Reggie Middleton - Bitcoin and Ultra-Coin

Reggie MiddletonReggie Middleton is an entrepreneurial investor involved with Ultra-coin who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analyst reports.


Trace Mayer: Welcome

Reggie Middleton: Thank you.

Trace Mayer: Welcome back to Bitcoin Knowledge Podcast. I got a special guest with us today, Reggie Middleton. Welcome, Reggie.

Reggie Middleton: Thank you.

Trace Mayer: Now you operate the Boom Bust blog, right?

Reggie Middleton: For 7 years I had Boom Bust blog which was a fundamental and global macro research analysis and opinion blog. Very recently I’ve decided to wind down publication there because I’ve dove head first in the big wide world.

Trace Mayer: You ain’t got lost on the rabbit hole, huh?

Reggie Middleton: Yeah.

Trace Mayer: Now I’m really excited with this ultra-coin project that you’ve got going on. The website is, right?

Reggie Middleton: Correct. Now, to be clear there is unfortunately an alt coin by a very similar name, and there is some confusion. So to be clear, my company’s name is Veritaseum. The product is ultra-coin and the website is

Trace Mayer: Okay. I mean, there have been all types of confusions. There’s like an ether coin with the Ethereum, but it’s not related to it at all. So we want to make sure people go look at this, it’s Now what is it that you’re attempting to accomplish with this ultra-coin project?

Reggie Middleton: What ultra-coin does is it’s not a specific coin. It programs the bitcoin protocol. The bitcoin block chain. So we take bitcoins. We use the bitcoins grid which is a programming language for bitcoin and we tell the bitcoin to imitate the business functions of X, Y, Z, industry and so the products are each industry that you go after. With the first industry being what we consider low hanging fruit and that’s Wall Street. Wall Street is a low hanging fruit because for the last 30 years despite a dramatic increase in efficiencies through technology such as the Internet, Wall Street offerings have pretty much remain stagnant while bonuses have been shooting through the roof in composition and offerings to consumer even though the product to be portion has been stagnant the price has risen faster than perhaps any other consumer consumable including for the last three years faster than income itself.

Trace Mayer: Yes, so we’ve got this bitcoin. I like to say, you know, we’ve got gold and gold is the same as it was two thousand years ago as defined on the periodic table. So it’s limited in amount, but it’s not extensible. Then we got the dollar that’s extensible, but not limited in amount and now we’ve got bitcoin that is extensible and limited in amount. By extensible, we mean that’s like a software term. We can keep building or extending the software. We can build new features into it and so with bitcoin we’ve got distributed consensus or distributed trust and we’ve really got programmable trust and that’s what you’re doing with ultra-coin. You’re intensifying or you’re building on using these features of bitcoins programmable trust to go after the low hanging fruit of Wall Street. What do you exactly mean by that? Like, are we talking about buy shares of stocks or bonds or other financial instruments? I mean, like give us an example.

Reggie Middleton: An example is you go through the website, you go to, you click download, you pick the platform of choice, Windows, Mac, Unix or Android and soon iOS. You download the appropriate wallet and it a bitcoin wallet. It’s just so uber smart bitcoin wallet. You open it up. You fill your bitcoin in and then you can trade among seventy-five thousand plus securities. Any asset class from any location on any exchange from around the world, twenty-four hours a day and you trade peer-to-peer so you don’t go through exchanges. You don’t go through brokers. You don’t go through Merrill Lynch, Citibank, New York Stock Exchange, NASDAQ. You take in bitcoin. You are turning the bitcoin into a derivative representative of say, pot bellies or gold or silver or Apple stock.

Trace Mayer: Or Apples shares? Okay.

Reggie Middleton: Or I.B.M. stock or treasury bonds or the green one or the Euro. You can actually trade pairs. You could go long or short. Or you could do much more creative things. So instead of going long Apple stock because you’re bullish in Apple, you could go long Apple, but short Samsung. So you receive Apple value and this is called value trading, a new paradigm. We see the Apple value and you pay Samsung value. And that’s in the same contract. So at the end of the expiry, you pick whatever expiration you want from a seconds up until years. At the end of the expiry as long as Apple did better than Samsung relatively you profit. You profit by the amount that it did better.

Trace Mayer: Are these like contracts for difference mainly?

Reggie Middleton: Theoretically, it’s swaps, swapping value.

Trace Mayer: So they are functioning like swaps and they settle in to bitcoin.

Reggie Middleton: Right. Bitcoin in, bitcoin out.

Trace Mayer: Bitcoin in, bitcoin out.

Reggie Middleton: Right.

Trace Mayer: So they all settle in to bitcoin and how do you pull in the prices? Like, how do we know that the Apple value or the Samsung value is accurate?

Reggie Middleton: The price pulled in through our server. The server acts as an Oracle as defined in the bitcoin whitepaper and it gives you instructions of putting the contract together, the smart contract and it shows the price to the client. The client can also read the price independently itself from the source. So you can do your own audit and which one of things that make this spectacular is that our server does not hold or touch any of the assets at all. So you have 400 bitcoin in your wallet. I have 600 bitcoin in my wallet. We decide to enter in a contract for 100 bitcoin. None of that bitcoin goes through out server. Our server doesn’t have any control grid. You can offer our server the ability using multisig to put you into a contract if your wallet’s not online. But because of the multisig authority you still cannot abscond with it. You can’t lock it up. You can’t steal it. The contract is edged in stone. True zero trust. That is in contrast to token based solutions which basically rely on something besides a block chain. I mean, relying on something besides the block chain, you don’t have zero trust. For example, we take you into a contract with me. You receive Apple and pay Samsung. I receive Samsung and pay Apple. We enter into the contract, three days later there’s an earthquake in the East Coast, okay. You could simply hit a button trace contract, it goes out the block chain. It shows you exactly where the funds are sitting in the block chain. You either always have it your personal wallet or theoretically the funds are leaving your wallet, but they are locked up in a block chain. Or you could go to the block chain and see exactly where the funds are. There is no time when you don’t have either control or full awareness of where the funds are.

Trace Mayer: So like using this you’re able to control the private keys?

Reggie Middleton: Yeah, each user has their private keys.

Trace Mayer: Each individual is able to control their own private keys, but then enter into these smart contracts with other users, but do it in a complete peer-to-peer way.

Reggie Middleton: Right.

Trace Mayer: So you’re not going through like an Etrade or an Ameritrade. I mean, you’re going through the ultra-coin server which is acting as the Oracle to pull the price data, but you’re not actually transferring any signing authority via the private keys to ultra-coin.

Reggie Middleton: Right. You’re not even going through ultra-coin. Ultra-coin acts as basically the messenger where it takes the information and fill the small contract data to the users. Now in that fashion theoretically you have to be online twenty-four hours a day to accept the contract. You can give ultra-coin servers the authority to hold one key out of a multisig. So if you’re not online, but we say we want to enter in this contract on these terms. The ultra-coin server can allow that contract to be entered into on your behalf, okay. But only with the instructions that you give it and those instructions are limited to only entering a contract. So ultra-coin, if the government decides to confiscate our servers, if we get hacked, if a virus attacks, we still don’t have access and never want to access your funds. Your funds can never be taken, compromised, et cetera. You can have a worst case scenario where the deal is compromised and then you have to roll back to where you were in the beginning. So you don’t lose your coins, but the particular sell contract if compromised will roll back. An example of that compromise would be if you have a massive earthquake and everywhere that the ultra-coin servers happen to be is destroyed.

Trace Mayer: Is affected, yeah.

Reggie Middleton: Yeah. And that’s difficult if you design the servers correctly because you have geographic plus logical faraday dispersion, et cetera.

Trace Mayer: Now you drop the bomb that a lot of people might not have caught. You said and this was a couple minutes ago, you said that the ultra-coin servers are acting as the Oracle as talked about in the whitepaper. So you’re saying there’s – Satoshi envisioned things like this happening even when the whitepaper was originally written. Even when Bitcoin was originally architected. Can you expand on that a little bit?

Reggie Middleton: Let me tell how I got started. I’m a finance guy. I’m a nerd. I’m a technologist, but I’m not a engineer, developer. I’m not a mathematician. I know math because it comes to Spreadsheets, you know, balance sheets, et cetera. One of my clients asked me to look into bitcoin for two years and I didn’t. Should have, but I didn’t, okay.

Trace Mayer: Bitcoins if you did.

Reggie Middleton: That is very true. But when I did, December 23rd of 2013, I took a look at it and I realized the media is the media. So I want to go straight to the source. The first thing I did was look up the bitcoin whitepaper. Once I read that you have a distributor – a decentralized distributor architecture, but it’s on Rail and you have the block chain and you could program the bitcoin. Why isn’t anybody doing this? So I called the different bitcoin – well-respect authorities, but those who are well-respected in the bitcoin community and I asked them why and I was getting various reasons. It’s beta, et cetera. But there are examples of it out floating around that worked. Satoshi was talking directly to people such as myself. If you focus on the small account of value which is what a bitcoin is a lowercase B. What other people call it currency you are missing the entire point.

Trace Mayer: Yeah, because currency is just one application of how this new virtual commodity can actually be used or applied, right?

Reggie Middleton: It’s not an application. It is the vehicle for communicating within the protocol. So that’s like looking at the internet and thinking of packets, information packets, that is what the internet is about. You know, most people don’t even know what the information packets are, but even if you do you realize the internet is so much greater than the information packets.

Trace Mayer: Exactly.

Reggie Middleton: The actual packet that you use to ping.

Trace Mayer: Yeah, because you’re just sending that packet over like TCP/IP, for example, but the Internet’s even larger than just TCP/IP.

Reggie Middleton: Much larger in terms of actual applied use.

Trace Mayer: Much larger, yeah. Yeah, I mean we could apply made safe across the “internet”. We can apply a whole different range of protocols and I mean, Satoshi talked about this how bitcoin is, it’s this virtual commodity where you’re able to transfer value over a communication channel. So that’s really what you’re getting at, right? Like, we’re able to use these –

Reggie Middleton: That’s it. 100%.

Trace Mayer: – logical or physical communication channels be transferring value and now ultra-coin is getting into using that in a very novel and innovative way.

Reggie Middleton: Right. In a way it’s the way it’s always been done basically derivatives, but it’s using – it was –

Trace Mayer: Yeah, but it hasn’t been done with distributed trust, right?

Reggie Middleton: Exactly. And that’s what’s new. What we did was, I created this from scratch to be 100% purely. They call it bitcoin 2.0, but I disagree with that. Because bitcoin is someone’s data. Bitcoin’s not even 1.0 yet.

Trace Mayer: Bitcoin’s not even 1.0. It’s 2.0.

Reggie Middleton: And I’m not good at math, believe it or not, but I know that one comes before two so. Before we get to two, let’s do one first.

Trace Mayer: Well, it depends on non-real numbers, right?

Reggie Middleton: But we can get to – if you consider bitcoin 2.0. This is a pure new paradigm solution and product. And so the swaps, the derivatives, the entire concept is based upon this particular technology. Wall Street is first. It’s the low hanging fruit. We have law, intellectual property, real estate, insurance, health care. We have an entire string of business plans and products in tow. We are writing patent applications behind us for protection because the industries that we are going after and make no mistake, we’re looking for pure disintermediation. We’re taking the middleman that extracts rent without adding value and we’re eliminating the need. Not only technically eliminating the need for them, but we are marketing the fact that he is no longer necessary.

Trace Mayer: So I mean, and there are a lot of different middlemen all throughout that chain. I mean you’ve got regulators. I made the statement I think I was one of the first talking about moving just one percent of offshore tax haven bank account assets and the bitcoin would move the price to like $2.8 million dollars per coin. When we’re using – if people use bitcoin to trade, like, you’re talking about there’s no centralized trust. It’s all distributed trust. Like who sends you a 1099 or the other tax forms when you’re trading in in this manner as opposed to trading on like Etrade, for example?

Reggie Middleton: Laws, regulations have to be totally rewritten. They were written – I compare it to transportation. You have traffic laws, parking laws, parking permit, et cetera that assume people will be driving cars or riding bicycles or driving a truck or a motor cycle.

Trace Mayer: Yeah, what about a hover bike?

Reggie Middleton: Right. You can think of in terms of a hover bike. You could think of interstellar space travel. You could think of interdimensional space travel. So what is the traffic ticket for going through dimension to dimension, going back in time? Now it sounds like science fiction except for the fact that you can now do that right now with bitcoin. Not interdimensional travel, but you could do intercontinental.

Trace Mayer: Yeah. But by analogy.

Reggie Middleton: Right. For instance, we take entire assets classes, entire assets and encapsulate the value into the block chain. We don’t take a token of the assets value. We take the actual value of the asset and fill it to the block chain. That changes the entire game. You have to rewrite and not only you have to rewrite laws, you have to rewrite the concept behind the laws.

Trace Mayer: Well, in a lot of ways, like, laws are just getting rewritten not in legal code but in software code.

Reggie Middleton: Right.

Trace Mayer: Because I mean, these contracts like execute we’ve got terms, we’ve got ways for them to settle. We’ve got a medium for them to settle in.

Reggie Middleton: And most importantly there are unbreachable. Our slogan is unbreakable promise, or in more legal terms, the unbreachable contract. If you have a contract that cannot be breached you by default have no need for courts, legislation.

Trace Mayer: Enforcement, remedy.

Reggie Middleton: Enforcement, administration and remedy are all the same entity right now.

Trace Mayer: I say what, I think we’ve gone over ultra-coin. We’ve made a very good case about what it is, like, proof of concept. Like we said, we’re still in beta with bitcoin itself. Ultra-coin is extensifying or even building on top of that. I got an email a few weeks ago from Greg Maxwell. He’s one of the bitcoin core developers and he asked me, you know, what features would you like to see built into bitcoin. So I’d like to ask you that question. What features would you like to see built into bitcoin? Like, what features need to be added to the actual core protocol that could make it more useful for some of these applications that you’re talking about? I mean you put entire industries. Like a lot of the entire function of the state. You’re saying we could we could put into the block chain so. I mean, do we need anything done to the core protocol to make this possible in your opinion? Like I mean, what should we do?

Reggie Middleton: Now that’s an interesting question. Believe it or not, nobody has ever posed it to me. The capability of bitcoin as it stands right now, I’m not even aware because the scripting language is simply stack-based scripting language, but if applied –

Trace Mayer: And it’s been intentionally limited because we don’t necessarily want to – I mean, like we can’t have –

Reggie Middleton: It’s non-Turing because you don’t want loops.

Trace Mayer: Yeah, we don’t want loops and like, things could get messy and we don’t want that to happen.

Reggie Middleton: But even with the limitations there’s a lot you can do. Even though I am obviously biased. I’ve heard that my particular product, our product, is one of most advanced products out and it is using just the bitcoin’s script. So with enough imagination plus intellectual capacity you can do a lot with what’s there. Probably for number one the biggest, the most important aspect I’d like to see added would probably be messaging. Some type of messaging capability inherent within the bitcoin protocol itself. So you could send explicit direct. I even call it messages, but communications within the bitcoin protocol.

Trace Mayer: So you mean something like what they’re experimenting with over in Bit Message for example?

Reggie Middleton: Right. Something like that. So you could have a bitcoin transfer or something very simple. You have a bitcoin transfer. You could send an explicit message in the bitcoin transfer it can be attached to, let’s say, you have it hashed. You got it verified so it can’t be changed, okay. So it could be a text message and that message can be a set of instructions written in regular plain simple English or Japanese, et cetera for the other side to receive. And have a guaranteed reception, guaranteed transmission and you have the inability to alter the message. That will go very far for the legal industry in terms of writing contracts because now that you have a smart contract that’s enforced through software, but you actually have the interpretation in English. Now you have limits in terms of and I’m not a developer, but you have limits in terms of what you put stuff into the block chain. But there are ways around that especially if you have the ability to send a message you could have each character represent, you know, something else in terms of having, I think what’s called, like –

Trace Mayer: Like an object.

Reggie Middleton: Yeah.

Trace Mayer: You know, so that we’re able to pull in a particular set of terms that are standardized.

Reggie Middleton: Right, represented by –

Trace Mayer: In the software codes already like written and standardized for all of that.

Reggie Middleton: So with messaging, you know, that opens up capability significantly. Now you can still do that, but the amount of thinking and coding that goes into it would be cut in, let’s say, a fifth.

Trace Mayer: Yeah, well that’s what we really want to do is streamline, automate as much as we can so that, you know, it frees up our human labor to be working on much more advanced things that require a little bit more of our creativity.

Reggie Middleton: Right.

Trace Mayer: Than just like pushing –

Reggie Middleton: Hopefully possible.

Trace Mayer: – paper around, right?

Reggie Middleton: Hopefully, positive things. You could free up – I anticipate about 50% of Wall Street labor especially on the transaction and on the creative side to be on the transaction side to be nonexistent within, I’d say about, 8 to 10 years.

Trace Mayer: Yeah, I mean, we can put all that into the block chain and automate it, like, you know we’re not going to be needing to send around hundreds and hundreds of pages on all the stock.

Reggie Middleton: So what happens to those people? There are two things. They can take their intellectual capital, some of which is significant, and go into a different direction or they can try and fight this innovation by using their intellectual capacity to muddy it, to create opacity versus transparency in pricing or in price discovery or anything else. Now that worked because coupled with the very strong marketing engine it’s called innovation. All the discussion here what Apple is doing with Apple Pay. But Apple Pay is not new.

Trace Mayer: Not even innovative really.

Reggie Middleton: It is not pervasive.

Trace Mayer: I mean, it is nice they’re starting to attempt to disintermediate like the Visas, the MasterCards and the payment system. Because they do tokenize the credit card and that token could then represent bitcoins instead of credit cards very easily. So I think it’s definitely kind of a step in the right direction, but you know, layering on more fees and payments space is just –

Reggie Middleton: You know, it should be unethical to the banks. The banks are liberally paying an extra fee for absolutely nothing. They already interface directly with the consumer. So to pay Apple five basis points, fifteen basis points to interface with the consumer which they already have seems nonsensical. The reason they’re doing it is Apple is very good at marketing, scares the bank saying you’re going to be left out. The banks could take this same fifteen basis points and create their own, you know, bitcoin solution such as I’m doing, but that’s not what happens.

Trace Mayer: That’s presuming that the banks are capable of like create anything new. I mean, what’s been the greatest innovation in the credit card or debit card market in fifty years?

Reggie Middleton: The boys.

Trace Mayer: We can put our own picture on our cards. I mean, that’s the biggest innovation we got. I mean, maybe bonus points or something.

Reggie Middleton: No, the bonus as in compensation bonus, quarterly.

Trace Mayer: Well, yeah. They get their bonuses. And ironically, you know I had always thought that, like, big retailers actually it was cheaper. You know they got more economies of scale, but I think that there is actually a form of reverse economies of scale at work here. Because I was reading in the Bitmat press release. They raised 14.5 million for a payment processor. They’re a bunch of former V.C. guys and they said that in some cases these retailers are paying 10% to be accepting the credit cards after P.C.I. compliance and the cost of hacks. And when you think about it, like, a hacker do you want to steal a database with three million records or do you want to steal a database with sixty million records or seventy-six million record. You want to Home Depot, Target, J.P. Morgan and so you get these reverse economies of scale work for their old, obsolete, held-together-by-duct-tape systems and a bitcoin disintermediation is all that.

Reggie Middleton: Right.

Trace Mayer: Like, you don’t need any of that and you don’t need to pay any fees.

Reggie Middleton: On that note, you know, our first product Ultra-coin value trading system. The second product is a payment system. Smart payments which itself as growing capabilities which means when you want to pay for something you re-disintermediate the payment processor in general and everybody connected to it. So you don’t need Apple. You don’t need Visa. You don’t need American Express. You need the person you’re paying.

Trace Mayer: And that’s it.

Reggie Middleton: That’s it. The values go through Bitcoin. You have a escrowing system which prevents fraud, prevents any child’s play because the main reason people default others or cheat others is to take their money. If you have a guaranteed loss at the attempted defrauding that cuts the attempts to defraud down 98, 99%.

Trace Mayer: Cui bono.

Reggie Middleton: Right.

Trace Mayer: Who stands to gain. I mean, if you don’t stand to gain why are you going to be not only trying to defraud somebody and risking, like, upsetting somebody only trying to defraud somebody and risking the like you know upsetting somebody in potential legal liability. I mean there’s just no reason to be doing it.

Reggie Middleton: This is direct loss of capital by defrauding. The defrauder loses and so that takes the incentive for fraud out.

Trace Mayer: And penalizes.

Reggie Middleton: And there are ways around that. Like, there are certain strategic players who will pay and take the loss to fraud others, but when you have a large system with anonymous payments you don’t know who you’re cheating or defrauding. So even the strategic players are taken out of the picture because it would take an awful lot of capital to defraud, you know, 450,000 people because they’re trying to get that one person.

Trace Mayer: Right.

Reggie Middleton: And their product is smart stocks, smart bonds where it basically unravelling the swaps and enable linked entries to sell when they get a swap which is basically selling equities or stocks, but they’re smart equity, smart stocks, smart bonds. You can issue an equity that stays automatically by default. You know, its nature is to pay X% dividend every X time even it’s quarterly contingent upon so many dollars of profit and that is guaranteed, written into the D.N.A. of the actual stock. So someone who buys that stock knows they would get that and you can have contingencies on except for when and then when you look at it you are what would be considered the prospectus is actually written in stone. You know –

Trace Mayer: Written in block chain.

Reggie Middleton: Or, written in the block chain.

Trace Mayer: Written in code.

Reggie Middleton: Right. So this hopefully should be a boon and we’re actually working with the legacy system and we’re going to try and get ICC acceptance. If this works out we’ll be doing this between 10% to 20% of the cost of each underwriting at most and probably significantly less than that. Again, disintermediation. So we have the value trading, the brokerage, disintermediation. On top of that use of asset management. If you got swaps and you could specify exposures instead of buying into a hedge fund or a mutual fund, you could buy into a fund that is controlled by somebody who doesn’t get paid by commissions. He gets paid solely for his advice. So now he has no incentive to lie. You take that fraud incentive out. And he could give you specific insights as to value depending on what you want. If you’re a CEO of a steel smelting company where you have specific exposures to aluminum, to steal, to electricity, to coal, to, you know, certain interest rates, et cetera, G.D.P. of the countries that you deal with in a country that you operate it. You know laser precision in terms of exposure and you create a portfolio out of that.

Trace Mayer: And risk management. Like, they’re able to carve it out just –

Reggie Middleton: Exactly

Trace Mayer: – atomically.

Reggie Middleton: Yeah. So you have hedges, you have assets, you have cash flows, specifically catered to your individual position. This could be done using the legacy method at about 10% per swap and then you have to worry about counterparty risk, credit risk, etcetera, plus the fees. So value trading, payments, smart securities and that is in general, step one, re-taking out Wall Street. Then we have to go off to real state, law, intellectual property, health care is going to be very interesting. Get my bird flu shield.

Trace Mayer: Security services, and it’s been a fascinating interview. Thanks so much for being with us, Reggie.

Reggie Middleton: Very welcome.

Written by Reggie Middleton on December 24, 2014.