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Cybercash & Digital Cryptography

     If you are interested in cryptocurrencies you might want to check out this company "Cybercash."

     You can read about it at Wikipedia, which notes that CyberCash obtained an exemption from the Department of State regarding the U.S. government restriction on the export of cryptography outside the United States. Cybercash shares jumped 66% on the first day of trading. This is the cover of the prospectus and graphic on the first page for visualizing Cybercash's value added proposition.


     If you are intrigued and you are wondering why you never heard about Cybercash, it may be because you are relatively young. The problem with getting exciting about this story is that the IPO for Cybercash was February 15, 1996, not 2020 (wikipedia has it on the 19th, but it was apparently 2/15). What happened to Cybercash? The company filed for Chapter 11 bankruptcy on March 11, 2001.

     So why do I bring up the story of Cybercash? The main reason I bring back the memory of Cybercash right now is because the idea of digital payments and currency using cryptography is not only not new, it's a very old idea, with a history of failure. In Chapter eight of my new book The Peaceful Investor about Day Trading, I point out the cryptocurrencies are not investments (nor are traditional currencies), and later in Chapter 27 about Crisis, Opportunity, and Bubbles I discuss cryptocurrencies in more depth.

     I came across this prospectus (and some others in my garage), which caused me to think back to 1996. I was working for an investment banking firm and was in the process of learning about this fascinating new development called the World Wide Web. I browsed the Cybercash prospectus and was intrigued, but not nearly as much as by the prospectus for this really interesting new company called Yahoo! That was the one and only time I ever walked into my bosses office, dropped a prospectus on his desk (Yahoo!, not Cybercash), and said I think this is going to be huge. My boss, Lewis J. Kaufman was a former Partner of Goldman Sachs and wasn't sure what to make of it. Neither of us bought the stock, but over the following years he often noted that I had tipped him off and been right about the coming internet explosion.

     Are there reasons to buy cryptocurrencies? Actually there are several logical reasons to buy cryptocurrencies, which I discuss here (and my tiny bitcoin related purchase), but I suspect most of the people buying un-tethered cryptocurrencies are speculating that they will be able to sell them later to others that are more foolish than they are.


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