The Forbes Blockchain 50, A Lesson from the BSV Saga, & A Buy & HODL Theory
Enterprises firms invested in blockchain right now, one crypto delisted, a theory for BTC investment
|Apr 19, 2019|
Our 3 stories this week seem like they are unrelated to each other but they help retail investors in 3 ways:
One is a story about global multinational corporations, many of whom are publicly traded, who are making big blockchain investments. These are companies you can buy today for blockchain exposure.
One is a a story about the due diligence you need to do about the crypto projects that interest you. AND
One is about an interesting buy and hold investing theory for Bitcoin, which we usually refer to as buy and HODL (for hold on for dear life).
Story #1: Forbes Releases the Blockchain 50 (Many Public Companies on the List)
Forbes issued its Blockchain 50 list of huge, mega corporations invested in the technology. Hyperledger Fabric & Corda look like the most popular private enterprise blockchains while Ant Financial from China, Mastercard, and Oracle are building their own chains.
Many of these are big name public companies you can buy today for your portfolio if you want exposure to blockchain that does not involve buying Bitcoin or other cryptocurrencies. In fact, while I don’t know what every company on this list does, I’ve heard of all of them except for 2: Ciox Health from just outside my old home of Atlanta who manages health care records and Broadridge Financial, which is a tech provider to the financial industry, and was a spinoff from ADP.
The companies fall into one of 5 categories:
Financial: Ant Financial, JPMorgan Chase, ING
Technology: HPE (the old HP), IBM, Intel
Health: Ciox, CVS
Food Service: Anheuser-Busch, Cargill, Nestle
Comcast- yeah seriously, they aren’t in any other category however they have a venture arm that’s made investments into blockchain so maybe that’s tech?
Here’s a listing from CVS that shows some of the information Forbes got for this list:
Our CNON Take: Forbes Crypto provides some of the best industry coverage from an incumbent financial publication. They’re really good and have a useful handle to follow on Twitter (@ForbesCrypto).
Usually, I think most of these investments are more for PR than industry or tech advancement when it’s companies this size in the game. But some of these companies are serious about its implementation.
Take two of our 4 categories above: Health & Food Service. For health, there’s health records and patient privacy while maintaining HIPPA compliance, which is a big part of blockchain interest at the moment. For food service, many firms are interested in using blockchain for supply chain management as well as proof of where raw ingredients are coming from (and tracking them). This helps in many areas but especially so when there is an outbreak or food borne illness.
Many of these companies are public and available for your investment right now. I would look at these projects they are invested in and why and for how much.
Example of Mega Corp Blockchain Research
For instance, I chose Nestle (Symbol: NSRGY) on this list for some more research and very quickly I found out the following about this company that does $92 billion in annual Sales
Nestle is a founding member in 2016 of the IBM Food Trust, IBM’s blockchain platform for supply chain for food companies to track ingredients
Nestle is partnering with French grocer Carrefour on a new instant food product together. Both are IBM Food Trust members and will use the blockchain to provide ‘food transparency’. This is new, as in 2019.
So this is a company that’s serious about its investment in blockchain. I would do further research to see if that investment is substantial or if it’s small to see if buying Nestle is not just a food company stock, but a blockchain stock too.
Or maybe what you take from this research is you should look at IBM in more detail….
Is this type of information helping you make crypto investment decisions? For $7/mo or only $55/year, you can get this in your email box every week
Story #2: BitcoinSV Delisted. Why You Should You Care
BitcoinSV (BSV), which stands for Satoshi’s Vision, is the project of early Bitcoin user Craig Wright. Craig claims he is Satoshi while many opportunities to prove it with cryptography and digital signatures have gone unrealized. Most believe he is a fraud and a couple people on CryptoTwitter including podcaster Peter McCormack and the infamous Hodlonaut have said so on the platform.
Aside from being a loudmouth and avid promoter of his project BSV, not much has happened involving Craig until recently. When the public forum of Twitter was used to say he is a fraud by people like the two mentioned above, Wright took action and filed libel suits in England.
This is what started it all…..
It started a couple days ago……The @blockchain blockchain.com wallet will no longer support BSV transactions.
Peter Smith@OneMorePeterAt @blockchain, we added support for close out only transactions (sell, send) for #BSV in January in the @blockchain Wallet and have encouraged users to sell or take their #BSV elsewhere...
Three major exchanges, Shapeshift, Kraken & Binance are delisting BSV as well meaning you will no longer be able to buy or sell BSV on these exchanges.
Those of you who read our analysis of The Real 10 may remember that Kraken and Binance are two of the 10 and Shapeshift is the best known decentralized exchange.
Our CNON Take: You may be thinking so what? A coin you never heard of is getting delisted around the cryptoeconomy. But consider this, what if you held this coin? How would you feel?
There’s a lesson here…….
The high of $89 on April 3 has now come down to $58.65 based on one man’s actions. That’s a decline of 34% in 2 weeks.
Some of the important questions to ask yourself about the cryptocurrencies you own are:
Are there enough different developers working on it so that if something happens to one the project continues? Others like to ask this as Is the project sufficiently decentralized?
Do you know who is backing the projects you like?
Do you follow any/some of those leaders on Reddit, BitcoinTalk, or Twitter?
Did you investigate them before buying?
This is NOT about BSV. Who cares about that guy? What this is about is you doing your due diligence before you make an investment and after you have made your investment to be sure it’s a crypto you still want to hold in your portfolio.
Story #3: The 210,000 Block Bitcoin Investment Theory
What is Bitcoin? is a consistent reporter on this theory, that you should hold your Bitcoin investment for 210,000 blocks. From the article, the basic theory is this:
Every bitcoin investment held for 210,000 is worth more today than when it was purchased or mined. What is Bitcoin? tested the theory and it held 100% of the time. ALL THE TIME
210,000 blocks is approximately 4 years. With blocks created every 10 minutes, this means 52,560 blocks are created each year and 210,240 are created in a 4 year stretch.
Four years is significant as every 4 years, the Bitcoin block reward (how many new bitcoins are issued every 10 min block) is cut in half. We are due for a reduced block reward in May 2020.
The cut in block reward every 4 years means the supply of Bitcoin is predictable while the number of Bitcoins being created is dropping, encouraging people to save, called HODLing.
Our CNON Take: Most retail investors and hobbyists who aren’t following the industry daily should probably be doing something that resembles a buy and hold strategy (like for your stocks) anyway.
That being said, I wanted to test this theory myself so here’s what I did.
I went to Blockchain.com and their Block Explorer and chose a number at random, block #400,000 (today we are at block 572,000) so this block was produced on Feb 25, 2016 or a little over 2 years ago.
I wanted to test this without using the bull market of 2017.
Here is the info you would see:
Now imagine we sold our 1 Bitcoin in this a transaction in this block. I found a price of $423 for 1 BTC on this date so that’s what we will use.
To test the theory, I’m going back 210,000 blocks to block 190,000, which was issued on July 20, 2012. Isn’t that kind of transparency cool? I love it.
On the July date for Block 190,000, I found a Bitcoin price of $10.13 so the theory obviously holds here.
Testing the Bear Market
Now I’m going to do the backtest that incorporates the 2018 bear market. I will use Block 551,000 from November 21, 2018 during some of the worst of the bear market using the exact same method as above.
Bitcoin price for 551,000: $4,574.36 (way down from the $20,000 high of 2017)
Back 210,000 blocks to Block 341,000 on January 29, 2015. Bitcoin price for block 341,000 is $238.49 so the theory holds true again even with the recent bear market we’ve had.
What This Theory is Really Saying
You may have thought to yourself reading this that those that bought at the height of the bull market in Dec 2017 are not accounted for in this theory and you’d be right. With less than 18 months since that height and the bear market that followed, we are still 2+ years away from 210,000 blocks.
And that’s the idea behind the theory to be real with you.
The idea behind this theory is the cut of the block reward in half creates bull market buying conditions. You must hold for at least 4 years to be sure you are HODLing your bitcoin during at least 1 block ‘halvening’ as its called. Every 4 years, people that like and invest in Bitcoin for all kinds of reasons (including you and me) are reminded that Bitcoin won’t just keep reprinting like the Federal Reserve or European Central Banks do to devalue their currencies. Supply will be fixed and often people add to their positions by buying more.
So will those that bought at 20,000 make money in 210,000 blocks (~January 2021)? No one knows but Bitcoin has had other bull markets and bear markets and every other time someone holds through a cut in the block reward the answer is Yes.
I’m intrigued by this theory and hope this gave you something to think about in terms of your investing strategies for Bitcoin and other cryptocurrencies with fixed supplies.