News Fix: New York Stock Exchange Parent Company and Facebook Make Big Moves into Bitcoin and Blockchain

It’s hard to keep up with the news these days. Between CNBC, Bloomberg, The Wall Street Journal, TechCrunch, Facebook and Twitter – just to name a few – there’s so much information flying around that it’s become hard to tell what’s really important… and what’s just noise.

The cryptocurrency news world is even more complicated. The mainstream media doesn’t quite get it. And searching through all of the crypto news sites can be a slog.

The bottom line is, whether it’s cryptocurrencies or pre-IPO startups, it’s hard to find and track reliable sources of information.

That’s where our News Fix comes in. Each week, Early Investing will round up the most important news stories and deliver them to your inbox on Saturday in one easy-to-read email. We’ll let you know what’s being reported and why it’s important. And we’ll offer some context to help you make informed decisions on your investing journey. And hopefully, we’ll have some fun along the way!

Now, on to the News Fix.

  1. The really big story this week is the parent company of the New York Stock Exchange is working on creating an online bitcoin trading platform for large investors (New York Times). The plan is to use “swap contracts” to allow big investors to buy and hold bitcoin.

    “The swap contract is more complicated than an immediate trade of dollars for bitcoin, even if the end result is still ownership of a certain amount of bitcoin. But a swap contract allows the trading to come under the regulation of the Commodity Futures Trading Commission and to operate clearly under existing laws – something today’s bitcoin exchanges have struggled to do.”

    Yes, it’s really weird (Bloomberg) that a decentralized currency needs a storage solution for institutional investors. But it does solve a lot of problems.

    More importantly, this sets the stage for institutional investors to enter the crypto marketplace. Big investors – hello Goldman Sachs (CNBC) – have been ramping up on crypto while waiting for a regulated crypto trading infrastructure to be built. This is a major step in that direction.

  2. Almost as seismic as the New York Stock Exchange (or at least its parent company) planning a move into bitcoin is Facebook getting into blockchain (Recode). David Marcus, who had been running Messenger (Facebook’s standalone messaging app), is leading Facebook’s new effort.The two things you should really know about Marcus are that he used to be the president of PayPal and he’s on the board of cryptocurrency exchange Coinbase. That’s right, a payments expert who loves cryptos is in charge of Facebook’s new blockchain team. Can you say Facebook Coin?
     

    While Facebook Coin may be the end game, WhatsApp, which Facebook also owns, might be Facebook’s guinea pig. Telegram, which competes with WhatsApp, raised $1.7 billion through its initial coin offering. And WeChat, which is the dominant messaging app in China, has built an entire mobile ecosystem around its payment solutions.Facebook could also use blockchain tech to restore user confidence in its privacy policies in a transparent manner. There’s fertile ground for Facebook to mine here.
  3.  

  4. Normally, Berkshire Hathaway losing its marbles over bitcoin would be our top story. Between CEO Warren Buffett’s “rat poison squared” comments (CNBC) and Vice Chairman Charlie Munger’s “harvested baby brain” comparisons (Yahoo Finance), there’s a lot to unpack. But as our own Adam Sharp cogently explains (Early Investing), this is really about Buffett and Munger yelling at kids to “get off their lawn!” and defending Berkshire Hathaway’s bank-heavy portfolio.

Hope you enjoyed this week’s News Fix.