite than just BWW. It’ll be raising $2 billion to acquire more restaurant chains (h/t Axios).
  • Discovery is upping its stake in Oprah’s television network to 70%.
  • There was no breakthrough in Brexit talks.
  • Richard Cordray, the former head of the CFPB, will announce he’s running to become the governor of Ohio on Thursday.

Economic Calendar

  • Monday     Earnings: No Events
  •                     Economic Events: Factory Orders (+)

  • Tuesday    Earnings: Dave & Buster’s, Lands’ End
  •                   Economic Events: International Trade, ISM Non-Mfg Index

  • Wednesday    Earnings: Broadcom, Lululemon
  •                         Economic Events: ADP Employment Report, Petroleum Status

  • Thursday   Earnings: Cloudera
  •                    Economic Events: Jobless Claims

  • Friday       Earnings: No Events
  •                  Economic Events: Consumer Sentiment

By the Numbers: Christmas Trees

By now, we’re firmly in the Yuletide spirit, and are busy decking out the Brewery with holiday ornaments. Menorah? Check. Snowman? Only a puddle now, but he was pretty handsome at one point. Christmas tree? Still working on it. The supply of Christmas trees (like the popular Fraser fir) is down, while the price is up. What’s going on?

10%—How much more you’ll pay for a five-to-seven foot Christmas tree than last year.

$74.70—Average price of a Christmas tree last year. That’s more than double what you paid in 2011.

30%—Decrease in acreage used to grow Christmas trees from ’02-’12 in the U.S. Blame the Great Recession for putting growers out of business.

7-10 years—The length of time it takes for a Christmas tree to reach maturity. So, it’s clear why the downturn is curbing current supply.

$2.84—Price of a gallon of diesel, up 46¢ from a year ago. Rising fuel prices have also made shipping trees a more expensive venture.

The Breakroom

Question of the Day

What four digit number has digit 1 three less than digit 4 which is one more than digit 2 which is twice digit 3 which is not a prime number and is one more than 1/3 of digit 4?

(Answer located at the bottom of newsletter)

Business Trivia

Pick the sponsored 2017 college football bowl game that does NOT exist:

1. Bad Boy Mowers Gasparilla Bowl
2. Cheribundi Tart Cherry Boca Raton Bowl
3. Love's Travel Stops & Country Stores Oklahoma Bowl
4. San Diego County Credit Union Holiday Bowl

(Answer located at the bottom of newsletter)

Stat of the Day

$5.7 billionValuation of Vice Media. That’s more than the NYTimes, Financial Times, and Washington Post...combined.

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Breakroom Answers

Question of the Day: 6849

Business Trivia: Love's Travel Stops & Country Stores Oklahoma Bowl

 

Hey MorningBrewDaily, I'm the WSO Monkey Bot and I'm here since nobody responded to your thread! Bummer...could just be time of day or unlucky (or the question/topci is too vague or too specific). Maybe one of these topics will help:

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Researching crypto-currency is not light reading haha. You might consider it discount after the China issue. Block chain technology has the potential to end transaction ledgers and eliminate the need for money wasting bureaucracy thus increasing efficiency. Just ask yourself, how well have I researched this potential position and what are the various ways it might blow up in my face? Proceed with caution.

“The only thing I know is that I know nothing, and i am no quite sure that i know that.” Socrates
 

It's the beginning of the end. Some of its fundamental weaknesses are emerging. The federal government is already talking about regulations. Rogue countries like North Korea are already focused on hacking the system. This is probably a good time to sell.

“Elections are a futures market for stolen property”
 

A good time to buy; buy or double down when people are panic selling. Price will rebound towards greater heights. You need time and patience to research and understand the blockchain technology. Hacking won't be easy and cheap; what doesn't kills you makes you stronger. Only invest what you can lose.

 

Best time to buy bitcoin at a discount. This is the future of transactions. The innovation of the blockchain technology has given us a tremendous amount of advantages with a few disadvantage like money laundering etc. The problem is not with the technology, but bad people that use the technology.

If a car crash happened every year, does that mean you stop selling cars? If an aspirin causes 15 death over 100,000 cases, does that mean you stop taking it when needed? It's the same argument and it's irrational to say ban all bitcoins because there's a few who's money laundering it and using it to buy illicit products.

And I'm not down to debate fiat currencies against a distributed ledger based on blockchain etc.

 
indophilosopher:
Best time to buy bitcoin at a discount. This is the future of transactions.

It may be the future of transactions. Does this mean that Bitcoin will succeed?

Dot coms had identified the internet as the future, and they were correct. Selling books, clothes etc via the internet were all great ideas, and nowadays there is plenty of super successful firms or websites which have just developed the dot coms intuitions. However, we all know how it ended.

Bitcoin (and cryptocurrencies generally) has a huge potential, but what I ask myself when I am tempted by investing in it is: how could it develop in the near future? Is it the near future of transactions, or for decades nothing will change?

Can we go into a shop and pay with Bitcoins? Are transactions conducted through Bitcoin payments? Will this happen soon? I don't think so.

And this looks similar to the already mentioned dot coms bubble, in my opinion. Again, selling clothes through the internet was definitely the future of shopping. Would this have happened soon? It depends on what "soon" means to you, probably.

What do you think?

 

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