Why Bitcoin is a Derivative, not a Currency.

In order for Bitcoin to be considered a currency it must satisfy three conditions: 1. be a store of value, 2. a medium of exchange and 3. a unit of account.

What separates fiat currencies from BTC is the fact that they satisfy the most critical condition: being a unit of account. The US Dollar is considered a real currency because it satisfies that critical condition. 1 USD is just that: 1 USD. It is backed by nothing other than the full faith and credit of the United States Government. It is not a derivative.

BTC, on the other hand, is a derivative, and is not a unit of account, as it is backed by the nominal value of the USD, which, in this example, is the independent variable.

In order for something to be considered a unit of account, it must have an independent value metric. If it does not have an independent value metric, then its value, by definition, is derived from some other thing. When the value of an asset is derived from the value of an underlying, that asset is defined as a derivative.

Open Positions (07-27-2017)

It's an Anglo Thing

The central bank race to cut and print has now turned into the race to hike and reduce, with North America leading the charge, and the Anglo cousins trailing slightly behind. The Fed has passed the hurdle of raising interest rates and has moved on to addressing a reduction in the balance sheet, which itself has been flat for the last three years. Additionally, The BOC and BOE are both signaling that its days of increasing quantitative easing and lowering rates have come to an end, and the next moves in interest rates are more likely to be hikes rather than cuts. This leaves the ECB and the BOJ far behind the curve, as Mario "any means necessary" Draghi still hints toward more quantitative stimulus, and has not made clear any plan to address a reduction in the balance sheet any time in the near future. The general concern among central banks seems to have made a U-turn: "how will the Fed ever raise interest rates without triggering a recession" has turned into "how will the ECB and BOJ ever get on the same rate path as the Fed, The BOC, and The BOE.

Closed GBTC (5-26-17)

Long GBTC @ 381

                                             

Central Bank of England Head Mark Carney Press Conference

Yen call June 16 2016

JPY call (June 16 2016)

— DONALD DOW (@ralexa2008) Feb. 19 at 02:27 PM

Long Yen

BOT +1 $6J_F @.0087875. $FXY $SPY

— DONALD DOW (@ralexa2008) Feb. 14 at 07:22 PM