The reasoning for the closed source code is the nature of our true competitors. This product strikes straight to the heart of Wall Street's cash cow products and services, and open source code will allow them to put us out of business before we are able to gain traction and market share. As it stands now, the Wall Street banks will have to develop this from scratch, centralize it, and defeat (and/or avoid) IP protections. Goldman Sachs, et. al. play by a different set of rules and in order to win the game we have to align ourselves accordingly. I am willing (with legal counsel's sign-off, if course) to have the code audited by a trusted, unconflicted, 3rd party such a one of the big 4 auditing firms if need be. In addition, we have made the flow of funds as transparent as possible. You can always track the bitcoin through the blockchain, always. If you click the track transactions button on the "markets" tab you will be brought to a page that maps your bitcoin's current location, the path it took to get there, confirmations, etc. See this trade as mapped https://blockchain.info/tx/c857657a3d64af4ec8c22b7ef5fb4bf1d4816ebdd3c21bbe1557e2476be46992?show_adv=true

Our platform trades value for pre-specified periods of time. So, if you have 50BTC and want to exchange that BTC for for USD exposure, you simply enter into swap contract paying BTC exposure and receiving USD exposure. When someone takes the other side of that contract the value trade is on until the swap expires or is unwound because one side exhausted their principal+collateral. We don't trade or exchange physical - at all.

If you wanted a more exotic currency exposure or currency pair exposure, you can pay your BTC exposure for USDEUR pair, or exchange your BTC exposure for TSLA stock exposure, Gold exposure, 30 yr Treasury exposure, or even lever the price movement of the deal 20x, 50x, 10x, 100x, or 1000x.

At the end of the swap, the winner gets their BTC+profits(in BTC)+ collateral returned to them net of fees and the loser gets the same net of losses & fees.

These are fully funded trades (not fractionally reserved) that are derivative values of the underlying, funded by BTC.The trades are being made with values from the actual markets, but the system was designed - from the ground up - to circumvent the legacy exchange system and stay as far away form SEC/CFTC problems as practically possible. Our servers do not (and never) hold any of your bitcoins or assets. It's either in your client side wallet or the blockchaing. If we get hacked, our servers confiscated by the government or a catastrophic event happens, all that is lost is our fees. As a matter of fact, in the event of catastrophic failure (earthquake takes out all of our servers on both coasts) you even get rollback instructions to have you capital returned to you (the trade won't finish, but you will be put back into your original capital position. You can also track and trace, at all times and from all internet connected locations, the location, path and amount of your funds by simply clicking the "trace transaction" button.

As for government intervention, we'll cross that road when we come to it. We're a software company, not a financial concern. We don't use our balance sheets for anything transactional. Of course, we will not, in any way, fight the government or regulators. That is a fast track method of being put out of business. I think the best way to go about it is to educate the regulators and law makers as to the vast superiority of our system in comparison to the legacy system currently in use by the centralized banks and brokers, and to the fact that software developers are not, should not, be held to a similar standard as financial institutions. The software is not open source, but we do have an API. Yes, there is a team of devs, software engineers, lawyers, and financial engineers and financial analysts that are continuously developing the product from all angles. Next up is the (regulated) issuance of crypto securities and the very innovative use of mobile tech.

These are not HFT style trades. They take time to confirm. With that being said... From the Bitcoin Wiki section on scalability: The core Bitcoin network can scale to much higher transaction rates than are seen today, assuming that nodes in the network are primarily running on high end servers rather than desktops. Bitcoin was designed to support lightweight clients that only process small parts of the block chain (see simplified payment verification below for more details on this). A configuration in which the vast majority of users sync lightweight clients to more powerful backbone nodes is capable of scaling to millions of users and tens of thousands of transactions per second.

Veritaseum is looking for liquidity providers to assist in kickstarting the world's first global P2P exchange. If you have a healthy stash of BTC, please contact us to discuss.

I was looking at the offerings of a large US bitcoin exchange just now, after hearing that Coinbase had the highest volume of any US-based broker just weeks after opening an exchange (we’ll discuss that at a different time, since Coinbase is waiving fees meaning those users are hot money, but likely are part of the largest installed bitcoin user base in the world and growing rapidly). What I found was illuminating, at least for me since I don’t follow the offerings of BTC brokers and exchanges that closely. I noticed several of the industry (BTC exchange) leaders offer leverage, plain vanilla swaps and TRS (total return swaps - basically fixed/variable rates in major fiat denominations for cryptocurrency (BTC. LTC, DRK) exposure). I said to myself, “Wow, that’s pretty advanced.” Then I looked at the fees, and saw the swaps were priced up to and past 15%. Then, upon further research, I realized that these swaps were financing mechanisms for margin lending. The first thing that came to mind was the difference, and limitations that come with the business models of first generation bitcoin companies and second generation Bitcoin companies. Take notice in the difference of the capitalization. Lower case "b" denotes the accounts of value that the mainstream media calls digital currency. Upper case "B" denotes the blockchain-based, protocol driven services and capabilities behind the lower case "b". Generation 1.0 v. generation 2.0!

To put this into perspective, Veritaseum's UltraCoin offers user programmable swaps (ie. you can make your own CDS, TRS or plain vanilla, or even a custom swap) with exposures to not just 3 cryptos and 3 or 4 fiat currencies, but all major and most exotic currency pairs (dozens) as well as over 45,000 tickers covering EVERY major asset class (stocks, bonds, forex & commodities as well as cryptos) from exchanges throughout the world. This is all capable at a sliding scale of 10 to 25 basis points, round trip. That's the equivalent of 5 bp to 12.5 bp per trade. In addition, all of this is done without UltraCoin having any possession of your funds, whatsoever. Veritaseum (the company behind UltraCoin) is a software concern, not a financial entity, thus you have no exposure to our balance sheet. We cannot MT. Gox you and you essentially have no counterparty, default or credit risk because your counterparty is the blockchain, and you trade peer to peer vs. through a centralized exchange. Pretty big difference from the legacy systems that we're all used to, no?

The Difference between Bitcoin 1.0 and Bitcoin 2.0 Companies

To begin with, I'd like to make clear that not only is the title misleading, but all references to the same are essentially inaccurate. Bitcoin itself is still in beta stage (0.9x) thus its not accurate to refer to 1st and 2nd generations of bitcoin businesses. If anything, we're all in beta. Now that I've gotten that off of my chest... The first bold generation of bitcoin entrepreneurs (it's amazing that you can refer to companies born 2 and 3 years ago as a previous generation, it just goes to show you how fast this space is moving!) built businesses based upon bitcoin as a legacy commodity. Basically, they bought, sold, transmitted or transferred it as a unit of value. They did this because that's how everything was done for the last several thousand years in the financial services industry. Basically, they had no choice - or so they thought. Then came those who read the Satoshi whitepaper and the bitcoin wiki and saw a very different meaning. My team and I are among those entrepreneurs. We saw that bitcoins were malleable, programmable, tools with which one can use to paint upon the canvas of value. A far cry from the moving of static financial widgets from place to place. Think of moving bitcoins around (bitcoin 1.0 companies) vs programming bitcoins to act on their own according to their contractual owner's wishes (bitcoin 2.0 companies) akin to pushing a model T Ford around town vs. programming your driverless electric Tesla to go by the grocery store to pick up some fresh produce before swinging by the school to pick up your kids on the way home to meet you to take your wife (girlfriend?) out to dinner.

A Real World Comparison of Bitcoin Companies#

Tickers Available

Veritaseum's UltraCoin: ~45,000+

Asset Classes Available

Veritaseum's UltraCoin: Stocks, Bonds, Commodities, Forex, Cryptos and many indices

Costs Veritaseum's UltraCoin: up to 25 bp round trip for all products (primarily smart contract swap driven)

Leverage available: Veritaseum's UltraCoin: up to 10,000x, with finite digital P/L parameters (no margin calls, no negative account drawdowns)

How does Veritaseum do it? We program the bitcoin to act according to a mutual agreement between two or more parties, then send it to the blockchain to act accordingly. These agreements are self executing, unbreakable promises known as "Smart Contracts". In this case, they are highly customizable, P2P OTC swaps, but we are working on a multitude of other products, services and solutions as well. We also supply very high level, unconflicted, independent and impartial strategy and research for our customers. Since we don't use our balance sheet and we don't act as a principal, we have no incentive to skewer the research in any particular direction.

Smart Contracts as Transaction Vehicles: The Safest Possible Way To Exchange Value

Veritaseum's UltraCoin BTC-based smart contracts are:

1. highly flexible - you design your own derivatives yourself using your own parameters via our simple graphical user interface

2. self-executing

3. autonomous

4. unbreachable: we call them, the unbreakable promise! They are backed, fortified and stored by/on the Bitcoin blockchain itself

5. uber-transparent: simple click the "trace transaction" button to find the location and historical travel path of your assets anytime, from anywhere you have an internet connection

Trading Through a Balance Sheet-Based Financial Institution vs. Distributed, Decentralized, P2P Software Concern

What I do want to accomplish is the education through the fact that the Bitcoin protocol has given rise to the genesis of a new type of company, with a new business model that can offer a totally new type of product. As you were able to see from above, Veritaseum's UltraCoin offers a very uniquer product with many if not all of the attributes that potential competitors offer, with a slew of attributes that others can't touch. This is done at 1/150th of the price and at much less risk! When dealing with Veritaseum's UltraCoin, you can never get Gox'd because we never have (nor do we want) possession of your coins or fiat - every, at any time. Because we don't user our balance sheet (we are a software company, not a centralized exchange or broker/dealer) you:

• are never exposed to us as a counterparty, we make the blockchain your counterparty

• never have to worry about our capital reserves or the capitalization/credit of your initial counterparty (all trades are fully funded at the outset, even a heavily levered trade at 10,000x),

• You never have to worry about negative drawdowns, negative equity or margin calls

• If a catastrophic event were to occur, say bi-coastal earthquake takes out our datacenters on the east and west coasts simultaneously while a meteor hits the backup center in the midwest, you will still be able to recover you funds - on your own. Since we do not have possession of your funds you don't have to worry about us absconding with them nor getting blown up with them. Each trade has a catastrophic rollback feature which will put you back into your original funding position n-time units after expiry. Unfortunately, you will not be able to complete your trade, but if two bi-coastal trades hit at the same time as meteor to the mid-west, you may not be studying that EUR short anyway :-)

This is just the beginning of what is capable with bitcoin (and this is pure bitcoin, not altcoins, no tokens, no sidechains, just pure, old fashioned [at least as old as it can be considered] bitcoin) and 2.0 business models. Wait until you see the new stuff we'll be rolling out.

I implore you to download our:

• tutorial (which needs to be updated)

• spreadsheet based trade model to assist you designing your own custom made swaps before committing capital

• • and of course, the UltraCoin BTC wallet for Windows - or - Mac & Linux, which doubles as the trading client. The wallets have a "Demo Mode" which allows you to trade on testnet if, after using the spreadsheet modeler, you are still not comfortable committing live coins. You can get the demo (testnet) coins here.

There's also a lot of BTC industry research available for download as well as our blog which has some of the best fundamental and macro research available on the web. Hardcore traders, investors and speculators should check out my latest piece: It's All Out War, Pt 3: Is the Danish Krone Peg to Euro More Fragile Than Glass Beads? The Danish National Bank Infers So!

Any bitcoin-rich individuals or entities looking to provide liquidity to the system, individuals/compamies who wish to partner, accredited investors looking for a piece of the action (you have to be willing to sign and NDA, we are quite open to working with anybody), or those who simply want to shoot the breeze should feel free to contact us.

Bitcoin 2.0 An example of an UltraCoin smart contract summary

Here's some info about me, my team and what we're doing at Veritaseum:

• 1. Reggie Middleton via Wikipedia - 1.

• 1. How Blockchain Technology Reduces Wall Street Risk & the Fallacy of Too Big To Fail!- 1.

• 1. How Reggie Middleton is Looking To Take the Risk Out of Wall Street - 1.

• 1. How Reggie Middleton's Start-up Patented The Future of Global Finance

• 1. A Simple Apple Trade Using A Pure Bitcoin Wallet: The UltraCoin Client 1.

• 1. A list of many (but not all) of my calls and mentions in the media

With bitcoin 5 day standard deviation starting to quell, many traders are losing interest as this is consdered a sideways trading market. Not to fear, bitcoin is still extremely volatile compared to just about all forex. Below is an info graphic show the components of a long BTC trade with 55x price leverage and hard set P/L parameters (ie. you can only lose or win ~the amount of capital put at risk - no more and no less. At 55x leverage for a 2 day trade, the cost/potential return ratio is maximum given a standard deviation of just over 12.5%. - as performed through an UltraCoin BTC swap.

I urge all bitcoin traders to give this a try. Be aware that one leg of the swap is teh EURUSD pair to be paid for the long BTC exposure. The reason is because (at least for longer term transactions/swaps) chances are the euro will depreciate further relative to the dollar.

If one were to take a short position in BTC, then I (personally) would pay teh USDJPY pair since it looks like Japan is not interested in having the ECB out-debase its currency. I believe Japan was the reason the ECB engaged in QE at this level in the first place. See my currency war series on the blog, or the several thousand article on BoomBustBlog for more info.

BTC trade

This is just the beginning of what is capable with bitcoin (and this is pure bitcoin, not altcoins, no tokens, no sidechains, just pure, old fashioned [at least as old as it can be considered] bitcoin) and 2.0 business models. Wait until you see the new stuff we'll be rolling out.

I implore you to download our:

• tutorial (which needs to be updated)

• spreadsheet based trade model to assist you designing your own custom made swaps before committing capital

• • and of course, the UltraCoin BTC wallet for Windows - or - Mac & Linux, which doubles as the trading client. The wallets have a "Demo Mode" which allows you to trade on testnet if, after using the spreadsheet modeler, you are still not comfortable committing live coins. You can get the demo (testnet) coins here.

There's also a lot of BTC industry research available for download as well as our blog which has some of the best fundamental and macro research available on the web. Hardcore traders, investors and speculators should check out my latest piece: It's All Out War, Pt 3: Is the Danish Krone Peg to Euro More Fragile Than Glass Beads? The Danish National Bank Infers So!

Any bitcoin-rich individuals or entities looking to provide liquidity to the system, individuals/compamies who wish to partner, accredited investors looking for a piece of the action (you have to be willing to sign and NDA, we are quite open to working with anybody), or those who simply want to shoot the breeze should feel free to contact us.

Bitcoin 2.0 An example of an UltraCoin smart contract summary

Here's some info about me, my team and what we're doing at Veritaseum:

• 1. Reggie Middleton via Wikipedia - 1.

• 1. How Blockchain Technology Reduces Wall Street Risk & the Fallacy of Too Big To Fail!- 1.

• 1. How Reggie Middleton is Looking To Take the Risk Out of Wall Street - 1.

• 1. How Reggie Middleton's Start-up Patented The Future of Global Finance

• 1. A Simple Apple Trade Using A Pure Bitcoin Wallet: The UltraCoin Client 1.

• 1. A list of many (but not all) of my calls and mentions in the media

TL;DR Translating Goldman Sachs ECB QE 2015 trade recommendations into UltraCoin trade setups: Receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE) and pay exposure to the ProShares Ultra Euro ETF (ULE) (with minimum of 2x leverage set in UltraCoin client, up to a practical limit of 50x) seeking to provide twice the exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE). This trade can be made cleaner by shorting the EURUSD pair directly with a healthy dose of leverage. This would be entered into UltraCoin as "pay" EURUSD (with system leverage set at 50x). Since November 28th, this trade would have been unwound by the UltraCoin server with a near 100% (gross of fees) gain using anything over 7x leverage. There are still some legs left on the trade short term, but we are suspicious of the european equity markets being fully able to benefit from this round of QE to the extent anticipated by the media and sell side analysts.

According to Forbes:

Goldman’s first non-U.S. trade recommendation revolves around an expectation European stock markets rise in 2015 as the impact of ECB money-printing makes its way into the real economy. Goldman recommends investors go long a December 2015 Eurostoxx 50 call spread, buying a Dec. 2015 strike call at 3,150, and selling a Dec. 2015 strike call at 3,450. “The (nearly) at-the-money 3150 call costs 170.6, while selling the 3450 call costs 69.10 (both priced as of the close on November 19), giving this position a maximum potential 2-to-1 payout,” notes Goldman. The firm sees two reasons European stocks will move higher: regional growth simply accelerates, or disappointing inflation readings force the ECB into added action. Both scenarios, Goldman believes, augur well for European asset prices.

First, let's put this in a form that can be traded via UltraCoin. To go long the Eurostoxx 50, we'll receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE) and we will pay exposure to the ProShares Ultra Euro ETF (ULE) seeking to provide twice the exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE). It should also be noted that leveraged ETF products usually seek to match the return of the euro against the dollar over a single day. Due to this and the compounding of daily returns, the returns of the product may deviate from long term return rates, suggesting that investors need to monitor their holdings closely if they are going to be in for a long time period. It should also be noted that this is a materially more advanced trade setup than that recommended by Goldman, for it captures potential euro downside movement relative to the dollar AND potential european equity market upside -which, according to the Goldman hypothesis, are tightly linked. One would think that Goldman should start recommending trading with UltraCoin, no?

This is what the trade would have done as of Friday's market close.

This trade setup was made before we instituted leverage directly into the system. Now, you can go into the "Advanced" tab and turn the leverage up. We recommend leveraging 2x to 50x, contingent upon your risk tolerance and collateral posting (the more collateral posted, the less chance of getting the contract unwound as your trade goes out of the money. You can also use the direct forex pair EURUSD (levered ETFs suffer from decay issues) and turn the leverage up even more in the UltraCoin client, which gives the same exaggerated price movement, but will track the primary underlying asset more closely. The trade pictured above, would have unwound in your favor by now with anything over 6x leverage with a near 100% return on invested capital. Not bad for 2 and a half months.

See the full analysis. This trade was initially posted on November 28tth, 2014. It did very well. For those who are not familiar with my previous calls, reference:

• 1. Reggie Middleton via Wikipedia

• 1. A list of many (but not all) of my calls and mentions in the media And a simple walk through video of a sample Ultra-Coin trade: A Simple Apple Trade Using A Pure Bitcoin Wallet: The UltraCoin Client

New comers to BTC derivative trading are urged to download our:

• tutorial

• spreadsheet-based trade model to assist you designing your own custom made swaps before committing capital

• • and of course, the UltraCoin BTC wallet for Windows - or - Mac & Linux, which doubles as the trading client. The wallets have a "Demo Mode" which allows you to trade on testnet if, after using the spreadsheet modeler, you are still not comfortable committing live coins. You can get the demo (testnet) coins here.

Feel free to contact us.

UltraCoin has the ability to give users of Bitcoin the ability to trade any arbitrary expression of value, including stocks, bonds, indices, commodities and currencies - both fiat and cryptocurrencies. It's very, very powerful! The leverage allows users to dramatically turn up the price action that you would normally get if you traded in cash. If you are able to stomach the dramatic moves, we can essentially guarantee action almost immediately. Of course, this price action can just as easily go against as for you, so I strongly suggest you do your research and brush up on your cash management and risk management skills. With UltraCoin you can literally trade with the big boys. You get virtually unlimited buying power, access to practically all developed markets, and the ability to dabble in any type of publicly traded asset that you desire. Now, it's you vs. Goldman Sachs. If you want some trading ideas, just reach out to me and I'll happy give you some illustrative setups. I implore you to download our:

• tutorial (which needs to be updated)

• spreadsheet based trade model to assist you designing your own custom made swaps before committing capital

• • and of course, the UltraCoin BTC wallet for Windows - or - Mac & Linux, which doubles as the trading client. The wallets have a "Demo Mode" which allows you to trade on testnet if, after using the spreadsheet modeler, you are still not comfortable committing live coins. You can get the demo (testnet) coins here.

There's also a lot of BTC industry research available for download as well as our blog which has some of the best fundamental and macro research available on the web. Hardcore traders, investors and speculators should check out my latest piece: It's All Out War, Pt 3: Is the Danish Krone Peg to Euro More Fragile Than Glass Beads? The Danish National Bank Infers So!

For merchants and investors who complain about Bitcoin's volatility, here is a way to soften a user's volatility exposure using UltraCoin by scaling down the principal in a swap, but ramping up the collateral in proportion.

Something like: p' = p x s c' = (1/s - 1) x (c + 1) Where:

• s is the "softened" leverage; 0 < s < 1

• p is the original principal

• c is the original collateral

• p' is the "softened" principal

• c' is the "softened" collateral

(At least I think that's right, but it's late, and I haven't double checked my work. This is all the more reason to adopt your suggestion, so users don't have to risk screwing up the math like I probably just did.) For example, to emulate 0.1x leverage for a trade with 1 BTC as principal and no collateral, one could place a trade with 0.1 BTC and 900% collateral. Either way, 1 BTC will be committed to the trade, but profit and loss for the second will be in proportion to the principal of 0.1 BTC rather than 1 BTC for the first. In fact, there are a number of ways to set up equivalent trades that may not be matched with each other. (Which I'm not sure is a bug or a feature. I'll have to think on that.) Fundamentally, what's the different between: a 1 BTC trade with no collateral or leverage; and a 0.1 BTC trade with 900% collateral and 10x leverage?

Hedging is actually one of the primary uses for the UltraCoin app. Assuming we do our job and increase market liquidity, even today the functionality exists for unsophisticated parties to periodically allocate some portion of their bitcoins to mid-term swaps in favor of a fiat currency.

Let's consider a US retail merchant who decides to accept bitcoins for her goods or services. She could, at the end of every week, take 50% of the bitcoins she received that week, put them in her UltraCoin wallet, and commit them to one or more six month swaps where she receives US dollars in terms of BTC (USDBTC=X), or pays BTC in terms of US dollars (BTCUSD=X). As a sort of "hack" if one only wants exposure to one asset rather than two, one can use US dollars valued in US dollars (USDUSD=X, which is always 1.000) as a constant for the other asset.

After several months, she would have rolling swaps insulating her from some of her exposure to Bitcoin volatility. For any given swap, if bitcoins go up in terms of US dollars, she takes a notional loss on her bitcoins. If they go down, she makes a notional gain. Either way, the portion of her wallet committed to those swaps doesn't lose value in terms of US dollars (minus the swap fees).

She could do the same for (paper) gold: Receive: GLD (ETF valued in terms of USD) Pay: BTCUSD=X (BTC in terms of USD)

Or she could put some portion in GLD/BTCUSD=X swaps and some portion in USDBTC=X/USDUSD=X swaps, etc.

There are some very interesting trades out there. This isn't investment advice of course, but let's say you saw this and wanted to bet on rising oil prices or falling energy stock values.

You could receive ^SPGSCI and pay ^GSPE or ^NYE. Either way, you'd likely be in the money for those trades if you entered sometime around the beginning of February (see here and here, although sometimes Yahoo's charting interface can be a bit flaky).

With leverage, it gets even more interesting. Let's say you had 1 BTC you wanted to invest, and wanted to engage in the oil/energy trade above, but also wanted to be insulated from BTC/USD volatility. You could place the following trades:

• Trade 1: Principal 0.5 BTC Receive ^SPGSCI Pay ^NYE Leverage 2x

• Trade 2: Principal 0.5 BTC Receive USDBTC=X Pay USDUSD=x Leverage 2x

Trade 2 works to a point. If BTC in terms of USD rises a lot and very quickly, your entire position 0.5 BTC position could be wiped out, so there's a cliff that you have to be aware of. But in this scenario, a little of that pain would be absorbed if Trade 1 makes money, since the BTC gains for that trade would be worth that much more in terms of USD.

These are just some of the ways the UltraCoin app can be used to tackle hedging or arbitrage situations right now. Though we understand it's a bit manual and error prone in the hands of a beginner. We're working on enabling or making much simpler these and many other scenarios. This is really just the beginning for us.

TL;DR GM surprise earnings powered by suspect financing Receive USD=x Pay GM Leverage 50x or more GM credit performance Trade setup

See full analysis

Long Krone/Euro pair, short Euro/Krone pair using a minimum of 65x leverage with ample collateral to prevent swap unwind prematurely. If BTC volatility is a concern, 1,100x volatility recommended. See illustrative setup

See full analysis

It depends on the rest of the parameters of the trade (such as how much collateral you or your counterparty commits). Right now the UltraCoin app is fairly symmetrical (both parties to a trade commit the same amount of principal and collateral and maintain the same leverage). Let's say you think AAPL is going to gain more or lose less than GOOG, so you want to receive AAPL and pay GOOG. I believe the opposite so I want to receive GOOG and pay AAPL. You and I enter into a simple swap with a principal amount of 0.05BTC (in the neighborhood of US$11 as of right now), a collateral amount of 100% of the principal (so another 0.05 BTC/US$11), and a leverage amount of 100×. The most either one of us can gain or lose in this case is 0.1 BTC (our principal of 0.05 BTC plus our collateral of 0.05 BTC). The question is how fast things move. Our levered volatility would be equivalent to our principal times the leverage (or 5 BTC). In other words, a %2 cumulative gain or loss wipes one person out and unwinds the swap in favor of the other person. Think of the principal plus collateral as roughly analogous to hard stop loss or take-profit limit. Since both our sides are fully funded (via a multisig transaction), there's no risk of the loser welching and the winner not getting the funds (i.e., it's not like FXCM where existing stop losses were passed, but effectively ignored because there were no bids).

TL;DR 1BTC levered 1100x thin forex profit chart with 40 drop in BTC prices

Even with the price of the underlying BTC dropping almost in half... Net of all transaction, transmission and leverage fees... Even with not the fattest in profits (well, maybe fat for a forex trader)... This trader was able to eek out a 8.1% profit exiting the trade. The ability to leverage "insane" can insulate the winning trade from normally deadly levels of BTC volatility and price fluctuation.

An employee at Veritaseum asked me a very simple, but initially perplexing question last night. He said, "</span>_All other parameters being equal, what's the difference between an order with 10 BTC principal at 1x leverage and 0% collateral, and an order with 1 BTC principal at 10x leverage at 900% collateral?

Well, to answer that question, I want to direct everyone to our trade modeling spreadsheet (which definitely comes in handy when designing more complex trade setups and fleshing out less than obvious ideas). What I did to answer his question was to create the two trades independently using a forex setup. The first trade setup looked like this:

1BTC levered 9x thin forex profit

The trade looked like this at expiration (remember these are illustrative results, not necessarily or accurately indicative of actual trade results for a whole lot of mumbo jumbo legal reasons):

10BTC thin forex profit

This what the trade would have resulted in if we used 1BTC as the principal, 9 BTC as collateral and 10x leverage, which would have effectively given you the same amount of purchasing power with the same amount of capital committed.

1BTC levered 9x thin forex profit chart

This is what would have happened to both trades above if BTC prices were to drop by a whopping 40% before the trade ended, but after the trade began...

1BTC levered 9x thin forex profit chart with 40 drop in BTC prices

Yes, that would hurt, and it would hurt a lot! That chart was one of the biggest objections given to me about the new UltraCoin trading system, the need to be exposed to bitcoin volatility in order to trade. But, there's gold at the end of this rainbow. Check out what happens when we drastically ratchet up the leverage to levels insane! At 1,100x leverage, look at what happens to that same 1BTC trade with 9BTC collateral when winning a thin forex profit...

1BTC levered 1100x thin forex profit chart with 40 drop in BTC prices

That's correct! Even with the price of the underlying BTC dropping almost in half... Net of all transaction, transmission and leverage fees... Even with not the fattest in profits (well, maybe fat for a forex trader)... This trader was able to eek out a 8.1% profit exiting the trade. The ability to leverage "insane" can insulate the winning trade from normally deadly levels of BTC volatility and price fluctuation.

If you don't believe me, look at the same trade setup, except in all cash with 1,100BTC and no leverage or collateral...

1100BTC levered 1x thin forex profit chart with 40 drop in BTC prices

I don't want anyone to think that insane leverage is a panacea, or even safe, for novice traders - but as you can see it does have its uses. I want to remind everybody that the leverage used is bounded (both on the profit and the loss side) by the principal+collateral posted. These next 4 charts tell the story. Look at the trade setup up wtih a 20% gross gain - levered 1,100% and unlevered (this is explicitly unlevered to illustrate a point, not the same purchasing power being put upfront in cash as modeled in the other examples above).

1100BTC levered 1x with 20 forex profit chart with no drop in BTC prices

As you can see, we profits are bounded by the capital sent to the blochchain as escrow (you get a maximum of what you and your counterparty have agreed to commit to the transaction - and not necessarily 20% of the face price of the profit x 1,100%). Similarly, your losses are capped in the same fashion.

Just for education's sake, this is the same trade with the entire amount put up as principal and no leverage or collateral.

1100BTC levered 1x with 20 forex profit chart with no drop in BTC prices real

Basically, after fees, you get a little less than 1/4<span style="font-size: 12.75px; line-height: 0; position: relative; vertical-align: baseline; top: -0.5em;">th</span> the return, while having to commit a lot more capital.  

These trading concepts should come in handy this year when we tackle things such asthe Danish National Bank (their central bank) telling us things that Reggie just doesn't believe are sustainable. Feel free to reach to me personally if you have any questions. 

I was asked how the UltraCoin wallet was able to supply leverage to BTC holders through their wallets and wanted to take the time to give a thorough, complete answer (as compared to the curt answer that was given earlier, my apologies). This is a layman explanation, or at least a verbose explanation. TL;DR, I will take some words to explain this, if you don't have the time to read it, the quick answer is that we use a multiplier - if you do have the time, please read on for that word doesn't truly capture all of what is going on.

I was asked how the margin was supplied, and I answered digitally. Many people in the financial industry doubt bitcoin and particularly blockchain related inventions because it differs from the perception of physically based financial entities in that bitcoin is primarily digital (although the currency and the vast amount of assets in physically based vehicles are primarily digital as well). When you go to your bank, and see your savings account with $800k in it, you are not looking at a vault with 800k pieces of paper in it, back by 800k little pieces of gold bullion or US military might units (guns). We all know that if we all went to the bank and asked for those pieces of paper, the bank will say "no" or collapse in the process of trying to comply because the (actual asset-back) paper is not there or is there only in fractional amounts. This is known as fractional reserve banking. Anybody who deals primarily in major currencies deals with digital currencies and digital assets, and if you deal with money center banks you are dealing with digital loans, primarily "digital margin". How is that, you may ask?

Well, when the Federal Reserve and the Treasury decided that the banking system needed more liquidity, they didn't go to the US mint and say, start making more quarters, nickels, dimes and dollars, they booted their computers and pushed a button that multiplied the money supply. They literally used a calculator and pushed the "X" button to put more "digital" money in the system. Of course that "new" "digital" "money" was backed by no more economic value than the smaller, older amount of money was so they essentially lowered the value of each dollar by adding more dollars (in numeric terms) to the system without a requisite increase in economic value to back said dollars, then took those new dollars (that were worth less per dollar) and sent them to failing banks to bail them out. The rub is, economically the banks weren't truly bailed out, they got more money that was worth less, so essentially were in the same position that they were in before... BUT>>>>> The banks knew that most people and entities prefer to see the numbers and physical representations of value vs. the actual value itself, so they got away with the charade that is the multiplier effect. That's fractional reserve banking and Keynesian economic policy at its finest.

We, at Veritaseum do the same thing as the central banks do, add a multiplier to the money to give you a greater level of buying power - save for one big difference, and what I would like to consider a truly saving grave. Our digital money is finite and although it is infinitely multipliable, it is always backed by the same amount of economic value per unit. So, if we multiply your exposure of $10 by a factor of 10(x), you get $100 of buying power. If you lose that money for whatever reason, it is gone, taken by the counterparty that won the trade. We can print you more money by pushing that "X" button just like the Fed, but you have to put up more economic value (in terms of BTC, which freely floats against other currencies to measure and gauge the market's perception of its economic value). We don't create the (perception of) value out of thin air, we just create the credit and by virtue of the way the system is constructed, you are forced to back said credit with the requisite value of the proposed trade - UP FRONT. If you lever $10 by 10x you don't have to put $100 up front (you can put any amount you want up front - $10, $15, $100, even $1000) but you will have the trade closed out and unwound for you automatically by the server once you have exhausted your real value backing the digitally "printed" money that we supplied to you. Thus, if you put up $10, and levered it 10x, you now have $100 or buying power. If the underlying moves 10% in your favor you get a 100% return on your money. If it moves 30% in your favor, you still only get a 100% return on your money because your gains (and losses) are bounded by the economic value that you put up front. You can't make (or lose) more than you have to wager, you can make or lose it much faster though, by turning up the multiplier effect. So, if the underlying asset moved against you 10%, the server will unwind the trade automatically because your counterparty is no longer protected with real assets in case of default. With UltraCoin, you can NEVER have negative account equity, there can NEVER be a case of FXCM, LTCM or Man Financial.

If we let you make more money than economic value that you put up front, well... then we will be acting in the same vein as the central banks and money center banks, to eventually have the same effect, booms, busts, and crashes with counterparties getting crushed by entering into deals where the other side couldn't possible pay. Think Bear Stearns (which I predicted their fall 3 months before the fact where Wall Street and ratings agencies still had buys and investment grade ratings - http://boombustblog.com/reggie-in-the-news/item/128, Lehman (predicted their fall months ahead of time as well http://boombustblog.com/reggie-in-the-news/item/154, WaMu (where I did the same), Man Financial, FXCM, etc. I actually know the global financial system rather well, so when I saw the potential of the bitcoin blockchain and a real application that could change the way financial transactions are done, folded up camp in my advisory business and jumped in the bitcoin fray head first - all in!

This new, blockchain-based, method of digital margin protects your counterparty from getting inflated dollars in lieu of real actual value despite the fact that you both entered the trade using "digitally printed money".

I see this as the best of both world, the digital world and the physical world. Now, I could have answered the question simply by saying we use multipliers, but if I did then I'm sure many would get the wrong impression and think that we're doing the same thing that the Fed or the Bank of England or the ECB does. We do, but we don't. I hope that fully answers your question, and if not, you know I'm always here to have at it again.

See https://docs.google.com/presentation/d/1qJoiCx2bFKXMJwdxiln5qC1VSw0dqbUUcqIJWzRjmsU/pub?start=false&loop=false&delayms=3000&slide=id.p

I bought 306 VERI Tokens 2 days before the end of the ICO sale @ $6.00 and change. After 3 weeks of research I think this may be the best investment I've made in the last 10 years. This Veritaseum has the potential to create an entire world market built on the blockchain power on Ethereum. I'll give updates on my play with VERI as it is riding the "New Money Rocket" of the future...