Table of Content
History of Poker and Business (in the Northwest US)
The market of cryptocurrencies is young, especially given the fact, that a lot of people are still uninformed or yet have to own a wallet or come into contact in any way. But also within the market people are still trying to figure out the perfect solution, to the market itself, to different needs and problems, to be seen in some ways by hard forks…
Yet we also see daily new ideas to use the blockchain in different ways for different uses, we see new coins, that cater to customized needs, and so on… a new market, exploding with ideas, sparking innovations, giving people opportunities, that nobody has even thought of before. This is very comparable to the birth of future exchanges!
The Northwest US or the Northwest Territory was to begin and up until the middle of the 1800s a rural, sparsely populated area, it was a vast wilderness, that had more swamps than roads, not much infrastructure of any kind actually.
The Area was further in constant warfare for almost all of the 1800s, either by the Indian Wars or on a smaller scale, but no less just as devastating by private groups, terrorizing the area. At the beginning of the 1800s, it was one of the poorest areas worldwide.
So by any means an uninviting place. So who lived there? People that had to, who found protecting in this area, because the law wasn’t as present there: Mostly Indians, pushed back from the east coast and the south, escaped slaves, French-speaking Canadians, who were pushed back by the English, people who fled their dept or the law. So this uninviting area was populated by somewhat uninviting characters.
Now looking at a survey that compared the wealth of individual Americans in their own economy and time, 19 out of the top 100 came from this region, building their wealth between 1850-1880! They weren’t just wealthy, they are today household names like Rockefeller, Pulitzer, Hurst, Armour, Swift and so on, they were innovators, inventors, creators of the modern day economy and many other fields!
How was this possible, what happened? Poker! We first read about poker in the area about 1820, but not how it is played or by whom, yet how large sums of money were transferred!
The game itself is similar to today’s game, there is a voluntary blind, turn- and river card come at once since there is no betting after the flop. What holds up until today, is that it is a carefully designed game, based on science and very rigid principals!
How Future Exchanges Developed
Since these poker players actually didn’t hold any money, they turned to poker checks, which were often made out of clay, personalized for example by a thumbprint or any other identifiable marker.
At the end of a game, you would trade other players markers for your own, this was called ring clearing, in the hopes you were able to get all your markers back (not having lost anything) and even have some markers of other players left, which meant you turned a profit.
So you played with money that you have created yourself, being able within your poker community to trade these markers for goods or labour! Soon these same people created their own banks, since other people saw, that these individuals were trading with their own money. They did this, by simply announcing they had a bank, printed their own (rather crude) notes, used clay or twigs, just as they did while playing poker. These so-called soft money banks or wildcat banks worked out more often than one would assume, although these banks had no funds, gold or own capital to give security.
Not looking at Tether…
So now this area found a way to create their own money, which they could trade for goods and services, use for labour, etc which sparked a lot of economic activity! Businesses, shops, companies were built basically on twigs and clay! Yet soon another financial feature turned up in the same area at the same time, created by the same people, poker players in general: future trades and future exchanges!
The similarities to poker are obvious, betting on stakes going up or down, based on gathered information and probabilities and at the end of the day you would trade your checks just as seen in the ring clearing… later this was actually done in the so-called „clearinghouse“!
Although future trades were bound to the agricultural market in the US up until the 1970s, the ideas, the innovation and possibilities this market sparked, seemed endless. Now it wasn’t just possible for someone who processed wheat to flower, to buy his wheat at one point in time for deliveries in the future, he could turn around, and sell it in the future right away, basically, he borrowed wheat, he didn’t possess yet! Soon people called future trades for all kinds of ideas, nobody has ever thought of before, like calendar spreads, or hedging new transportation ways, buy selling wheat at an old market by buying it at a new market, where crops are now delivered to.
Even though these new ideas seemed crazy, it was a much more efficient way to organize things, you had an internally generated credit, which by now was trusted up to a point, where nobody involved even questioned the system anymore and you had a far better information flow than anywhere else at the time!
Now they had created a market, that has led to an explosion of business activity and innovations throughout the world!
In the 1970s, Wallstreet copied the ideas for the financial sector and today we see all kinds of „crazy“
ideas floating around the future exchanges within the crypto markets.
Poker Today
As for poker, a lot of people thought the game would lose its soul by going online since it always had a regional character, that sparked its explosive, innovative attitude. But today, not only do we see some of these older, regional games make comebacks in the online world, we see booms of games like Chinese poker winning in the markets, we see the online poker market revolutionize itself by decentralizing, more and more people open up their own home game online, some of them being successful cardrooms, some even rising to become multi-million dollar casinos by private people, giving the big players in the market like Pokerstars and Partypoker each year a bigger run for their money!
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Great article. Learned a lot