What I Learned From the Founder of the World's Most Popular Cryptocurrency Wallet

by Nicholas Vardy
blockchain

“The world is about to get very weird.”

- Nicolas Cary, co-founder and president of the world's most popular cryptocurrency wallet

Bitcoin was the biggest investment story of 2017.

Blockchain - the technology underlying bitcoin that was invented by Satoshi Nakamoto - may become the biggest story of 2018.

Yes, bitcoin is revolutionary...

But blockchain technology applies to far more than just cryptocurrencies.

No wonder investors are scrambling to get a piece of it.

No fewer than four exchange-traded funds (ETFs) launched in January alone, allowing anyone to invest in the blockchain mania.

The question is...

Should you board the blockchain hype train?

What Is Blockchain Anyway?

I’ve heard for years that blockchain technology will change the nature of every business in the world.

But I still had a tough time getting my head around the concept...

I figured it was time to learn from the best.

So a few months ago, I attended a Harvard Business School Angels of London event titled “Understanding the Opportunity of Blockchain & Cryptocurrency.”

It was a heavy-hitting panel.

The group's moderator was Nicolas Cary, the co-founder and president of Blockchain.com, the world’s most popular digital currency wallet.

Cary said it was the most impressive collection of experts on blockchain he had ever seen.

Cary asked each panelist to describe blockchain as he would explain it to his mother.

Here’s the answer Cary himself gave...

Blockchain is a live spreadsheet available for all the world to see.

This “distributed ledger technology” (DLT) includes all the information on the transactions related to anything you can buy or sell.

DLT offers several compelling advantages.

First, it provides full transparency.

Second, it eliminates the middleman.

Finally, it ensures all records are accurate and unalterable through unhackable cryptography.

Here’s the example that brought the idea home to me...

Say you want to buy a house.

To do so, you need a team that includes real estate agents, lawyers and title professionals.

But once real estate transactions move to using a blockchain-based "smart contract," you'll be able to buy, confirm the title and generate a purchase agreement with a few clicks of a mouse.

No team of experts needed.

That’s bad news for real estate agents, property lawyers and title companies.

But it’s good news for you.

After all, you’ve just saved most of the transaction costs of buying and selling real estate.

Blockchain: Bigger Than the Internet?

Some experts expect blockchain to become more significant than the internet.

And it’s easy to see why...

Blockchain technology speeds up e-commerce, manages supply chains, validates financial transactions and even confirms the authenticity of drugs.

London-based startup Everledger is even using blockchain technology to combat fraud in the diamond industry.

Major Wall Street banks expect blockchain technology to have a massive impact on the global economy...

  • Deutsche Bank forecasts blockchain technologies will record transactions for about 10% of worldwide GDP by 2027.

  • Gartner estimates blockchain delivered $4 billion of value to businesses in 2017. That number will grow to $3.1 trillion by 2030. That equals an average annual growth rate of 94%.

  • Analysts at RW Baird expect artificial intelligence and blockchain to usher in internet 3.0, following Facebook and Twitter's internet 2.0 social media revolution.

  • Morgan Stanley believes blockchain technology could join autonomous trucks, drones and the “Uberization” of freight transportation as a critical disruptive technology.

Don’t Board the Blockchain Hype Train Just Yet

Until recently, only venture capitalists had the chance to invest in blockchain.

But 2018 has already seen the launch of a handful of new ETFs that offer an easy way to invest in the blockchain story.

Hoping to dampen speculative investors, the SEC requested both issuers exclude the word “blockchain” from their names.

(Ironically, the SEC office in Fort Worth tweeted that it wanted to add “blockchain” to its name to increase its followers by 70,000%.)

Investors still poured $262 million into the two largest blockchain ETFs since their launch on January 17.

Nevertheless, I cannot recommend any of the 3-week-old blockchain ETFs just yet.

And if you suffer from FOMO - the fear of missing out...

Remember this...

It’s still in the very, very early days for blockchain.

New technologies, including the steam engine, the automobile, the radio and even the internet made and lost investors fortunes.

In the end, a handful of winners dominated those industries.

Who the blockchain winners will be is still unclear.

As Nicolas Cary observed at the Harvard panel...

If blockchain were a clock, it would be in only the first two or three seconds of an hour.

So be patient...

You still have plenty of time to make your fortune from the blockchain revolution.

Good investing,

Nicholas

Thoughts on this article? Leave a comment below.

Another Play on the Digital Payments Revolution

Like Nicholas, Alexander Green urges caution about investing in hyped-up cryptocurrencies and blockchain projects. Nonetheless, he sees how digital payments technologies have the potential to change the world.

That's why Alex recommends PayPal (Nasdaq: PYPL) to his Oxford Communiqué subscribers. Here's Alex checking on the pick back in October of last year...

A survey by CAN Capital found that mobile payments technology is overtaking e-commerce as the biggest trend in retail consumers' spending habits.

This is good news indeed for PayPal (Nasdaq: PYPL), a member of our Oxford Trading Portfolio.

Spun off from eBay (Nasdaq: EBAY) two years ago, PayPal is at the forefront of the digital payments revolution. The company allows consumers and businesses to securely transact with each other online and - using mobile devices - in public.

PayPal customers can easily access their funds and safely move them. They can send money in the U.S. or abroad, make donations to a cause, or even pay over time with PayPal Credit, a reusable credit line without the plastic.

The firm now has more than 218 million active customers. Its global payments platform is available 24/7 in more than 200 countries, enabling customers to pay in more than 100 currencies.

The company is a huge beneficiary of the growing use of smartphones. Mobile payment volume soared 54% last quarter.

Many of these payments were made with its Venmo app.

If you are not familiar with Venmo, a) you soon will be, and b) you are definitely not a college student or millennial.

Venmo is PayPal's peer-to-peer payment platform that's popular with young adults who want to send money to their friends at no cost.

The app has gone viral. (Like Xerox and FedEx, it has even entered the vernacular, as in "Just Venmo what you owe me.")

Payment volume on Venmo hit $9.4 billion last quarter, up 93% from more than a year ago.

What Google is to search and Facebook is to social media, Venmo now is to person-to-person payments. And its services are free to the user.

"What is the revenue model in that?" you might reasonably ask.

Just this: According to CEO Dan Schulman, every time a merchant or consumer uses an additional PayPal service - free or not - their lifetime value to the company doubles.

- Donna DiVenuto-Ball with Alexander Green

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