By Eric Brouwer on The Capital

Herd mentality drives every bubble. You will find it in the bubbles of the past, present, and future. The psychology of the crowd can make one invest in products that with hindsight one should have steered clear from. Understanding how crowds tend to influence our behavior can make one a more informed and wiser investor. Bitcoin serves as an excellent case study to illustrate crowd thinking mentality and how you can best avoid falling prone to it.

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Learning about herd mentality can potentially you avoid your next investment pitfall.

This article does not constitute legal or any other professional advice and is not intended to be relied upon as such.

You may or may not realize that you have succumbed to group thinking. You may after all not even understand that there are symptoms of group thinking or you may not even care. But you should. In almost every bubble that we have encountered since time immemorial, those that partook in the bubble almost always succumbed to group thinking. They may not have understood that at the time, but with hindsight the symptoms of group thinking were evident. If only they knew and understood the effects of group thinking would they may have had a chance of avoiding the trap of investing in a bubble ripe for popping. …


John Law introduced the idea of paper where he devised a system of easy credit that helped contribute to the boom and demise of the French economy in the 18th century. Like John Law, who set out to change the monetary basis from specie to paper, Satoshi Nakamoto also embarked on a mission to change paper money back to specie, albeit in the form of a cryptocurrency called bitcoin. What thus enfolds is a story of how two people from centuries apart sought out to revolutionise the monetary order of their respective times.

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John Law and Satoshi Nakamoto sought to change the monetary order of their respective times.

This article does not constitute legal or any other professional advice and is not intended to be relied upon as such.


This article explores three investment bubbles: the South Sea company bubble, the tronics boom, and the ICO bubble. While these “castles in the air” span different eras and have completely different companies and technologies involved, the underpinnings for the speculation remains the same. Investors get swept up in the madness of crowds and follow the herd in an effort to strike it rich. From analysing these bubbles we can learn important investment lessons.

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From the South Sea company bubble, tronics boom, to the ICO bubble, we can learn important investment lessons from the madness of crowds.

This article does not constitute legal, investment, or any other professional advice and is not intended to be relied upon as such.

A Short History of Bubbles and Lessons…


Warren Buffett and John Maynard Keynes have polar opposite investment theories. The former uses the firm foundation theory to make investment decisions while the latter employed the castle in the air theory. Both theories help us understand how different investment perspectives can construct opposing narratives for bitcoin’s price and valuation.

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Buffett and Keynes have opposing perspectives on investing that help us understand how investors value bitcoin.

This article does not constitute legal or any other professional advice and is not intended to be relied upon as such.

Buffett vs Keynes: a battle of investment theories

Have you ever wondered why Warren Buffett, perhaps the most successful investor of all time, likened bitcoin to “rat poison squared”? The answer has to do with the investment theory that he subscribes to called: firm foundation theory. …


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By Eric Brouwer on ALTCOIN MAGAZINE

Since the Initial Coin Offering (“ICO”) boom in 2017, we have seen an explosion in a commentary on what constitutes security for the purposes of US securities law. However, little attention has been paid to Europe where promoters have also issued ICOs. To that extent, in this educational piece, I provide an introduction to the European Union (“EU”) securities law.


Bitcoin has a branding problem. The market largely views bitcoin as a speculative asset with little to no use cases beyond transacting pseudonymously on the dark web to purchase illicit activities and fund terrorism. While the market may currently view bitcoin negatively that is not to say that bitcoin’s brand cannot change. Incumbents operating in the bitcoin ecosystem can help steer the direction of bitcoin’s brand and reinstate a positive market perspective of bitcoin, thereby recasting bitcoin’s brand for the better.

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Bitcoin has a branding problem that incumbents operating in the space may be able to fix.

This article does not constitute legal or any other professional advice and is not intended to be relied upon as such.


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The Commission’s proposal for a crowdfunding regulation will provide a harmonised regulatory framework for crowdfunding service providers.

If passed, the Commission’s proposal for a crowdfunding regulation will provide a harmonised regulatory framework for crowdfunding service providers to passport their services across the European Union (“EU”). In response to the proposal, the European Parliament indicated that if the Commission sought to regulate Initial Coin Offerings (“ICOs”) then it should submit a new proposal rather than regulate ICOs under the proposed crowdfunding regulation.


The purpose of this article is to assess under European Union (“EU”) law, specifically the Prospectus Regulation, whether the DAO characterises as a transferable security. Analysis of this query reveals that the DAO would have met the threshold of a transferable security under EU law and thus come within the scope of the Prospectus Regulations.

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A DAO will typically meet the threshold of a transferable security under EU law thereby engaging the Prospectus Regulation.

This article does not constitute legal or any other professional advice and is not intended to be relied upon as such.

A DAO is likely a transferable security under EU law

When Slock.it created the first Decentralised Autonomous Organisation (“DAO”), news generated from the event sparked interest from the Securities Exchange Commission (“SEC”), the US securities regulator. In a 2017 report, the SEC investigated the DAO and concluded that it qualified as an offering of securities to the public. …


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By Eric Brouwer on ALTCOIN MAGAZINE

With hacking, embezzlement, and negligence ubiquitous in the crypto exchange market, it’s time for a more mature approach and the adoption of harmonised crypto regulation. At least that is the underlying message from the International Organization of Securities Commission’s (“IOSCO”) report on crypto-asset trading platforms.


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By Eric Brouwer on ALTCOIN MAGAZINE

By running or contracting others to run full nodes, regulators will collect and analyze data and with that, command governance over the bitcoin end user. It may not be the end of bitcoin, but it certainly represents the end of an unregulated era and the start of a new regulatory saga.

About

Eric Brouwer

Trainee solicitor specialising in FinTech, blockchain, crypto, investment funds, and financial services regulation. @EricBrouwerC www.ericbrouwerlegal.com

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