Would you trust blockchain with your bacon?

Everything tastes better with Blockchain — PolygamousRanchKid

A friend keeps telling me that as a worker in conventional finance industry, I am very skeptical of the new things. Skeptical about blockchain, bitcoin, smart contracts, islamic finance (not to mention islamic finance smart contracts on a blockchain.. yeah well, blogposts are there. I expect shortly we will see Islamic Dinar Crypto Currency to support an arabic sounding smart contract). So I decided I will be more open minded about the stuff and will also try to play devil’s advocate with myself to see if there is a case for investing in these assets. Hey, if Bitcoin skeptic Mark Cuban is investing in Cryptocurrencies, I sure as hell can make a neutral case if not a bullish case for it.

https://www.bloomberg.com/news/articles/2017-08-22/bitcoin-skeptic-mark-cuban-to-invest-in-cryptocurrency-fund

If you read tweet storms of crypto prophets and evangelists, ICOs are about to democratize startup investing and disintermediate VC funds. The problem with following them is that it is an echo chamber most of the time wherein each of them retweets one another. These are just the most recent tweets and retweets of high priest of Crypto Naval Ravikant

I do tweet threads occasionally but writing fifty 40 character tweets to make a bull case for something — one must be just preaching to the converted here.

The conclusion doesn’t even make sense.

I presumed Mark Cuban, skeptic and startup investor, will be investing in ICOs i.e. join the ICO crowd before he becomes irrelevant or disrupted. Nope! that is not what he is doing here. He is becoming part of an investment fund that will invest in early stage blockchain companies.

People may cite that as bull case for ICOs but if this works out as planned, fund investors are getting preferential treatment. That is not democratization or disruption of VC model. Oh well…

Runa Capital’s Nick Tomaino is also investor. I googled him and it turns out he was doing marketing and business development for Coinbase and runs TheControl blog about crypto/blockchain/ICO whatever.

He wrote a blogpost about valuing Ethereum.

https://www.bloomberg.com/news/articles/2017-08-22/bitcoin-skeptic-mark-cuban-to-invest-in-cryptocurrency-fund

I admit I have done valuation shenanigans in my finance career by playing with interest rates, growth rates or selectively choosing comparable transactions but the below method of digital currency valuation was completely new to me.

It is typical of tech press buy / sell news items: List postives and negatives of a company, and based on the most recent news suggest a future uptick or downtick in the stock price not considering that once it is news, it is already built in the current stock price. Anyway, who am I informing. The aforementioned valuation is total horseshit but the confidence with which he comes up with 19.3% exact probability, I wish I had such confidence in probability weights in my assumptions. I hope that investment his Runa Capital does in other blockchain enterprises does not value them or their ICOs in this way.

No day is complete till you receive a new press release masquerading as news about blockchain from the large corporate entities. So there was this.

https://www.bloomberg.com/news/articles/2017-08-22/bitcoin-skeptic-mark-cuban-to-invest-in-cryptocurrency-fund

As usual headline is different than the main story which says that companies will explore if blockchain holds any promise. It had this interesting tit bit.

However, it didn’t tell us what was stopping Walmart from having this information earlier. What problems did blockchain overcome and at what costs? If I had to guess, I’d say someone in Walmart’s China IT department has been taken on too many dinners by IBM. But that is just me. Earlier, IBM and Walmart had reported this.

https://www.bloomberg.com/news/articles/2017-08-22/bitcoin-skeptic-mark-cuban-to-invest-in-cryptocurrency-fund

More vaporware — no details how this will be achieved and why it can’t be achieved with existing technology without using blockchain.

Some say we won’t have a blockchain revolution till we have IoT revolution. Why? Because to really enjoy the benefits of blockchain, everything needs to be on the blockchain i.e., your smart home, your driverless car, title and ownership registries, bank accounts etc. That future is way way off because at the moment, it is not Internet of Things rather Internet of Hackable Things.

https://t.co/CoixtaPrgW

Crypto experts may be able to secure their identities and currencies by having cold wallets etc but the ordinary folks like you and me won’t be able to manage it.

https://www.bloomberg.com/news/articles/2017-08-22/bitcoin-skeptic-mark-cuban-to-invest-in-cryptocurrency-fund

At least with the non-blockchain non-crypto world, there is some redressal.

So this sums up my bull case for crypto currencies and ICOs based on just yesterday’s developments. I don’t think I will be getting invitations to speak at #crypto forums. Crypto is hot nowadays with people falling over each other throwing money at ICOs etc. I seriously need an ICO idea that I can firmly believe in and use to get entry into crypto forums.

In the end, I leave you with this

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