Crypto’s Devil Wears Prada

16th of October, 2017

Since the GFC exploded with a massive BANG there has been endless apportioning of blame. The US Congress passed laws, The UK spat its financial chewie leaving the EU and taking its financial might with it. ASIC went on a rampage issuing Enforceable Undertakings and Bans wherever it could. And so the list goes on.

Such actions are fairly and squarely aimed at a metaphoric horse that has not only bolted, but run so far it’s tired, stopped and had a drink and is now looking for a rest.

A question that is rarely discussed or even raised is who invented these financial instruments of mass destruction and could it happen again. (OK so we have asked and answered the second question many times but work with me here…)

So let me introduce you to Blythe Masters AKA the “Devil in Prada”.

Now please don’t take this the wrong way, I am in no way meaning to equate Blythe’s personality or ethics with the fictional character Miranda Priestly, a powerful fashion magazine editor of the spectacularly successful Runway Magazine.

However, both these women are extremely intelligent, powerful and of course ambitious.

You see Blythe Masters is widely credited as the creator of the humble credit default swap – the financial weapon of choice for those who blew the financial system to smithereens in 2008!

Now don’t get me wrong, my point here is not to blame the GFC on Masters, far from it, but she obviously has a very sharp mind and enormous business acumen.

Unfortunately, KO’s seem to follow Masters, or Masters follows KO’s. I do not know which nor am I particularly concerned.

From 2004-07 Masters rode the massive boom as the Chief Financial Officer of J.P. Morgan’s Investment Bank. Her departure well timed, leaving someone else to mop up the mess of the GFC.

In 2007 Masters was appointed Head of Global Commodities by JP Morgan – not a bad move given that Commodities were then the HOT sector. However, it is alleged that JP ended up paying $410M to settle a US Investigation into the alleged manipulation of energy markets in California and Michigan while Masters was in control. The bank of course strongly denied any wrong doing by them or their employees.

During the same period, Masters Commodity division, was commonly accused of manipulating the metals market.

One way or the other Masters is a Master of getting involved in hot sectors early and riding the boom.

So surely that has to bring about the question “What is Masters doing now?”

Well, I’m glad you asked!

Masters is the CEO of a company called Digital Asset Holding (DAH) a company using BlockChain (and similar technology) to develop enterprise distributed ledger systems.

DAH has upset the Bitcoin community because it sees the possibility that Wall Street Bankers could co-opt the Blockchain technology stripping it of its decentralised nature. The thing is, Bitcoin, like the internet, has no borders, no controlling body. Security for Bitcoin is derived by the numerous “Miners” validating the code and this threatens the powerbase of Wall Street, something that will not be tolerated by the privileged!

The point that I am trying to make is that Blythe Masters seems to have an uncanny nose for a Boom, usually exiting just before or as the proverbial hits the fan!

“My view is that we will see this technology in various forms be deployed in a commercial setting in less than a couple of years. That doesn’t mean it will become mainstream in that time frame, I think that the time frame that it’ll take to get to be mainstream would be five to ten years,” Blythe Masters

I’d definitely be watching the Blockchain space. It looks like the making of a good old fashion Oil or Gold Boom (we even have miners involved!), which is sure to end in a bust!

Like all booms there will be plenty of pioneers whose businesses are “going to change the world” and can use their optimistic logic to validate and justify the “generous valuations” – but we all know where this ends up.

Let it be said that you heard it here first; the coming Blockchain and Bitcoin Crash is coming, and coming soon to a device near you!

2019 might be the Chinese year of the Pig, but I think it will be remembered as the year of the Blockchain/Bitcoin Crash…

Interesting timing, some of you might say!

Seeing and understanding how this sector is likely to play out is only half the investment story. Change brings about opportunity! It is the opportunity that we will be highlighting at both the Calnan Flack Opportunities Summit and Forecasting Weekends.

For more information or to join us at these either of these events click below for further information: