As IF Times

link What’s Not Being Said About Bitcoin | TechCrunch.

There are lots of smart people out there who seem to be making money (literally) in the new murky world of Bitcoins.  I’ll confess that I don’t have any good grasp of how this new world digital currency works, but there seems to be some semblance of acceptance by those pioneers at the leading edge of this stuff.  Even retailers and service providers are effecting transactions using bitcoins in parallel with plain old money.

Intuitively, it’s a stretch to think that a currency based on nothing can actually be a medium of payment for goods and services.  In addition, if you can find or ‘mine’ this currency just by fooling around on the internet, it seems just a bit iffy for us hard asset types.  We are reminded of the story of Jack and The Beanstalk.  To summarize the story for those not born in the 1930’s, the mother of Jack was none too pleased when he returned home with a handful of beans as payment for the family cow instead of hard currency.

As it happens, the beans were not ordinary, but of the magical kind and all worked out well for Jack, who was in danger of being sent to an orphanage until that happened.  Eventually, Jack winds up stealing gold coins, eggs and a harp from an unfriendly Ogre and then lives happily ever after with his mom.

We haven’t the slightest idea  if the real life Bitcoin stories will wind up with modern day Jacks being eaten by Ogres or by them scoring great wealth.  It is however noteworthy that Jack’s eventual wealth was acquired by theft and bravery rather than menial work.

link Facebook Inc NASDAQ:FB Market Cap Surpasses that of Amazon.

When you review the top stock market darlings over the past year or so, (with the exception of Tesla Motors ) one common theme stands out conspicuously.  The high fliers are companies tied to “social networking”.  Facebook, Twitter, Zynga, LinkedIn and of course the recent $19 billion dollar acquisition of What’s App. All of these are companies are expected to be advertising bonanzas for ad sellers to their websites.  In many respects, Google and Apple are also tied into social networking.

In essence, these stocks are extending the high school experience and capitalizing on it in ways never before imagined by the cool kids.  They are gossip stocks, preying on people’s apparent need to know what everyone else is doing.  Everyone has become Gladys Kravitz.  The difference is that now, the circle of snooping is much larger and someone gets paid to allow people to snoop.  Imagine this same business model in a time before the internet if you wanted to snoop on the activities of football captain “a” with head cheerleader “b”.  Your best pal would spill the beans, but before doing so, recites an ad to have a Coke or buy a Chrysler.

This is the core business model of the gossip stocks.  The companies all provide a means to socially interact among other people digitally, since typing letters on a small screen is the most natural way to communicate.   In order to do so, you have to navigate billboards that advertise purses, shoes and electronics as well as virility and baldness cures.  The billboard people pay untold millions of dollars to the gossip companies for providing the eyeballs.  Someone’s very smart…or maybe not.  I’ve never heard of anyone making a purchasing decision based on a banner ad on their Facebook page, but then again, I’ll have to check that on Twitter.  Don’t people just ignore them?  Aren’t they like the toss away fliers you get when entering a Costco?

It’s amusing to survey a brief sampling of the total market capitalization of some of the best known American corporations and compare them to the high flying gossip stocks.  First, we list the gossip stocks:

Facebook   105 billion dollars

Twitter   30 billion dollars

Zynga   4 billion dollars

LinkedIn  23 billion dollars

Now some notable well known corporations:

Google   404 billion dollars

Apple  468 billion dollars

Exxon 416 billon dollars

IBM  199 billion dollars

Coca Cola  163 billion dollars

Microsoft   315 billion dollars

McDonalds  96 billion dollars

Kraft Foods   32 billion dollars

General Motors 58 billion dollars

With the exception of perhaps Google, the companies listed in the second grouping have been around for decades, have deeply rooted infrastructures, employ armies of people and produce some of the most well known and consumed products in the world.  These dinosaur companies are on their way to becoming eclipsed by the new gossip industries.  It may be only the beginning.  Imagine what happens when someone invents a way to communicate merely by voice.