Blockchain and Cryptocurrencies Vision Risk

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There has been building enthusiasm towards stocks focused on or even having exposure to blockchain technologies or cryptocurrencies. Last week, Bitcoin made a new high of over US$7,000, up from just under US$1,000 at the end of last year. While we do not have an insider sentiment indicator on the group, it is worthwhile for investors, speculators or those thinking of speculating in this space to have a sense of some insider dynamics going on within the Bitcoin community. We came across a summer YouTube informal interview with early Bitcoin investor Roger Ver that is worth watching because it exposes the stakes involved with competing visions of where the cryptocurrency should be headed.

The video foreshadows the impact these competing visions could have on the marketplace as evidenced by what happened over the weekend as Bitcoin dropped below US$6,000 at one point while some competing cryptocurrencies gained (Zerohedge has an overview of weekend cryptocurrency trading). This volatility reflects what we call vision risk - competing ideas of how cryptocurrencies should be developed. In our view, it is likely that many of these early visions will fail to gain the critical mass needed to become commercially viable.

With that in mind, we provide this video link below for information and contextual purposes only, and it is not meant to endorse the views expressed in it.

https://www.youtube.com/watch?v=XdndP85OiiA&t=70s

Generally, we see similarities between the rise of blockchain and cryptocurrency stocks and the early days of the Internet. In the early 90s when the Internet bubble was inflating, nearly all Internet, media, and Telecom stocks benefited. However, a shakeout eventually occurred. For example, in 1999 Yahoo! was the dominant leader in search. When the dust cleared a few years later, Google emerged as the undisputed champ. That is something to keep in mind when contemplating a bet on a specific blockchain technology or cryptocurrency.

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