Reggie Middleton rose to national prominence when he accurately predicted the failure of Bear Stearns and Lehman Brothers and his BoomBustBlog became required reading of analysts, investors and the financial media.
Having built a reputation as a radical financial thinker with guest appearances on CNBC and the Keiser Report just to name a few, Middleton turned his attention to Bitcoin in 2013. Now he’s launching Veritaseum, a Bitcoin solution which aims to disrupt the traditional financial services model by eliminating the need for middlemen.
Cointelegraph spoke to Reggie Middleton to discuss his background, his solution and where he thinks the Bitcoin industry is headed.
“Several clients asked me to look into Bitcoin, and when I did my jaw dropped.”
– Reggie Middleton
Cointelegraph: Your personal journey to where you are in the Bitcoin Community today was an interesting one – can you talk a little about that?
Reggie Middleton: I struck out on my own at age 23 creating mutual fund arbitrage programs, selling risk management and insurance programs to municipalities, creating dot.coms during the frenzy (basically, the first version of Google Docs 20 years before its time), and creating fundamental analysis software. I was (and still am) a full-time dad raising three children. I bought distressed real estate in downtown Brooklyn in 2000. The fundamentals were in place, liquidity via loose lending standards, optimal pricing (distressed only) and quantitative metrics were prime (the bubble was just getting on its way).
“[I] schemed on shorting each and every financial institution that ever did business with me as I blogged about it.”
After a 1,200% return 5 years later 2+2 started to equal 63 – it was time for the exit. I sold off my portfolio for literally multiples of what I paid for them just a couple of years earlier after pocketing real cash flow and schemed on shorting each and every financial institution that ever did business with me as I blogged about it. Since I couldn’t find any decent research, I decided to roll my own by hiring a few analysts and teaching them my critical, spreadsheet-driven method of looking at things.
The blog became very popular (~2007) to the point where people were actually getting belligerent in their requests for opinion causing me to put up a paywall. Three days of silence later I got a call from Wall Street to turn on 3 members of their prop desk if they wired me US$10k. BoomBustBlog.com was born.
Seven years and roughly 80 highly contrarian, accurate boom/bust predictions later… Bear Stearns, Lehman Brothers, Countrywide, WaMu, residential and commercial real estate busts, Blackberry fail, Google pop and Apple drop, European sovereign debt crisis, etc. Several clients asked me to look into Bitcoin, and when I did my jaw dropped.
Programmable money with its own transportation rails that can sidestep money center and central banks via an unhackable, open consensus ledger? Even though I missed the boat on BTC price gains, I was actually right on time for the smart contract gravy train.
CT: You made a name for yourself in finance by predicting the demise of the, then very buoyant, housing market and then the banks that had become incredibly wealthy from trading MBS etc. – did you have an inherent skepticism about financial services or was it a result of what you saw with regards to leverage and counterparty risk?
RM: I’m a very analytical person. If you went through the balance sheets of the banks during that time (or today) you’d notice plenty that didn’t make sense. It’s as simple as adding 2+2 and then realizing it didn’t really equal 64! Now, add on top of that my natural “skepticism about financial services” business model and you had what was essentially a hound on the scent of insolvency armed with spreadsheet wielding analysts and a penchant for sniffing out bullshit.
CT: When was your ‘eureka moment’ with regards to applying Bitcoin to this industry?
RM: It was October 2013, when I read the “contracts” section of the bitcoin Wiki. The minute I got through the first paragraph my entire brain lit up! Smart contracts are by far the most disruptive aspect of the bitcoin “invention” yet they are being overlooked and dismissed by most investors and practitioners. I expect this to change in a dramatic way once education permeates the sector.
“Veritaseum contracts are superior to traditional contract law in terms of security, costs and efficiency and reduces the frictions of most other transaction costs commonly found in the financial system[.]”
CT: Can you explain (as simply as possible) the workings of Veritaseum and its difference from the traditional financial services model
RM: In…
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