All posts by Виктор

The significance of China’s free trade zone(中国自由贸易区的实际目的)

China formally approved the establishment of a free trade zone in Shanghai  in September 2013 and further announced the approval of twelve more free trade zones in various cities in China in January 2014.

Shanghai is the forerunner of all the free trade zones and is a world focus on this new phase of modernization of China. The principal purpose of establishing the free trade zone of Shanghai is to open up the economy to facilitate China’s modernization. The secondary purpose is to build a city with a state of arts infrastructure hardware-wise and software-wise similar to major cities of developed countries, such as Tokyo, New York or London, to replace Hong Kong. There shall be ample of business opportunities in Shanghai in the coming years.  Implementation of all the innovative plans in building the free trade zone requires a lot of talented people. Hence there shall be a lot of job openings for international professionals.

The new vision on Shanghai is that:  one day in the near future, the Chinese currency RMB shall be fully convertible; the Shanghai stock exchange shall  become an international stock exchange; a sophisticated broadband data super highway shall cover the whole city to facilitate fast communication and cloud computing in business activities and for inter-branch work collaboration of international companies;  offshore banking shall be offered; a modern commercial litigation and arbitration mechanism shall be set up (laws that complies with modern business practice shall be enacted); the City of Shanghai shall grow as part of the urbanization strategy of China to increase internal consumption to sustain economic growth.

(Note: stock that may benefit from this development is China Telecom: CHA:NYSE)

Виктор С.

Copyright Reserved MONIES.CA 2014

Bitcoin and NSA (比特币及美国国家安全局的关係)

In my previous posting, I did emphasize that the Bitcoin ledger (i.e. the Blockchain) is quite robust because of the strong encryption of all transactions despite everybody can access, download and play with it. (Please also read my warning in my other posting here).

The encryption technology is creditable because it was developed by the NSA of the US Government in 2001 and had been tested and used for many years.

In brief, each transaction (in fact, I would rather call it an assignment because the recipient plays no role in the execution of the transaction) is encrypted (or hashed) by SHA-256 (a cryptographic hash functions developed by NSA of the US Government).

The following fictitious transactions may provide you some idea about the encryption.

Transaction 1.

2013-06-23 Obama pays Putin 1 million for sending Edward Snowden to USA

Transaction 2

2013-06-24 Putin pays Obama 1 million with comment money returned Edward Snowden loves to stay with me

Applying the SHA-256 function to the two transactions produces the following fixed length outputs. The technical term for the output is a digest.

The digest of Transaction 1 reads like this

86612cbef8b217813af9e56651a1ef17172b099905605ee2e11c2387ea94afc1

The digest of Transaction 2 reads like this

4311270be76fd9e2d48b1148c05d287ab789b2fb9eb1f1e8df5676c0c2efb7b7

You can try out the SHA-256 function here to encrypt your secret message to grasp an understanding what it is and may be you can use it to verify the above two transactions.

Виктор С.

Copyright © 2014 All rights reserved. VICKILEAKS.NET

Regulating Bitcoin is not difficult (管制比特币並不困難)

It is not difficult to regulate Bitcoin by treating it as a commodity and applying the rules for commodity trading on the exchanges. The exchanges should also be registered and regulated as a commodity exchange.

First of all a definition must be given to cyber commodity (Bitcoin or Litecoin).

Such definition should read like:  A Cyber Commodity (such as Bitcoin) is defined as something with perceived value passing between two parties in a transaction in cyber space or otherwise with total daily trading value in all known trading platforms of not less than one million USD in any business day and the number of transactions being not less than 10,000. A committee under the commodity trading regulatory body should interpret the aforesaid guidelines and determine when a cyber entity should be classified  as a commodity for regulation in an exchange.

There will be similar product (like Bitcoin) coming up in future. Before the participants have grown to a significant size and before total monetary value involved is of any significance,  there is no need for any regulation because many newly born cyber entities may not live long. Regulating too early is just a waste of money.

For commodity traded outside the exchange between two consented parties, regulation is not necessary. This similar rule should apply to cyber commodity (Bitcoin).

Виктор С.

Copyright © 2014 All rights reserved. MONIES.CA

What you must know before you invest in Bitcoin?(买卖比特币须知)

If you want to invest in Bitcoin, there are  some fundamentals about this commodity that you must know.

Without a firm belief of the followings, it would be better for you to avoid this commodity.

First of all, you must treat Bitcoin as a commodity. It is not a currency because there is no promise there. There is no support to it other than supply and demand. What value is given to it depends on how you see it such as you value an ounce of gold or one carat of diamond or a piece of jade. Bitcoin is not tangible but a cyber concept of trust. Over a time span of 100 years from now, the systems will create to a maximum of 21 million Bitcoins which are being discovered very slowly by a group of people called miners who are also volunteer validators of transactions. The miners only follow system discipline to validate transactions and they will be rewarded with Bitcoin if they do them right. But they have no obligations to ensure the transactions are correct.

Secondly, in any deal (that is transaction) , there is only two parties involved namely a sender of Bitcoin and a recipient of Bitcoin. There is no third party witnessing what is happening, although all communications are encrypted by the system. In other words, if the sender and recipient are involved in a dispute about a transaction, there is no way of showing evidence to prove who is right and who is wrong. It is just like a sender passing cash (such as a stack of bank notes) to a recipient who issues no receipt.

Thirdly, you must have good faith in the Bitcoin transaction which happens as follows.

There is a general ledger system called the Blockchain which records all transactions in encrypted form. This is the only book keeping system which sequentially records all transactions from genesis to the present. It is supposed to be very robust such that nobody can break into it to alter the already committed  transactions. Any transaction will be committed to the Blockchain after 6 miners have validated it and not before that. On one hand, we can say that nobody owns this Blockchain because there are many copies of Blcokchain scattered and stored in different computers called nodes in different parts of the world. On the other hand, we can also say that everybody owns it because anybody can download the Blockchain. As long as Bitcoin exists, the size of the Blockchain will grow forever. You must trust that there is no mutation in this growth.

Finally, there are already copycat systems out in market such as Litcoin. People will gradually learn more about this relatively new cyber product. So, the mystery will soon be over.

Bitcoin Transaction
Bitcoin Transaction

Виктор

Copyright © 2014 All rights reserved. MONIES.CA

Bitcoin Shall Stay Safely for a long time as a Cyber Commodity (比特币会继续流行及长久存在)

Despite the recent arrest of Bitcoin traders Charlie Shrem and Robert Faiella in January 2014 for charge of  money laundering by the US government and the ban on trading of Bitcoin from all financial institutions by the Chinese government in December 2013, it is the author’s view that Bitcoin shall stay safely for a long time as a Cyber Commodity.

Although many people called Bitcoin a cryto-currency, the characteristics of Bitcoin in fact more resembles those a commodity such as gold than banknote which is just a promised to pay note.  People worry that Bitcoin will disappear overnight in a way like the junk stock of a bankrupted company or like the deprecated banknote of an overthrown government of a third world country. Or,  people may imagine that Bitcoin is controlled by an organization, which if  raided by government authority will lead to total collapse of the whole Bitcoin system. People worry about the possibility of unchecked issuing of Bitcoin which could generate so much of the commodity that it will be rendered worthless. In fact, all these are misconceptions. None of the aforesaid scenario is likely to happen.

Bitcoin is not a physical entity, but a cyber product. It  is a widely distributed commodity like gold and has a sophisticated decentralized and highly encrypted ledger keeping system, technically called the block-chain. Many people possess Bitcoin. However, instead of storing the commodity (i.e. Bitcoin) in safe deposit boxes, people store Bitcoin in their computers or i-phones.

One may think of Bitcoin as a commodity for bartering other products or services. Like any commodity which is subject to the laws of supply and demand, the price of  Bitcoin fluctuates. Being so new (it was introduced only in January 2009) and mystical (little people fully understand what it is), its price is extremely volatile. However, it will continue to exist in the financial market as a popular commodity because of  the  robust nature of decentralized record keeping system (technically called the block-chain) and the anonymity of ownership. What identifies an owner is just a set of number technically called the public key. An owner exercise all his authority by another set of numbers called the signing key (or private key). Taking ownership of the signing key of a person would mean taking ownership of all the Bitcoin asset of that person. So if the signing key is not properly safe guarded for example proper backed up, one may loss all the Bitcoin asset by just losing that key.

There are two groups of people who love Bitcoin particularly. The first group are gamblers who think they could take advantage of the volatility of the price of Bitcoin by betting on its rise to make money. The second group are criminals who make illegal dealings such as drug dealing because of anonymity and convenience. One can try to imagine that, billion of dollars can change hands by just passing over an i-phone which contains the signing key.

If one merely uses Bitcoin for bartering, there is no way of  identifying the dealing parties because the deal is peer-to-peer and anonymous. It is like a cash transaction in the cyber space. The only control government can exercise is when a third party trading platform is involved because by government regulations participants in trading of financial products must make known their identity. This is a worldwide protocol. So criminals would prefer hoarding Bitcoin like hoarding gold or diamonds and use it for bartering whatever illegal items they want to procure. Their transactions are mostly peer-to-peer in order not to get into trouble on a third party trading platform. Anyway despite the US strong auditing of the trading platforms and China banning them, peer-to-peer deals in Bitcoin will be still continued actively in these two jurisdictions. Drug deals will continue to happen and corrupt money could still be remitted overseas.

虽然美国政府於2014年1月逮捕了比持币对换商人Charlie Shrem 及Robert Faiella 对他们发出洗黑钱的指控,及中国政府於2013年12月对金融机构发出禁止对换比特币的指令,但笔者认为比特币会继续流行及长久存在。

以其特质看,其实比特币近似商品如黄金多於货币。很多人对比特币有不同的误解,如它一夜间会变得一钱不值,它受政府取缔而要立时停止运作,它是一个受某机构除意操控的产物。以上全是错误的观念。

比特币不是一件实物,而是互联网络的产品。它已分布於世界每一个角落,为很多人持有,好像黄金为很多人持有一样。它有一个分布很细致并非只一人拥有的记帐系统(Block-chain) ,要把这记帐系统毁灭,理论上要毁灭差不多每一个比特币拥有者的电脑,因此这是不可能的事。现在很多人拥有比持币,不过他们储存比持币的地方不是保险箱而是电脑或手机。

比特币可被联想为一种以物换物的商品。既然是一种商品,它会专守供求定律,其价值会有波动。由於它是一种相当新的产品(它於2009年1月才面世) 而相当神秘(是实上很多人还未完全认识它是什甚) ,所以它的价格波动是很大的。虽然如此,它在金融市场上仍然会是流行的。其原因有二,其一为它可靠及不受区域限制的记帐系统,其二为其匿名保密的持质。比特币持有人是靠一组数目字确认其身份,这组数目字叫Public Key。比特币持有人行使转让权是靠另一组只有他知到而无任何人知的数自字,这组数目字叫 Signing Key。因此任何人取得比特币持有人的Signing Key便可使用其比持币。如果比持币持有人未好好地保管他的Signing key,一但遗失,他将会永远失去他所有的比特币。

有两类人特别喜欢比持币。第一类是赌徙,因为他们认为大幅的价格波动可让他们低买高卖中迅速获利。第二类为作非法买卖如毒品买卖的不法之徒,他们利用比特币非常容易转让及匿名的特质。试想,把一个存有Signing Key的手机转手另一个人,数亿元便可以在不知不觉中转让了。

如果用比特币作以物换物的交易,基於交易是点对点而没有中介的,交易双方的身份是查不出的。这就相当於现金交易。政府惟一可控制的是比特币的第三者交易平台。因为一般规例金融交易机构要有详细的客户纪录。因此不法之徒不会用第三者交易平台,而是用比特币作以物换物的交易如使用黄金或钻石作以物换物交易一般,使用以点对点的匿名比持币转让交易。因此非法之徒会储存比特币留作交易之用,如他们储存黄金,钻石或美钞一样。现在虽然美国政府正严格审核比特币的第三者交易平台(即中介平台) 及中国政府禁止金融机构交易比特币。但比特币仍然会在这两个地区活跃使用,以比特币作毒品交易仍会进行,贪污之财亦可以比特币方便汇出国外。

Виктор С.

Copyright © 2014 All rights reserved. MONIES.CA

Google – A Stock of the Future (谷歌 :一间超时代的公司)

Many still conceive Google as just a search engine company earning money by selling advertisements on the internet only.

In fact Google is much more than that. It is a company of the future. It is a company which is threatening Microsoft.

Apart from selling advertisements online, Google has many other services . This long list of items may have diverted our attention away from what Google is actually heading.

Chrome is a product that will bring success to Google. It is a platform that is challenging Microsoft, a platform that will eventually cannibalize Microsoft’s Desktop.

What Windows is to Microsoft, Chrome is to Google.

Many year ago, being a man of vision and with an ambition to dominate the desktop as well as the Internet, Bill Gate killed Netscape, then  a successful  pioneer web browser developing company, by giving out  the free browser, Internet Explorer (IE). From then on Microsoft’s Browser IE became the dominant web browser for surfing the internet.

Upon Netscape’s going out of business, the industry supported a volunteer group of former Netscape employees to develop the Firefox Browser to challenge Microsoft’s dominance on the internet. However, Firefox was not popular and developers often used IE as a platform for their application developments. Very often Firefox’s http requests hit the annoying  message  “not supported, please use IE”.

For Google to develop Cloud computing, relying on IE as a platform is not a good idea for obvious reason. Neither is it good to relying on Firefox which is maintained by volunteers. So after much deliberation within the company, Google finally developed its own browser, Chrome, and released it in 2008. Within five years, Chrome wins the trust of the internet community and by now has overtaken  IE as the most popular browser on the internet.

Using Chrome, Google gradually integrates all its services such as “Google+”- a social networking service, Google Drive – the Cloud Hard disk, Gmail, Calendar, online office documents processing applications etc.

Microsoft has dominated the desktop for over 28 years. The industry had tried to introduce Linux as an alternative OS to Windows for the desktop but was never successful. The game changed in 2010 when the tablet hit the market. Though the population of desktop users is still large, yet many people have switched from desktop to tablet. And incredibly, six month old babies have also become users because at this age they can stretch their hands to fetch things, the only motor skill required to operate a tablet. In response to the new market, tablet manufacturers emerged with different bleed of OS. Virtually, except  IE,  every made of browser  such as Chrome, Firefox, Safari etc. can sit on any tablet.  IE on the other hand can only sit on Microsoft’s proprietary Windows OS because as a price paid for killing Netscape, IE cannot be detached from Windows OS made up of codes of Gigabyte size. If Microsoft has to maintain its own standalone browser brand, the only way is to build another browser in a different name making IE a legacy.

In the desktop market,  putting Windows OS and Linux OS side by side, Windows is the giant. However, in the tablet market, the Android OS of Google has dwarfed Windows OS.

“Desktop” computer shall still have a market especially in the office environment. However, the trend has already started in moving the “desktop” to the Cloud. Application shall be deployed from the Cloud the hard disk shall be replaced by the Cloud drive such as Google Drive.

It is a trend that future application shall be deployed from the Cloud as service and hence be charged as a service with revenue model similar to that of cellular phone business, a model with regular and constant cash inflow.  OS and applications shall always be updated automatically  and consumers shall not have to bear the tedious annual upgrading of desktop OS and desktop office applications manually any  more.

The Chromebook of Google  is in fact a landmark product of this future trend.

While online advertising is still Google’s major revenue base and will be subject to economic upturns and downturns similar to all other businesses, this solid revenue base of Google shall healthily  support Google’s development in Cloud computing,  a vast market with tremendous growth  potential. So far in this area, Google is moving in full momentum and is ahead in the game.

谷歌乃一著名的搜索引擎,现时主要收入来源仍然是网上广告,它亦不停发展其他产品及服务,此公司视野甚广,于2008年发展及推出自已的浏览器(Chrome)以此作为平台攻占整个互联网市场,其野心及市场策略可媲美当年微软公司(Microsoft)发展视窗(Windows)攻占了差不多整个桌面市场。但其规模比单一个桌面市场大得多。谷歌发展的云端服务将挑战及蚕食微软的桌面市场。虽然云端服务是一个竞争剧烈的市场,但谷歌在人力及财力上有庞大资源的优势,它将会主导市场,它的发展潜力是相当大的。

Виктор С.

Copyright Reserved MONIES.CA 2014

大麻股(A Marijuana Related Stock)

A Stock to Watch:  GW Pharmaceuticals PLC  (GWP : LSE)(GWPH: NASDAQ)

GW Pharmaceuticals PLC(GWP)乃一间英国制药厂,现时其单一产品是Sativex ,乃由大麻提练出来的一种药用喷剂,公司拥有英国政府许可的秘密大麻(Marijuana)种植场,经多年开发及临床试验,产品Sativex已面世多年,药物主要用于治疗多发性硬化症(Multiple Sclerosis)引發之痉挛。现时主要市场是欧洲多个国家。过去公司曾尝试将产品销售美国,但美国的临床试验得不到满意效果而得不到美国药物管理局之批准。及后公司与一间在美国已有销售基础的日资私人大药厂Otsuka Pharmaceutical Co. 合作研发产品,公司并指定Otsuka为其美国代理商。现时GWP还不断与Otsuka合作改良大麻品种及对从大麻提取出来的不同成份作积极的研究,并展开临床试验,尝试扩展产品用途的领域,如治疗末期癌病痛楚,缓解癫痫发作等等。

GWP发展及锁售药品已超过十年,现Sativex在医疗界广为人知(美国不少吸食大麻人仕,更以Sativex的疗效为例,争取吸食大麻合法化),公司亦於最近选择了拉叮美洲的代理, 相信正式进入美国市场,将计日可待。而大麻对多发性硬化症(Multiple Sclerosis) 的疗效亦长久得到专业学者的认同。因此GWP是一间甚有发展潜力的公司。

Виктор С.

Copyright Reserved MONIES.CA  2014

A Stock to Watch: OPAY(一间百折不朽有前途的网上汇款及电子支付平台的上市公司)

A Stock to watch: Optimal Payments PLC (OPAL traded in LSE)

This is a money mover and payment gateway company established in1999 in Canada. Its original name was Neteller. The company took advantage of the online gambling poker boom in 2003 and the exit of Paypal’s from the online gambling market as an opportunity to enter the online gambling market by providing money transfer service. The company is not by itself an online casino.

The company established a service center in Calgary targeting the US market. It was then the leader in moving money for online betting sites. In 2004, the company went public in AIM with a capitalization of £240 million. In 2005, the company processed $7.3 billion worth of financial transactions reporting a revenue of $172.1 million and a net profit of $91.5 million.

At that time, the company derived close to 90% of its revenue from market in the United States.

The good days of the company were over in 2007 when the US government sudden arrested the company’s founders when they were in transit in the United States while travelling and charged them for money laundering. They were only released after the company paid for them a $136 million fine. After this event, the company completely exited the US market.

Share price of the company plummeted from its peak of 760p to 50p. The Calgary service center was closed forever.

Its founders later rebuilt the business by merging with Optimal Payments, a payment gateway company and diversified its services from the online gambling to services for transactions of other merchandizes and created a popular money storage Mastercard for conveniently carrying money across borders.

In recently years, the US government gradually changed its rules and allowed online gambling to take place within the United States though it is to be regulated. Optimal Payments quickly teamed up with Casino operators such as Caesar Palace which established an online operation Caesars Interactive Entertainment  and gaming hardware and software provider Bally Technologies, Inc. While till now, no one residing in US can sign up an account for money transfer with Optimal Payments, the company can still bring clients outside US to play games on the US sites to benefit the US economy.

Given the recently price performance and the large volume of transactions of this stock, it is not unwise to speculate that business of this company has some break through and has substantially improved. Whether one decides to hold this stock or not, it is definitely interesting for one to follow the story of this stock. Unlike the early years, risk of holding this company is reduced because although transfer of money for gambling site is still bread and butter of this company, the company has diversified significantly and successfully that now about 40% business of this company is not related to online gambling. That 40% cannot be easily killed.

Виктор С.

Copyright Reserved MONIES.CA 2014