Is There Value in Blockchain Without Bitcoin
Can you feel it? There has been an awakening in technology, and it is going to make the diligent and prepared a lot of money, maybe.
Everyone is talking about the Blockchain now and its revolutionary capabilities. Revolutionary technology usually brings revolutionary investment opportunities with it and we're all about revolutionary investment opportunities.
The hype surrounding Blockchain Technology is reminiscent of the hype that surrounded the internet as it started its roll out to the masses in the mid 90s. An early investor in the right Blockchain company, can reap the same kind of rewards that early internet investors did.
However, our dive into the world of Blockchain technology didn't lead us to anything revolutionary yet; and we were left with a serious question. Is there value in Blockchain Technology away from Bitcoin?
Blockchain's Background
First it would only be fair to acknowledge that Blockchain Technology is still young, still really, really young. Blockchain was introduced to the world with Bitcoin, which was created in 2009. However, it wasn't until a few years later that people took some time out from bashing the thought of a cryptocurrency to recognize the technology underneath, which is the Blockchain.
For comparison, according to this History.com piece the internet was developed in January 1983 and the World Wide Web, giving us the ability to access data on the internet was developed in 1990. America Online became the premier portal to the world wide web in 1995 and in the same year the world got Yahoo.com. In 1998 Amazon sold its first book online and Google also came along. From 1983 to 1995, that was 12 years of not a lot happening. After '95 is when the business of the internet started to pick up.
The Blockchain for those who aren't aware is a secured ledger. Cryptocurrency transactions are recorded in this ledger, and these unalterable transactions recorded by the Blockchain helps to solve the issue of trust that exist between buyers and sellers.
In 2018 people still aren't completely sold on Bitcoin or cryptocurrencies, but many have become fans of Blockchain's potential. Blockchain could have an impact on banking, insurance, supply chain logistics, music, healthcare, energy, and transportation as well as other industries.
Our search for a blockbuster Blockchain investment away from cryptocurrencies left us feeling like investors looking for the revolutionary investments in Nanotechnology. Nanotechnology was another great invention that was supposed to change the world. Now people joke that realizing the promise of nanotechnology has been five years away for the last 35 years. Hopefully we won't be saying this about Blockchain Technology 30 years from now.
Blockchain the Disrupter
Enterprises are adding Blockchain development to their R&D, and according to Gartner, the business value-add of Blockchain will grow to slightly more than $176 billion by 2025, and then it will exceed $3.1 trillion by 2030. So Blockchain Technology isn't just something that cryptocurrency fanboys and fangirls are championing. There is real belief in Blockchain Technology by companies all around the world.
This article by Forbes highlights 50 companies and how they are embracing Blockchain Technology. In this list you'll find a lot of "developing," "exploring," "creating," and some "patents filed." The Forbes list supports this ZDNet's list of the 10 sectors most likely to be disrupted by Blockchain technology.
From the Forbes list we find major enterprises like IBM, JP Morgan Chase, American Express, Wells Fargo, Toyota, and The Bank of China to name a few, and they are all exploring the potential of Blockchain Technology. When companies this large are all exploring the same tech it's because they believe there is gold at the end of that exploration.
Then there are places like Dubai and Australia that are ready to implement Blockchain Technology as soon as possible. Dubai plans to upgrade its current government systems to Distributed Ledger Technology (DLT) by 2020. In Australia, Prime Minister Scott Morrison has been bullish on Distributed Ledger Technology since he was the country's treasurer, even having the country invest in research and development initiatives of the technology and its implementation.
Where is the Blockchain Investment Opportunity
So we know what the Blockchain is. We know companies believe there is a use for it and determining that use could be beneficial to them, and we have governments in Dubai and Australia looking to implement Blockchain Technology in some form or fashion. So where does all of this lead to and where are the investment opportunities?
What we learned in our quest to find the big Blockchain investment idea is, that if we compare Blockchain to the Internet we’re another three to five years away from getting the American Online of Blockchain Technology, that company that becomes the game changer.
In the meantime we’ll likely see Blockchain Technology developed into a tool of efficiency for the companies that we already know. The large banks and financial institutions that we've named earlier will likely use Blockchain Tech to make banking or investing more seamless, which will likely lower expenses and lead to higher net income, more free cash flow, increased dividend payouts, and share buybacks.
The investment opportunity here lies with the established company that is the most progressive and willing to incorporate new tech into the way they do business. Investing in “efficiency” and “cost-savings” doesn’t sound exciting, but it is a lot safer investment.
A company with stable revenue year over year that can find ways to cut costs by implementing new tech is a prize investment, but for the investor looking for the aggressive high flier there is another avenue for a Blockchain investment.
Smaller Companies That are Exploring the Possibilities of Blockchain Technology
The second avenue of investment is in the companies that will develop these industry efficiency tools based off of Blockchain Technology. While a company like JP Morgan Chase is exploring Blockchain Tech and how it can improve the ways in which the company does business, we believe the Blockchain product or service a company like JP Morgan Chase adopts won’t be developed by JP Morgan Chase.
The companies that will provide these Blockchain services will be smaller companies like the companies found in the slide above and will likely go from unknown to rockstar overnight if they can get it right.
It should be noted that this way of investing in Blockchain Technology is extremely risky. An investor could lose a lot of money investing in company after company waiting to find his or her Blockchain payoff, and that payoff could never come (remember Nanotechnology). Another slight problem that we've encountered is that many of the companies that are dedicated to Blockchain Tech development are private companies. There are however many publicly traded tech companies that are devoting resources to Blockchain Technology development.
The Investment Plan
Our play for Blockchain investing is in the bigger companies, like the ones listed in the linked Forbes article. The plan is to invest in these companies at value prices and hope that Blockchain Technology can add to the companies becoming more efficient. Investing in a good company at a value price is great on its own, anything we get from the adaptation of Blockchain Technology is the cherry on top.
We're already seeing our strategy pay off on our UPS investment from our Seville Report Newsletter Issue 3, You can read more about UPS and their Blockchain initiative here.
For our revolutionary blockbuster Blockchain investment, the American Online, Amazon, or Google of Blockchain, we're still searching and researching. We are still on the lookout for the company or companies that can be that blockbuster Blockchain investment.
Time will tell what type of impact Blockchain Technology has on business and society. Taking note of how major enterprises and governments are responding to the technology we feel Blockchain Technology will be the next big thing, along with artificial intelligence and machine learning. It is still early and there may be a ways to go before we see the true potential of the Blockchain, but we advise all investors, especially young investors, to be aware and keep an eye and ear open for investment opportunities involving Blockchain Technology. The right Blockchain investment could be life changing.
Do you have a blockbuster Blockchain investment idea? If so let us know in the comments below, remember sharing is caring.
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