Investing Beyond the Blockchain Hype


In the 90s when you wanted to increase the value of your stock there was one easy option. Add ‘dot com’ to the end of it.

Back in the 60s you added ‘tronics’. As in electronics.

Every figurative or literal gold rush brings in its fair share of excited prospectors. As well as charlatans, con men and enthusiastic businessmen looking to make money from the prospectors.

And today the magic word is ‘blockchain’.

Analysis this week from Autonomous Research shows more than 31 companies in the US have ‘pivoted’ so far into the blockchain business.

Just this morning the cautionary tale of technological disruption that is the Eastman Kodak [NYSE:KODK] camera company — a company decimated by the digital camera revolution — looked to maybe redeem itself by launching its own ‘Kodak-coin’ token.

The share price jumped 130% on the news.

Just a few days ago Long Island Iced Tea Corp [NASDAQ:LTEA] changed its name to Long Blockchain [NASDAQ:LBCC].

It’s raising money and turning itself into a bitcoin mining company.

The stock price rose 200% on the news

Here’s the thing, though. Long Island Iced Tea Corp. currently has no actual businesses tied to blockchain. It’s basically a tiny Beveridge company in Farmingdale with sales of less than $1.6 million per quarter.

Chanticleer Holdings, the owner of burger restaurant chains including the infamous Hooters, said late Tuesday it will launch a blockchain based rewards program.

The share price shot up 50%.

And a company called Rich Cigars [OTC:RCGR] share price went from 3c to 70c on the news that it too was now a blockchain company.

Apparently, the directors think the crypto mining industry will buy them more Cuban cigars than the actual cigar industry…

It’s got so crazy even the normally staid regulators at the US Securities and Exchanges Commission got in on the action with this tongue-in-cheek tweet yesterday:

This is all madness, right?

Yes, of course it is!

But that doesn’t mean you can’t make a buck.

And it doesn’t mean there aren’t big thing happening under the surface.

Let me explain…

Beyond the fads

What both professional and naïve investors don’t get is the same thing investors in the dot com boom didn’t get.

The professionals don’t get the enormity of it. They think it’s a fad.

And the naïve don’t understand the actual repercussions of blockchain. How it is a transformative technology. Not simply a word you add to your company name.

This is how I frame it…

Blockchain technology does one simple thing.

It decentralises the storage and transfer of data.

That’s the basis of the data revolution we’re in.

It’s not about burger reward points, or cryptocurrency mining. These are just facets of the industry.

Not bad ideas necessarily, but not the main game.

Now that one simple use — the ability to store and transfer data in a decentralised system — is as transformative as the connectivity of the internet was back in the 90s.

The implications are profound. 

Think about it…

Why do you need a bank?

Why do you use Facebook, Uber or Airbnb?

Why do you use Google?

Why do you need a settlement agent or lawyer when you sell or buy a house?

Why do you store your data with Amazon cloud services?

Why does a lawyer store your will?

Why are government services like Centrelink such a hassle, and always prone to making mistakes?

Why do you need an accountant to audit your books and do your tax return?

Blockchain technology improves every single one of these industries and many more. Because all every one of them does is store, validate and exchange data in some way.

That is what their value is based upon.

Blockchain technologies do away with the need for these middlemen.

But that’s just the start…

Where the real gold lies

As you probably know, blockchain has already revolutionised one industry.

The Initial Coin Offering (ICO) boom has changed the face of venture capital.

For better or for worse, this new system takes away the power of the former gatekeepers. In my opinion that’s a great thing. Though you have to know it’s incredibly risky.

Like I said at the start, any gold rush attracts the scams and the scammers.

But there is also real gold, too. So why shouldn’t you have a chance to get in on it?

To do this properly you need to understand that Long Island Iced Tea Corp isn’t part of this revolution.

The companies that will really benefit will probably not have the word ‘blockchain’ in their name.

They will be companies that can strengthen their position by using the technology. Or by making themselves crucial contributors to the data value chain.

At its heart, blockchain is a data revolution.

Certain companies will benefit over the next few years. And create life changing fortunes.

That’s the companies you should be looking for.


Ryan Dinse,
Editor, Money Morning

PS: In October last year, I set up a stock advisory service that can help you benefit from the blockchain boom the smart way. One of the stocks is already up 336%. But importantly, the masses still don’t get it, and are distracted by the fads. That means the real opportunities are still there for the taking. You can find out more here.

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia