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Bitcoin: The True Fraud – Winklevoss Bitcoin Trust ETF (Pending:COIN)

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The ICO (preliminary coin providing) fallout will create a shopping for alternative in cryptocurrency, which needs to be thrilling for buyers who’ve been searching for an opportunity to purchase in. I consider there’s plenty of fraud occurring within the ICO market. There shall be fallout right here and the SEC must take a tough stance. I consider that may trigger concern within the cryptocurrency house, however received’t break the business. As a substitute, it’ll create one other shopping for alternative.

Proper now, ICOs are the wild west, principally digital cash and tokens being offered to buyers, all of that are fully unregulated. The blockchain will upend the way in which we do funds and transactions, particularly on the backend with trades and settlements. Mainly corporations, or people, make guarantees to ship one thing and buyers purchase into these tokens/ICOs, which can be utilized just for the factor promised. However there is no such thing as a accountability for being delivered these items or providers. It’s a breeding floor for fraud. Josh Brown has a terrific analogy of what an ICO actually is … “Take into consideration ICOs such as you would take into consideration the tokens at Chuck E. Cheese. You set into the machine and it spits out tokens right into a plastic cup, which have a worth at Chuck E. Cheese as a result of they can be utilized there. However they’ve zero worth as soon as you are taking them out of the germ-and-pizza-emporium. Can’t use these tokens wherever else – so if Chuck E. Cheese goes beneath, you’re holding one thing nugatory. The similar could be true of an ICO – if the corporate doesn’t make it, you acquire an unregistered safety with no recourse or skill to recoup something.”

However don’t confuse Bitcoin with ICOs. Bitcoins are precise cash and never tokens. They’ve fully totally different functions and functions.

The key’s to not make investments greater than you may really afford to lose. And bitcoin shouldn’t be a ardour funding. When the narrative adjustments, be versatile and alter positions in accordance. For buyers that need to purchase bitcoin, it may be intimidating. Investing within the Bitcoin Funding Trust (OTCQX:GBTC) just isn’t the suitable reply. Moderately, there are just a few underrated alternatives for these buyers trying to persist with public markets.

There are nonetheless younger and unproven corporations the place the chance-reward alternatives may show very asymmetrical. Whereas your complete cryptocurrency market cap is nicely over $100 billion, realistically, there’s solely a handful of public corporations that present publicity to the market. John McAfee’s MGT Capital Investments (OTCQB:MGTI) is likely one of the largest, with a $100 million market cap. Shares of MGT are up 25% within the final yr and has develop into a bitcoin mining firm that develops cybersecurity merchandise. In contrast to most cryptocurrency corporations, it really has a optimistic guide worth. The firm can also be really making income on bitcoin mining.

There’s additionally UBI Blockchain Web (OTCQB:UBIA), which has $180 million market cap, being a blockchain know-how improvement firm. It’s a Chinese language firm with no revenues. As you see, the most effective choices nonetheless depart rather a lot to be desired. That’s why I believe whoever can get a cryptocurrency ETF to market shall be an enormous winner.

So sure there’s a bubble and fraud in cryptocurrency, however it’s not bitcoin, it’s within the ICO market. Close to JPMorgan CEO Jamie Dimon calling bitcoin a fraud. He’s within the minority, as most huge financial institution CEOs are embracing the blockchain and haven’t echoed Dimon’s claims. What can drive bitcoin and the overall cryptocurrency market increased is the adoption of the blockchain by different giant corporations and banks. Many have began to put money into blockchain functions. Extra funding coming to the business can occur quick as nicely.

It’s straightforward to be bearish on new know-how, however buyers that ignored the likes of Google (GOOG) (NASDAQ:GOOGL) and Amazon (AMZN) for years can definitely attest to the necessity for having an open thoughts. Bitcoin, the Uber of cash and the peer-to-peer foreign money, is the legacy asset in cryptocurrency. No matter how sure components of Wall Road really feel about cryptocurrency, there’s no denying the expansion that the house has skilled. Granted, I really feel that there are many frauds occurring within the business and the general public market choices depart rather a lot to be desired, proudly owning bitcoin — even when it’s with the best alternate on the market — Coinbase — continues to be a worthwhile choice for buyers keen on crytpocurrency.

Disclosure: I/we’ve no positions in any shares talked about, and no plans to provoke any positions inside the subsequent 72 hours.

I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (apart from from Looking for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Editor’s Be aware: This text discusses a number of securities that don’t commerce on a serious U.S. alternate. Please concentrate on the dangers related to these shares.

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