Bitcoin is going to do to banks what email did the post office and Amazon did to retail. Understandably those at the center of the financial system are concerned.
The banker’s mantra of “blockchain not bitcoin” has caught fire on Wall Street – everybody loves blockchain, they may not know what it is, but they love it! Jamie Dimon, CEO of JPMorgan, hates Bitcoin, but loves blockchain, Goldman Sachs CEO, Lloyd Blankfein, has embraced blockchain while he is warming to Bitcoin. Admittedly, I suffered from the same love affair with blockchain. As an early adopter of Bitcoin I still had feelings for the currency, but for a period of time I was infatuated with blockchain.
Perhaps I should begin with the journey that lead me to Bitcoin. For more than two decades I was a part of Jamie Dimon’s and Lloyd Blankfein’s world of traditional finance. I began my career as an equities trader and then spent most of the internet bubble trading merger arbitrage — for those old enough to remember the halcyon days of “Merger Monday,” I was the guy placing bets on whether the deal would go through and who would be next. After the internet bubble popped and in the throes of a recession, I started a brokerage firm that catered to mutual funds and other institutional investors. My clients were the old guard of the financial world. We did well, but I didn’t find it very exciting.
Then I began to trade ADR’s (American Depository Receipts). These stocks represented shares in foreign companies and traded on the NYSE and NASDAQ. The trick with this type of trading was to watch the foreign currency markets for unusual moves. When currencies moved and the ADR’s did not, there was money to be made. These markets were much more exciting than stodgy blue chip stocks. After a few years playing around in the currency markets, I made the leap to global macro investing.
As a global macro investor I could make big bets on macro-economic trends in the global financial markets. I became quite adept at reading central bankers’ cryptic messages. With this insight I would place bets on the world’s currencies markets 24 hours a day. For a financial markets nerd like me this was exhilarating. The interplay between central bank policy, geopolitics and financial markets was a playground. Then I stumbled onto Bitcoin.
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