Pretty much every publisher has jumped on the cryptocurrency bandwagon, and this latest one shouldn’t come as much of a surprise… Jim Rickards has styled himself as a currency guru, with his “Currency Wars Alert” and plenty of pitches about the impending demise of the dollar or other major currency moves in recent years, and now he has launched a new service about cryptocurrencies with Agora.

That service is called Rickards’ Crypto Profits ($2,000/yr), and he says he’ll be providing one recommendation per month… but that it’s just now that he has decided to recommend his first cryptocurrency.

So what is it? That’s the deep, dark secret that we’re teased with in the ads. Here are the clues he drops:

“A few days ago Jim Rickards told me he’s ready to make his first ever cryptocurrency recommendation…

“It’s a tiny crypto that’s trading for just around $0.70… [N.B. let’s check the price again before we record. Even if it’s higher, we still expect it to go much higher. It’s actually $0.53 as of Wednesday morning; a better entry point]….

“Jim says this window of opportunity to cash in BIG could close as soon as next Monday.”

OK, so there’s the urgency that every good teaser pitch requires — they know damn well that if you say, “this might rise 1,000% in a year” that you will probably take your time to think about it before giving them your credit card number… maybe even talk it over with your spouse, do some research, you know — be thoughtful.

But if they say “you’ve only got a few minutes to decide, this will be old news by Monday!” — well, then they’ll be able to convince quite a few folks to jump over the fence and come join their party right away, without looking around to see if maybe there’s an angry bull on that side of the fence… or even just a lot of cow manure to slip on.

That’s made even worse by the wild and crazy cryptocurrency markets, of course, since everyone has heard stories of the neighbors or in-laws or whoever else that got 10,000% returns on some cryptocurrency or another and is living on easy street… the “FOMO” trade (fear of missing out) is helping to drive even the stock market to wild new highs, but in the cryptocurrency world it sometimes seems like FOMO is the only thing driving prices. That discourages research, thinking, and caution, and encourages fast decisions and rash choices… like, for some people, plunking down $2,000 for a completely nonrefundable subscription like this new one from Rickards.

So at least slow down for a moment and think about that: How many things would you buy, sight unseen, for $2,000, with no recourse if it turns out that it’s junk? (or is even just completely different than you expected?) Some of you can afford that and would write it off with a laugh, I’m sure, but that’s a lot of money for most of the folks who see these investment newsletter ads — for the average person in the US, that’s about three weeks of take-home pay (or, worse, most of the money they had set aside for retirement savings for the year).

But enough preaching from me… what is this cryptocurrency that Rickards is pitching? Here are the hints I gleaned from the pitch:

“In the last few months of 2017, this coin already grew from around a penny to approximately 70 cents per coin….

“This $0.70 cent coin is better than bitcoin.

“Bitcoin doesn’t hold a candle to this coin….

“Some publications are already calling this crypto “the biggest winner” of 2018.

“CNBC calls it the “new hottest cryptocurrency of 2018.”

“And Fortune says we could see $87 billion flowing into this tiny crypto by next year.”

But the big urgency here, we’re told, is that IBM is “backing this currency” … and that there’s some kind of news expected:

“Soon, IBM is going to make a massive announcement regarding its plans with this coin…

“It could happen as soon as next Monday.”

And there is apparently other adoption happening, too:

“Deloitte has started implementing this coin for internal transactions and witnessed a 40% reduction in their costs….

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“This is not just some random no-name company.

“It’s Deloitte, one of the largest accounting and consulting companies in the world.

“If you’re running a bank, wouldn’t you like to cut your costs by 40%?

“Of course you would.

“That’s why a dozen banks have already lined up to adopt this coin…

“With more on the way.”

So what little cryptocurrency are we being teased with here? This is almost certainly the Lumens token, from Stellar (often the cryptocurrency itself is called Stellar), usually abbreviated XLM. This one has grown quickly, now it’s a top-ten coin when measured by the size and dollar value of the circulating supply (the “market cap”, per coinmarketcap.com, is about $8.5 billion now — still tiny compared to bitcoin or ethereum, which together account for more than half of the dollar value of all cryptocurrencies put together, but much larger than most of the thousands of “tokens” that are vying for cash and attention).

And yes, Stellar has partnered with IBM and Deloitte — the goal is to build a network for fast transactions across currencies, with Lumens being the interim currency that is used to make everything work quickly. It is a cryptocurrency, but it’s not one that’s built on mining or on work — the participants in the system don’t earn tokens, but everyone who wants to use Lumens to facilitate transactions will need to have some inventory of the tokens in the future. The security of the system seems to be built on their own “consensus protocol,” whereby different participants in the network and choose who to trust to verify transactions. So it’s a blockchain, a public and distributed ledger still, it’s not a private or proprietary network (like Ripple is, apparently), but it’s one that is supported by partners and participants, not by miners who compete to participate.

Sounds kind of interesting as a concept, though I have no idea what kind of math you have to do to try to determine what a “lumen” should be worth. The transaction fee is set at .00001 XLM for each operation, and I guess the assignment of “trust” and the actual sending of a payment would be two operations, so that’s .00002 XLM for a basic transaction, or at the current price of something close to 50 cents per XLM “token”, that would be a fee of one thousandth of a cent. Each account is required to hold a reserve of XLM as well, at least 0.5 XLM (about 25 cents), so in order to participate in this network as a sender or recipient you’ll have to have at least a quarter “invested” in Lumens. Both of those requirements seem to be set solely to discourage bad actors and hacking, the actual fees go back into the pot and, essentially, help to fund stellar’s R&D and create the 1% annual inflation that is written into the network, from what I can tell.

So yes, it is a real cryptocurrency that is being tested by some real technology and financial services companies — though those relationships are almost certainly not exclusive in any way (IBM is doing a lot of blockchain work, presumably with many of the existing networks as well as in building their own proprietary software). I have no idea whether that means XLM has any kind of edge on becoming the foundation of the global money-transfer system in the future, every large bank and financial institution is researching blockchain integration or implementation or creating their own blockchain-inspired protocols and it’s probably going to be a while before any consensus emerges about what blockchain or cryptocurrency protocols become valuable business tools or get effectively “built in” to the next generation of internet protocols.

Here’s how Stellar describes itself, in bitcoin terms:

“The main differences between the Stellar network and Bitcoin are the following:

• Stellar is based on a consensus algorithm rather than mining. This means transactions confirm in a few seconds.
• The supply of lumen increases at a fixed rate of 1% a year.
• Stellar aims to let you transact in your currency of choice (fiat or digital).

“The hope is that the currency itself will be mostly a behind-the-scenes currency, and that the Stellar network will help provide more liquidity between currencies.”

They even have the beginnings of a graphic novel that illustrates their notion of “consensus,” which even a dummy like me can appreciate.

I can’t tell you which cryptocurrencies will go up or down, of course, because there’s almost no economic rationality tied to any of the cryptocurrencies. I can’t tell you with any certainty why bitcoin should be at $100 or $1,000 or $100,000 per token, which means that, as far as I’m concerned (and yes, my brain is limited in its ability to process these ideas), these are simply speculative barometers of sentiment.

Which isn’t to say that blockchain or distributed ledgers are a passing fancy or a fad — I do think there’s a chance that they could form the foundation of the next internet, and that we’d all probably be better off if that’s what happens… but drawing any kind of line between that sentiment and a price, in US$, for any particular cryptocurrency is nonsensical to me. And any guesses about “valuation” are, frankly, even tougher for a token like Stellar Lumens, where there is not even a reward to be earned for building and maintaining the network.

What does that mean? Most cryptocurrencies are, to my way of thinking, really a distributed reward system, with the benefits of creating a new web protocol “token” being shared among those who invented it, those who work to support it (the miners who verify transactions), and those who fund the company that’s developing it (the ICO “investors”), and the “real” part of that work, (the micropayments that miners receive for verifying transactions, for example), has been completely overshadowed by the speculative folly of bidding up the future value of those tokens.

So I get the idea, and it makes sense and we could see some really powerful technological changes in the next decade if and when blockchain technology is used to dramatically improve and democratize the internet (and make transactions far faster and safer, obviating the need for all those “trusted” counterparties like banks), but I still can’t tell you whether ethereum should be worth $5 a token or $50,000, or whether Stellar Lumens and its consensus-based verification model will be in huge demand. To me, that’s all fuzzy guesswork (I do own small chunks of a few of the big cryptocurrencies, ethereum and bitcoin and bitcoin cash, but I’m fully accepting of the fact that those positions could go to zero overnight).

And with that, dear friends, I’ll pass it back to you to discuss — I can tell you that Rickards is almost certainly touting Stellar Lumens, and he thinks IBM might make some big, loud announcement about it sometime, and IBM is already a big participant in the nascent Stellar network of “validators’… but I suspect that “announcement” talk from Rickards is as much about inspiring your quick action in pulling out your credit card as it is about any fundamental reason why the Stellar Lumens story will change overnight.

So… whaddya think? Excited about Stellar Lumens or any of the other blockchain or cryptocurrency tokens out there? Have a valuation argument you want to make? Think I’m a knucklehead? (You’re not the only one who has that sentiment, don’t worry.) Our ears are open, please fill ’em up with a comment below.

P.S. The most rational explanation I’ve read for bitcoin and blockchain and the potential value that many of us see in these ideas (if not necessarily in any specific token) was in the New York Times Magazine last week — definitely worth checking out if you’re just trying to get your head around the whole crypto topic in general.