Home Attitude – Video Clip #2

This is the second of seven video clips about Home Attitude. I really appreciate the eight 5-star reviews on Amazon. I have ads running on Amazon and Google, and will be starting a Goodreads campaign in January. Kindle and Print are still running about neck and neck. It was a pleasure to present all four Attitude books to The Rotary Club of Ridgefield this week. Thanks for your support.

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HamletHub Is All About Local

News Room

The word “local” is at least as powerful and important as the word “attitude”. We all care about what is going on in the world, but we care at least as much about what is going on where we live, in our local communities. HamletHub recognized the importance of local some years ago and built a web business to make it real. Thousands of people in local towns around Connecticut learn what is going on locally by reading a daily email from HamletHub. Anyone can visit HamletHub, enter a zipcode, and see local events from among more than 200,000 happenings across the country.

Kerry Anne Ducey, Founder and CEO of HamletHub, asked if I would participate in an interview about my new book, Home Attitude. We mutually decided to broaden the discussion to cover the theme of all my books, attitude. Following is the introduction to the interview.

Four Attitudes & A Crusade for Change

Local author, Internet pioneer, and community advocate, John R. Patrick believes most big problems and big solutions involve attitude. That’s why he has authored a series of books that speak to just that – attitude. How does it impact our online experience? healthcare? Our political landscape? Your lifestyle and your home? Here, we talk with Patrick about his crusade for a better way of life he believes begins with a state of mind. See the interview.

Also in the news, an introductory 30 second video about Home Attitude is now live on Instagram. Instagram is a good place to find pictures and short videos. I will be sharing more videos there over the weeks ahead. You can now follow me on Instagram in addition to Facebook, Google+, GotChosen, LinkedIn, Medium, Twitter, and YouTube. Visit Instagram here.

Disclosure: I am an investor in HamletHub.

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What’s Next For Bitcoin – Part 2

Bitcoins

My friend Harris Miller, in Virginia, pointed out there was a $70 million bitcoin theft, which may have gotten lost in the news frenzy over the price rise. He makes a valid point, and I would like to make some further comments about the heist in this post. The $70 million of bitcoin was stolen from a cryptocurrency mining service called NiceHash following a security breach. Some distinctions need to be made. First is bitcoin was not hacked, it was an ancillary bitcoin service which was hacked. You could think of the service as something like a check clearing service. Hackers were able to break into the website and steal some bitcoin. The important thing to note is the technology underlying bitcoin is the bitcoin blockchain. To my knowledge, a blockchain has never been hacked. 

There have also been other hacks of bitcoin exchanges. Think of bitcoin exchanges like coin shops or bank offices. In 2014, Mt. Gox company, lost almost $500 million in bitcoin. At the time, Mt. Gox was handling over 70% of all bitcoin transactions worldwide, and was the largest bitcoin exchange in the world. Once again, it was not bitcoin which was hacked, it was a failure of the exchange to properly manage security. If someone robs a bank, it is not the fault of the money. There was a lot of, I won’t call it fake but, inaccurate news coverage at the time.

Harris Miller raised the question of what insurance bitcoin holders have.  The answer is it depends. Cryptocurrency regulations are at their infancy. Mt. Gox bitcoin holders were not insured. I doubt if NiceHash provided insurance either. Some further distinction is required. First, U.S. banks also fail. Seven banks have failed so far this year, 62 failed last year, and 554 have failed since 2000. If you are interested in seeing which banks failed and in which states, look here. Bank depositors are insured partially. The FDIC insures up to $250,000 per depositor, per insured bank, as a result of the Emergency Economic Stabilization Act of 2008, which raised the limit from $100,000.

While there is no American-wide or global regulatory framework to require cryptocurrency depositor insurance, there is a lot going on in that direction. Two bitcoin exchanges in Japan have launched insurance products aimed at preventing losses. The world’s largest bitcoin exchange by trading volume is BitFlyer, based in Tokyo. BitFlyer is the fourth digital currency exchange to receive a “BitLicense” from New York’s Department of Financial Services. Coinbase, Circle, and Ripple have also been granted a BitLicense.

It is not clear to me if a BitLicense in NY requires exchanges to provide insurance, but I think it will become common practice for all exchanges. Coinbase says all digital currency they hold online is fully insured. This means if hackers were to break into Coinbase, the insurance policy would cover any customer losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft. The insurance does not cover any losses resulting from a compromise of an individual Coinbase account. It is the customer’s  responsibility to use a strong password and maintain control of all login credentials. As always, I recommend using a password manager such as 1Password or Dashlane.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage. As a customer, you can keep bitcoin in the digital wallet or in an offline digital vault. They have a process for moving bitcoin back and forth between wallet and vault. I believe a prudent policy is to keep at least 90% of your bitcoin in the vault.

At 6:00 p.m. EDT tonight, the Cboe Futures Exchange (CFE) will begin offering traders a way to buy and sell bitcoin futures. I am looking forward to watching the action. I predict the price of bitcoin will either race to the moon, crash to the sea, make a move up or down, or stay roughly the same. Finally, I offer the advice my father once gave me about investment recommendations. He said, “Don’t give any and don’t take any”. He was a wise man.

Disclosure: I am an investor in Coinbase and in Bitcoin. I am not recommending anyone invest in cryptocurrencies or cryptocurrency futures.

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What’s Next For Bitcoin

Bitcoins

In February 1637, a single tulip bulb sold for more than 10 times the annual income of a skilled craftsman. Very shortly after the peak, the price collapsed dramatically. The build up became known as tulip mania. An article in the “Quarterly Journal of Austrian Economics” used the term to refer to large economic bubbles when the price of an asset seemed unrelated to the asset’s intrinsic value. Numerous scholarly articles and books argue about the causes and consequences.

Is the current meteoric rise of the price of bitcoin a case of tulip mania? Some say so, and that bitcoin has no intrinsic value. In late October, I wrote the total market capitalization (value) of all cryptocurrencies exceeded $150 billion. As of this writing on Friday, December 8, about 40 days later, the market cap of bitcoin alone exceeds $250 billion. I have been writing about bitcoin in this blog for four years, but there was rarely anything in major publications. Today bitcoin was on the front page of The Wall Street Journal and major coverage appeared in The Economist and most other major publications. White House economic adviser Gary Cohn said he and other administration officials are watching the price closely.

The total of all cryptocurrencies is still a drop in the bucket compared to the value of all forms of money in the world, which is approaching $100 trillion. Is bitcoin for real? Some experts are saying no. Some who say bitcoin has no value are threatened by it. Large banks collect billions in fees for money transfers, credit card processing, and numerous other services which could be done much more efficiently with digital currencies. Many governments in the world like to control their currency, but the people often don’t trust those currencies. With digital money, you are not trusting your government, you are trusting the mathematics of encryption.

To me, it looks like the Internet of 1995. Bill Gates said, at a 1994 conference in Paris where I was also a speaker, the Internet was interesting, but not for business. He said it was slow, unreliable, and insecure. Some IBM executives saw the Internet as a threat to its proprietary networking business which at the time was a very profitable one billions dollars per year. I argued the Internet would replace all proprietary networking, including that of IBM. Enthusiasm and pessimism about the future of the Internet were both running rampant.

I see cryptocurrency as the future. Does anyone think we will be exchanging paper money and metal coins 20 years from now? I don’t. How about 10 years, or five? Startup companies all over the world are innovating with blockchain technology, the underlying infrastructure which enables bitcoin and other cryptocurrencies to work. Digital payments and cryptocurrencies are both gaining momentum. It is right in front of us. Apple Pay, Samsung Pay, Chase Pay, Walmart Pay, Zelle, Paypal, and many others are enabling payment from mobile devices. I see adding cryptocurrencies to the mix as a logical extension.

With more than 1,000 cryptocurrencies out there, will one or more of them emerge as better and cause the demise of bitcoin? It is certainly possible, but I do not think so. For those old enouogh to remember, the Beta video tape format was superior to the VHS format. Later there was a secure web protocol called shttp. It was superior to https, which is what we all use today. In both cases, it was the grass roots which dominated and held on. In other words the momentum of VHS and https was so strong, it could not be reversed, even though there were better solutions. This is why I see bitcoin continuing to be dominant. 

One of the criticisms of bitcoin is the volatility. That may change very soon. At 6:00 p.m. EDT on Sunday, December 10, the start of Global Trading Hours, Cboe Futures Exchange (CFE) will begin offering traders a way to buy and sell bitcoin futures. The Chicago Mercantile Exchange (CME) will follow suit the following Sunday. Those who see bitcoin as over-priced will be able to bet against it. The introduction of futures contracts could have a stabilizing effect on the price of bitcoin. This in turn could encourage more retailers to accept bitcoin. Whole Foods eGift Cards are now available from $5 to $500 at eGifter.com. You can visit the website and purchase the cards with bitcoin. Regional airline carrier Surf Air, the “all-you-can-fly” private airline, announced late last week travelers can pay for their seats with bitcoin through a mobile app. If volatility does decline and if fees are trimmed, the giants of retail may offer plans to accept cryptocurrencies. We could be on the verge of a shift to a digital economy where cryptocurrencies, now at their volatile infancy, could enable more secure, private, verifiable, efficient, paperless transactions.

Disclosure: I am an investor in Coinbase and in Bitcoin. I am not recommending anyone invest in cryptocurrencies.

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Notes From The Harvest Summit: The Future of Cars

Sonoma vineyard

On Friday (11/10), I attended the Harvest Summit, at the La Crema wine estate in the Russian River Valley of California. I promised subsequent posts to share some of what I learned. You can find other posts about the event by scanning through my blog at johnpatrick.com. This post from my Summit notes is about the Future of Transportation.

One of the breakout sessions I participated in was called The Future of Transportation. The goal was to discuss how the planes, trains, and cars of tomorrow will impact our daily lives. The discussion leaders were Karen Francis, Strategic Advisor, Autonation & Nauto, Stefan Heck, Chief Executive Officer and Co-founder, Nauto, and Matt Carpenter, Vice President & Chief Financial Officer, Audi of America. The discussion turned out to be mostly about self-driving cars. 

Everyone agreed autonomous cars can have a huge positive impact on safety, cost of operation, and global warming. One thing I had not thought about is repair cost. We spend tens of billions of dollars per year for six million collisions at a cost of $4-8K each. More important than reducing damages is the potential to save tens of thousands of lives per year. Not only will self-driving cars be more efficient and better for the environment, they will get us where we want to go more quickly. As more and more data is collected about the routes taken by the intelligent cars, they will learn to avoid dangerous intersections. Rather than gunning it to shift lanes to try to get ahead of the traffic flow, smart cars will space themselves evenly, resulting in a better flow of traffic for all.

We had a lot of discussion about the impact of self-driving cars on the number of cars on the road, which is another way to say, will we need as many cars? Even the Audi executive acknowledged consumer purchases of cars will decline. One person suggested none of the children born today will have a driver license. They won’t need one. The trends are already clear. I have a son in Boston who does not own a car, and a nephew in New York who does not have a driver license. Another person pointed out San Francisco parking garage real estate is declining in value due to more people using Uber et al rather than driving themselves. Self-driving car services will accelerate all of these trends. The Audi executive said the company strategy is to build its brand so when a consumer makes a request for a car to come get him or her, they will specify the autonomous car be an Audi. Most of us thought that was wishful thinking. One conclusion all of us came to was there will be fewer cars on the road, but the utilization of those cars will be much higher.

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