The Future of Futures

Crypto Will Be A Player

I met Luke in 2014. We had two meetings. I wrote an angel check. It is an investment that I am extremely proud of. It was the right investment, in the right person even though the timing was off. I am very fortunate that Luke is the person he is, and was able to keep the company alive through trials and tribulations totally out of its control and get it to where it is today. Not only Luke but the rest of the team as well. They are first class.

For those of you interested in angel investing, this is one example of how long it takes to see a return or even the prospect of a return. When someone is building a revolutionary company, it does not happen overnight.

What Luke is talking about in this video are some of the things we chatted about back in 2014. He didn’t “evolve” to this idea.

If you think crypto is a tulip bulb, please listen to this video. I think there is a lot of fraud in crypto. There is a lot of bunk. There are a lot of places to trade crypto that are not ready for prime time because the people behind them don’t really understand how to organize and operate an exchange——>and neither do most of their investors.

I am very happy Luke is beginning to go public with his thoughts. He came out of the high-frequency trading industry and those people are culturally close-mouthed about even where they order lunch from.

It has been a long ten-year road for Bitnomial. Why? Because of their vision and what they want to do. They couldn’t have gone off half-cocked and just started trading without the necessary regulatory licenses and approvals. To get that, they had to go through an expensive and arduous process.

As an investor, I would be lying if I said that I was this patient. I would have loved to see them go faster. But, they couldn’t. Especially given what they want to do.

Bitnomial is changing the entire paradigm of how markets are collateralized and settled.

I agree with Luke. People think that there needs to be an exchange to trade a contract. Except, it doesn’t offer anything new. I wrote about this here. Me Too exchanges rarely work.

To work, an exchange has to blaze an entirely new trail. One of the things that CME did back in the day was fundamentally change how trading worked. They introduced live cattle and hog trading instead of trading benign commodities off a warehouse receipt. Live animals! A few years later, foreign currencies. Then, the first cash-settled interest rate product and stock index product. The CBOE started the listed options market.

It shows. CME is the largest exchange in the entire world by far and they were the most innovative when it counted.

Go to the Bitnomial page and look at their senior management team. These are people that had a career of experience in marketplaces before they joined Bitnomial. Their board is also knowledgeable and can add significant value. This is not a fly by night operation.

It’s often said that many ground breaking innovations start out as a game or look like a toy. A lot of people have sunk a lot of money into crypto projects that look like toys or games.

I think the educational hurdle to leap over for consumers to use crypto is larger than the chasm that fills the edges between each side of the Grand Canyon. That’s not the case for industrial finance.

Industrial Finance prizes efficiency. As crypto develops, and the US regulatory agencies adapt, Industrial Finance will embrace crypto and then it will start to filter into consumer applications.

There are a lot of points in this video that are pretty deep.

When do you know a crypto token isn’t a joke? Why would someone accept it for collateral?

I think the crypto world thinks too simply about crypto. They say things like, “It will replace the dollar”. Or, “Governments are irresponsible and inflate so people will turn to crypto”. That may or may not be true, but it is not relevant when it comes to efficiency.

If there is

• a competitive liquid market

• with a diverse set of players

• ease of entrance and exit

• transparency

• clear rules of settlement and clearing

• clear rules of engagement, and arbitration

Then it doesn’t matter if a government backs it or not, because the market does.

You might say that since the market is so new and unproven, there is too much uncertainty to put faith in it. Ask people who trade nickel at the London Metals Exchange (LME) about that idea.

When Bitnomial changes the paradigm of how trading is executed from soup to nuts, I believe retail traders will have a better shake on their exchange than any other.