Twitter CEO Jack Dorsey’s first tweet is expected to sell for $2.5 million on Sunday. Here’s why the NFT is so valuable.

Twitter CEO Jack Dorsey.JPG
Twitter and Square CEO Jack Dorsey.

  • An NFT version of Twitter CEO Jack Dorsey’s first tweet is expected to sell for $2.5 million.
  • Bidding on the tweet ends on Sunday, Dorsey said.
  • Observers said NFT buyers may be speculating, buying pieces they expect to resell in the future.
  • See more stories on Insider’s business page.

When the auction for an NFT version of Twitter CEO Jack Dorsey’s first tweet ends on Sunday, a buyer is expected to pay at least $2.5 million for it.

The message – “just setting up my twttr” – clocks in at 24 characters, including spaces, placing its value at more than $100,000 per character.

What makes a tweet from 2006 so valuable? Even in the form of a non-fungible token, or NFT, with a digital signature from Dorsey, it’s still just a few lines of code.

“An NFTs value is largely derived as a function of scarcity and speculation,” said Tom C.W. Lin, a professor at Temple University’s Beasley School of Law.

The value of high-priced NFTs – like, say, the $69 million NFT sold this month – comes from the combination of high demand and rarity, as with any piece of art. An NFT version of Dorsey’s tweet is a digital object that can’t be duplicated, making it scarce.

Lin added: “An NFT itself does not have much intrinsic value beyond those factors.”

Demand for Dorsey’s tweet started slowly. According to Valuables by Cent, where the auction is hosted, the chief executive created the auction for his own tweet.

The first offer was made on December 15. The bidder offered one dollar. Within a few weeks, the top offer was $3,500. But that offer was canceled by the bidder, sending the bidding back to zero.

When Dorsey tweeted a link to the auction on March 6, there was another one dollar offer. Users entered nearly 30 offers on the day of Dorsey’s tweet, sending the price to $2.5 million. As of midday Sunday, that was still the highest bid.

Dorsey said he would convert the proceeds from Sunday’s sale into bitcoin, then donate it to charity.

Skeptics and NFT novices may question whether a public tweet can truly qualify as scarce, commanding such a high price. After all, Dorsey’s Twitter post has been live for all the world to see since March 2006. And it will continue to be live on Twitter even after Sunday’s sale, so anyone can read it for free anytime they want. It’s right here:

So what exactly will the buyer be getting with the NFT version? That version will add a digital signature, making it a one-of-a-kind moment, akin to a work of signed art, according to the Valuables FAQ.

Dominik Schiener, cofounder and chairman of the IOTA Foundation, said anyone who buys an NFT version of a tweet is basically getting the “essence” of the tweet’s value.

It’s important that the buyer trusts both the auction website and the seller. Otherwise, they could just post a new NFT version someplace else, he said.

Twitter HQ in San Francisco
Twitter’s San Francisco headquarters.

“In order for the tweet-NFT to be valuable, there has to be consensus that the platform and technology is a de-facto representation of scarcity,” Schiener said via email. “If the world comes to an agreement that the NFT version of an asset on blockchain is ‘real’, then it means you are acquiring the ‘essence’ of that thing’s value.”

Dorsey’s tweet might be worth $2.5 million for collectors simply because they could resell in the future for an even higher price, said David McCarville, a director at Fennemore Craig.

He said the rise of the NFT market is being driven by early adopters who’ve made money from cryptocurrency. They may be seeing similar opportunities in the NFT market.

McCarville said: “These early adopters believe that they are in a position to be the first movers in a market that is still very new and therefore should enjoy significant appreciation in value.”

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‘Big Short’ investor Michael Burry slams NFTs with a quote warning ‘crypto grifters’ are selling them as ‘magic beans’

Michael Burry big short
Michael Burry.

  • Michael Burry subtly criticized non-fungible tokens (NFTs) this week.
  • “The Big Short” investor shared a quote comparing NFTs to “magic beans.”
  • Burry has blasted Tesla, bitcoin, Dogecoin, GameStop, and other popular bets this year.
  • See more stories on Insider’s business page.

Michael Burry isn’t a fan of non-fungible tokens (NFTs), if his Twitter profile is any indication.

The investor has changed his header image to a screenshot of this quote: “NFTs exist so that the crypto grifters can have a new kind of magic bean to sell for actual money, and pretend they’re not selling magic beans.”

The quote is from “NFTs: crypto grifters try to scam artists, again,” an article posted by David Gerard on his “Attack of the 50 Foot Blockchain” blog last week. Gerard is the author of a book with the same name as his blog, which tackles bitcoin, smart contracts, and other cryptocurrency topics.

NFTs serve as virtual certificates of ownership and authenticity for digital items, and are stored securely on a blockchain. They’re getting lots of attention after a digital art NFT was sold for $69 million at a Christie’s auction last week.

Tesla CEO Elon Musk, Twitter CEO Jack Dorsey, “Shark Tank” star Mark Cuban, and other high-profile figures have also discussed and dabbled with the technology in recent days. However, critics question the value of NFTs given it’s virtually impossible to stop others copying, downloading, and sharing digital images and videos.

Moreover, Gerard argues on his blog that NFT proponents are using artists as “aspiring suckers” to pump cryptocurrencies, and handing them “crumbs” for their efforts.

Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s, which was chronicled in the book and the movie, “The Big Short.” He’s slammed popular investments including Tesla, GameStop, bitcoin, and Dogecoin this year, and warned investors against buying into speculative bubbles.

The Scion Asset Management boss recently signaled he was taking a break from tweeting. However, the latest change to his Twitter profile suggests he still wants to have his say.

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Billionaire investor Chris Sacca told people not to ignore the $69 million NFT sale this week

chris sacca, lowercase capital, sv100 2015
Chris Sacca.

  • Chris Sacca sees the $69 million NFT sale this week as significant.
  • The venture capitalist said people shouldn’t ignore non-fungible tokens.
  • Sacca highlighted the appeal of collectibles and the value of creators getting paid.
  • See more stories on Insider’s business page.

Some people will have rolled their eyes at the record-breaking $69 million sale of a digital artwork at a Christie’s auction this week. They should pay attention to what the transaction signifies, billionaire investor Chris Sacca tweeted after the news broke.

“No matter how you feel about NFTs, don’t look away from this,” he said. He was referring to non-fungible tokens that serve as virtual certificates of ownership and authenticity for digital items, and are stored securely on a blockchain.

“It’s okay to not get why someone would pay that, and it’s okay to be bummed about the climate impact,” Sacca continued. “But don’t be willfully ignorant about what’s happening.”

Metakovan, the pseudonymous buyer of “Everydays: The First 5000 Days” by artist Beeple, will receive a NFT confirming they’re the new owner of the piece. However, there’s nothing to stop other people downloading and sharing copies of the artwork.

Sacca – an early investor in Uber, Twitter, and Instagram – has praised NFTs and downplayed concerns they’ll be a short-lived fad.

“Very cool and I am a collector at heart,” he said in a Twitter thread last month. “I don’t think it’s a bubble, and I do think it will work.”

However, the Lowercase Capital founder and former “Shark Tank” star said he wouldn’t be abandoning physical memorabilia anytime soon. “I have a feeling this is going to be the tech that finally turns me into the ‘Yeah, but I only listen on vinyl’ guy,” he joked in the thread.

Sacca lauded NFTs as the next frontier for collectibles, and praised them for allowing creators to collect royalties on future resales of their work, in a Forbes interview published this week.

“Collections as a reflection of your identity are powerful,” he said. “And I will never underestimate the beauty of tools that empower creatives to do and get paid for their best shit.”

Billionaire investor and fellow “Shark Tank” star Mark Cuban also touted NFTs in an interview this week, labeling the ability to receive royalties a “game-changer” for digital commerce.

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Billionaire Mark Cuban is selling a motivational quote as a NFT for $1,700

Mark Cuban
Mark Cuban.

  • Mark Cuban is selling one of his quotes as a non-fungible token (NFT) for $1,700.
  • The “Shark Tank” billionaire has 10 of the tokens for sale with a 15% royalty.
  • Cuban is also selling hype videos for his Dallas Mavericks basketball team.
  • See more stories on Insider’s business page.

Billionaire investor Mark Cuban is selling one of his motivational quotes as a non-fungible token (NFT) for $1,700 worth of cryptocurrency.

Cuban’s listing consists of a digital image of him with the words, “Nobody ever changed the world by doing what everyone else was doing – Mark Cuban” pasted on top of it.

The “Shark Tank” star and Dallas Mavericks owner’s quote has been butchered in the listing description: “No one ever changed the world by what everyone else was doing,” it reads.

Cuban still had 10 of the NFTs up for sale at the time of writing. They’re each priced at just under 0.96 ether, the cryptocurrency built on top of the Ethereum blockchain.

NFTs are essentially digital certificates of ownership and authenticity, which are securely stored on a blockchain. They’re unique tokens used to identify and track digital items.

Cuban is charging a 15% royalty on secondary sales, meaning he gets a cut if the buyers of his NFTs resell them in the future.

The investor, who made his fortune by selling his audio-streaming startup to Yahoo during the dot-com boom, has two other items listed on Mintable, a digital-goods marketplace.

“The UnderDog has spoken,” a motivational video for the Dallas Mavericks, is priced at close to $2,300. “MavsSunsGameDayExperience,” a 30-second hype video featuring players dunking glowing basketballs, recently sold for about 0.75 ether or more than $1,300.

The hype around NFTs hit a fresh high this week after one was sold for $69 million in a Christie’s auction. The buyer of the digital artwork goes by the pseudonym Metakovan and runs a NFT fund called Metapurse.

Cuban discussed his own experimentation with NFTs in an interview earlier this week. He described the option to charge royalties on resale as a “game-changer” that has “changed the nature of selling anything digital.”

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Collectors are spending millions of dollars every day on virtual NBA highlights. Here’s what to know about NBA Top Shot.

NBA Top Shot Press Logo_Collectibles_
NBA Top Shot.

  • NBA Top Shot is taking the internet by storm. 
  • The blockchain-based platform lets users trade virtual collectibles called “moments.”
  • It has seen over $100 million in sales over the last week, with some moments raking in over $100,000.
  • Visit the Business section of Insider for more stories.

As bitcoin surges to new highs, there’s another digital-trading boom that’s taking over the internet – and it’s not just another cryptocurrency. 

Basketball fans and even opportunistic, sports-indifferent investors are piling into a new online marketplace from the NBA called Top Shot. The site, which lets users buy and sell virtual trading cards, has exploded in popularity in recent weeks as people look to make a buck on the still nascent platform. 

Whether it’s a bubble that’s about to pop or the next big thing in sports collectibles, there’s serious money pouring in. Millions of dollars worth of cards are changing hands each day, and some ultra-rare collectibles have been valued at over $200,000. 

Here’s what to know about NBA Top Shot: 

What is NBA Top Shot?

Top Shot is an online marketplace that lets users trade and collect official NBA-licensed video highlights called “moments.” The platform was created by a tech company called Dapper Labs in collaboration with the NBA and the National Basketball Players Association. 

It was first opened to the public in October and is still in beta. It has rapidly picked up steam in recent days, with well over $100 million in transactions completed over the last week. 

What are moments and how do you buy them?

Moments are video-based trading cards that each show a short clip of an NBA star making a play. For instance, a highlight of the Miami Heat’s Jimmy Butler slamming a dunk will currently run you around $600, while a clip of the Detroit Pistons’ Derrick Rose sinking a buzzer-beating jump shot costs $2,600 and up. 

NBA Top Shot_Press Collectibles_
NBA Top Shot.

Users can get their hands on moments by buying them on the marketplace from individual sellers or by participating in “pack drops.” Every so often, Top Shot puts a limited number of packs – collections of rare and common moments – up for sale for $9 and up, but they sell out quickly.

Why are moments worth anything?

Anyone can go to YouTube and watch every basketball highlight that has ever been recorded for free, so what makes moments valuable? 

For one, the collectibles are based in blockchain – the same technology that underpins bitcoin and other cryptocurrencies – meaning that all transactions are recorded and each moment is impossible to forge. Moments aren’t cryptocurrency, but rather a form of non-fungible token (NFT).

Plus, Top Shot is only releasing a limited supply of each moment, so scarcity drives up prices as well. There are three classes of moments: “common” ones with a supply of 1,000 or more, “rare” ones with between 150 and 999 examples in circulation, and “legendary” moments, which are limited to 99 examples or less. 

There’s also an even rarer “ultimate” tier that Top Shot says is on the way. 

Screen Shot 2021 02 23 at 1.05.53 PM
NBA Top Shot marketplace.

Not surprisingly, the rarer the moment, the more it’s worth. There are several legendary-tier moments currently listed for sale for $200,000 and up – and yes, some people are actually paying that much. 

On Monday, a LeBron James dunk set the record for the priciest moment sold to date at $208,000. 

How are people making money on NBA Top Shot?

Users can theoretically make money by purchasing undervalued moments from collectors, waiting for their value to go up, and selling them at a profit. They can also score valuable moments from pack drops and make money that way. 

For example, if you buy a limited-edition pack for $230 and it contains a “legendary” moment worth, say, $5,000, you’re automatically in the black. It’s possible, hypothetically, to buy a pack for a couple hundred dollars and end up with an ultra-desirable LeBron James or Zion Williamson moment that people are willing to shell out six figures for. 

That promise of dizzying gains has brought a huge amount of new users to the platform – the number of users has multiplied 19 times since December 31, and 93,900 customers have bought moments to date, a Dapper Labs spokesperson told Insider on Tuesday. 

Not to mention, the amount of money those users are spending is growing by the day. 

Top Shot has seen $204 million in all-time sales through its peer-to-peer marketplace since launch, the spokesperson said. As of Wednesday afternoon, more than $146 million of that occurred in the last seven days, according to Crypto Slam, an NFT marketplace and data tracker. And in one 24 hour period ending on February 22, Top Shot saw a record $47.5 million worth of sales on its marketplace, the spokesperson said. 

Top Shot has made $11 million from pack sales, according to the spokesperson. It pockets a 5% fee from each transaction on the marketplace. 

What else can you do on the site?

Aside from buying and selling moments, users can create public “showcases” of 1-10 moments they want to show off to the world. Top Shot also hosts “challenges,” which require users to collect several specific moments within a particular time frame. 

Users can also work to boost their “baller status,” a score that reflects their overall accomplishments, including their collection and community participation.

Is NBA Top Shot a bubble?

Top Shot has evidently created something extremely popular by giving sports fans their own cryptocurrency-adjacent phenomenon to speculate on. But it’s difficult to say what the market for moments will look like long term. 

Right now, users who can get in on a pack drop can essentially print money, because even the cheapest moments are worth more than the cost of a low-tier pack. It’s hard to imagine that sort of market can continue for too long without a correction. 

But for the moment, Top Shot is all the rage, with basketball players themselves even getting in on the action. The bigger question may be whether or not Top Shot can handle all the new attention – in recent days, the platform has halted trading and new sign-ups due to high traffic as it scrambles to keep up with demand. 

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JPMorgan and Citi are using blockchain technology, and other banks are considering allowing clients to hold crypto in bank accounts, Bank of America research finds

FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017. REUTERS/Chris Helgren/File Photo
  • Bank of America research published Tuesday shows banks like JPMorgan and Citi use blockchain technology. 
  • Other smaller banks said they are open to allowing clients to hold cryptocurrencies in the future. 
  • The research sheds on light on where traditional financial institutions stand on blockchain amid bitcoin’s massive rally.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A research report from Bank of America shows banking behemoths JPMorgan and Citi are using blockchain technology, while other banks are considering allowing commercial and institutional clients to hold cryptocurrencies in their accounts. 

BofA analysts led by Erika Najarian compiled responses from banks they cover regarding use of blockchain technology and willingness to facilitate crypto transactions. 

They found that 21% of banks they cover have incorporated blockchain technology into their businesses in some form. Blockchain is a digital ledger and the technology used to transact with cryptocurrencies like bitcoin.

JPMorgan, Citi, Wells Fargo, US Bancorp, PNC, Fifth Third Bank, and Signature Bank are among some of the banks that said they use blockchain.

While JPMorgan and Citi did not specify in what capacity they use blockchain technology, Wells Fargo highlighted its WFC Digital Cash platform, which allows investors to transfer accounts between Wells subsidiaries. Meanwhile Fifth Third said blockchain technology is in use “in very limited cases for sensitive information.” PNC was the first US bank to join the Ripple network. 

Meanwhile, no banks under BofA coverage are facilitating crypto transactions or allowing customers to hold crypto in accounts at this time. However, Citizens Financial Group said they are open to allowing clients to hold crypto in theory at some point, but would need to develop a robust anti-money laundering infrastructure. US Bancorp told BofA they’re “currently looking at applications of blockchain technology and crypto opportunities at the commercial bank.”  

Several banks said they are waiting for regulatory clarification on providing cryptocurrency custody services before adopting the digital currency. 

According to BofA analysts who conducted the study, the consensus among banks was that any future application of cryptocurrency would be concentrated in commercial, custody, and commercial payments rather than retail clients. 

Also, Citi is “more focused on tokenization” than facilitating cryptocurrency transactions, according to BofA, while JPMorgan is “actively assessing if they will take cryptocurrency in accounts.” 

The research sheds a light on where major financial institutions stand with regards to blockchain technology and cryptocurrency amid bitcoin’s epic rally. 

“While the future of cryptocurrencies is still oft-debated by the market, many investors view blockchain broadly as general ledger technology that is key for banks to unlock efficiencies in the future. As such, we see this wide gap in blockchain technology (and willingness to adopt it) as potentially telling of a bank’s tech investment strategy,” the analysts said. 

 

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Warren Buffett blasted Bitcoin as a worthless delusion and ‘rat poison squared.’ Here are his 16 best quotes about crypto.

warren Buffett
Warren Buffett

  • Warren Buffett has repeatedly criticized Bitcoin and other cryptocurrencies as risky and worthless.
  • “I can say almost with certainty that they will come to a bad ending,” the billionaire investor and Berkshire Hathaway CEO said.
  • Bitcoin has skyrocketed as much as 350% in the past year to record highs.
  • Here are Buffett’s 16 best quotes about crypto.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett has been a vocal critic of Bitcoin in recent years, repeatedly dismissing the cryptocurrency as worthless and a risky, speculative asset.

Crypto fans have brushed off the billionaire investor and Berkshire Hathaway CEO’s warnings, driving Bitcoin’s price up as much as 350% to record highs over the past year. 

Here are Buffett’s 16 best quotes about Bitcoin and crypto, edited and condensed for clarity:

1. “Cryptocurrencies basically have no value and they don’t produce anything. They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the problem. In terms of value: zero.” – CNBC, February 2020

2. “It’s ingenious and blockchain is important but Bitcoin has no unique value at all, it doesn’t produce anything. You can stare at it all day and no little Bitcoins come our or anything like that. It’s a delusion basically.” – CNBC, February 2019

3. “If you and I buy various cryptocurrencies, they’re not going to multiply. There are not going to be a bunch of rabbits sitting there in front of us. They’re just gonna sit there. And I gotta hope next time you get more excited after I’ve bought if from you and then I’ll get more excited and buy it from you. We could sit in the house by ourselves and we could keep running up the price between us. But at the end of the time there’s one Bitcoin sitting there and now we’ve gotta find somebody else. They come to an end.” – CNBC, May 2018

4. “In terms of cryptocurrencies generally, I can say almost with certainty that they will come to a bad ending. If I could buy a five-year put on every one of the cryptocurrencies, I’d be glad to do it, but I would never short a dime’s worth.” – CNBC, January 2018

Read more: ‘Extremes are becoming ever more extreme’: A Wall Street strategist who sounded the alarm before last year’s 35% crash showcases the evidence that a similar meltdown is looming

5. “Probably rat poison squared.” – Fox Business interview at 2018 meeting

6. “It’s a mirage basically. It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money just because they can transmit money? I hope Bitcoin becomes a better way of doing it but you can replicate it a bunch of different ways. The idea that it has some huge intrinsic value is just a joke in my view.” – CNBC, March 2014.

7. “It’s not a currency. It does not meet the test of a currency. I wouldn’t be surprised if it’s not around in 10 or 20 years. It is not a durable means of exchange, it’s not a store of value. It’s been a very speculative kind of Buck Rogers-type thing and people buy and sell them because they hope they go up or down just like they did with tulip bulbs a long time ago.” – CNBC, March 2014

8. “A rising price does create more buyers and people think ‘I’ve gotta get in on this’ and it’s better if they don’t understand it. If you don’t understand it you get much more excited than if you understand it.” – CNBC, May 2018

Read more: Michael Saylor has invested over $1 billion of MicroStrategy’s funds in Bitcoin. The software CEO-turned Bitcoin whale explains why he is making such a massive bet on the digital asset.

9. “It will feed on itself for a while and sometimes for a long while and sometimes to extraordinary numbers. But they come to bad endings and cryptocurrencies will come to bad endings.” – discussing speculative bubbles at Berkshire’s shareholder meeting in 2018.

10. “You’re going to be a lot better off owning productive assets over the next 50 years than you will be owning pieces of paper or Bitcoin.” – CNBC, March 2014

11. “I get in enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about? We don’t have to know what cocoa beans are gonna do, or cryptocurrencies, we just have to focus on eight or 10 stocks.”- CNBC, January 2018

12. “It draws in a lot of charlatans. It’s something where people who are of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbor’s getting rich buying this stuff that neither one of them understands. It will come to a bad ending.” – 2018 shareholder meeting

Read more: Cathie Wood’s ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

13. “Bitcoin has been used to move around a fair amount of money illegally. The logical move from the introduction of bitcoin is to go short suitcases because the money that was taken in suitcases from one country to another – suitcases will probably fall off in demand. You can look at that as the economic contribution of bitcoin to the society.” – CNBC, February 2020

14. “We don’t own any, we’re not short any. We’ll never have a position in them.” – CNBC, January 2018

15. “I don’t have any Bitcoin. I don’t own any cryptocurrency, I never will. I may start a Warren currency, maybe I can create one and say there’s only going to be 21 million of them. You can have it after I die but you can’t do anything with it except sell it to somebody else.” – CNBC, February 2020

16. “I’m really sorry it happens because people get their hopes up that something like that is gonna change their lives.” – CNBC, February 2019

Read more: A growth-fund manager who’s beaten 96% of his peers over the past 5 years shares 6 stocks he sees ‘dominating their space’ for the next 5 to 10 years – including 2 he thinks could grow 100%

Read the original article on Business Insider

How to invest in blockchain, the high-risk but high-potential technology behind bitcoin and other digital transactions

blockchain
A variety of ways exist to invest in blockchain technology, which empowers cryptocurrency, but also holds great promise in other industries.

  • Investing in blockchain technology has become hot due to its role as the database for cryptocurrencies and digital transactions.
  • You can invest in blockchain technology via stocks of companies that offer cryptocurrency-related services or are developing other industrial applications for it.
  • Despite its growth potential, blockchain technology should be seen as a high-risk investment. ETFs are the safest way to play.
  • Visit Business Insider’s Investing Reference library for more stories.

Bitcoin often dominates the financial news, riveting investors with its volatile price swings and appreciation potential. Getting far less attention, though, is blockchain, the database technology on which the cryptocurrency rests. 

A blockchain is like an electronic ledger. Data can be entered into it, but cannot be altered or erased, giving it its much-celebrated property of permanency (and implied integrity). 

Many blockchains have emerged since the first one that made bitcoin’s debut possible in January 2009. Some of these blockchains support cryptocurrencies like bitcoin, while others support multipurpose digital platforms – such as Ethereum – that work like decentralized versions of more traditional (i.e. centralized) platforms and networks. 

Investing in blockchain technology has become a hot topic over the past few years. There are numerous ways to do it too, since blockchain technology doesn’t relate only to cryptocurrencies. It also encompasses:

  • Companies that offer cryptocurrency-related services (such as crypto-exchanges, where you trade currencies)
  • Companies that are building their own blockchains for other industrial/ business purposes

Let’s look at how to invest in such companies, along with the pros and potential pitfalls of blockchain investment.

What is blockchain technology?

A blockchain is a database that is usually operated by a distributed and public network of participants, although a growing number of companies have begun using or building private blockchains (also known as “permissioned” blockchains). 

The purpose of such blockchains is to create digital records – of transactions, certificates, or contracts -that can only be added to, rather than changed or deleted. Rather than relying on a single entity to enter new information, they use a “consensus mechanism” that sees multiple participants use cryptography (the science of encrypting, or coding, data) to validate new entries.

“There’s no need for a third-party, such as a bank or a regulator, to verify actions because it’s a shared process, secured by cryptography. This removes intermediaries and creates a framework that improves trust, transparency, and efficiency across different, and very separate, organizations,” says Hadyn Jones, senior blockchain market specialist at PwC.

Why invest in blockchain technology?

It’s this promised improvement of trust, transparency, and efficiency that has transformed blockchain tech into an attractive investment prospect. Blockchain has applications in a wide range of industries, where the companies implementing blockchain tech will gain a competitive advantage over rivals. 

“Using blockchain, organizations can build greater trust and transparency in areas such as the provenance of pharmaceuticals, food ingredients, or component parts. Solutions can also be created that support commercial transactions, the issuance and trading of securities and cross-border payments,” says Jones.

“In our Time for Trust report, PwC’s economists estimated that blockchain technology has the potential to boost global gross domestic product (GDP) by $1.76 trillion over the next decade,” he says. “So it is natural to see why investors would be interested in those leading companies that can deliver most in blockchain-related services.”

Put simply, by reducing costs and increasing profits, blockchain tech may make companies more profitable. Bigger revenues would obviously raise their stock shares – and the portfolios of investors who allocated capital to them early.

But they don’t have to be tech plays. More broadly, blockchain investment can also involve investment in companies that work specifically with cryptocurrency (such as crypto-payment platforms like Square) and those that have invested in crypto (such as MicroStrategy). 

Because the performance of these companies revolves around the performance of cryptocurrency prices themselves, they’re more likely to rise in correlation with cryptocurrency prices. And with bitcoin rising by around 300% in the past 12 months, investors with a taste for high-growth stocks may be drawn to them.

Ways to invest in blockchain technology

One simple way to invest in blockchain technology is to buy shares in any publicly traded company that’s either using or building blockchain tech, or that works with or invests in cryptocurrency.

Individual blockchain stocks: general companies

When it comes to firms using or working with blockchain technology, some of the most prominent publicly traded companies include:

  • IBM (offers blockchain services)
  • Amazon (offers Amazon Managed Blockchain service)
  • Intel (offers blockchain services)
  • Nvidia (sells GPUs to cryptocurrency miners)
  • AMD (sells GPUs to cryptocurrency miners)
  • Mastercard (working on blockchain-based cross-border payments with R3)
  • Honeywell (using blockchain to track sales)
  • DocuSign (offers blockchain service)
  •  JPMorgan (created its own cryptocurrency, JPM Coin, and its own unit for blockchain projects)
  • Canaan (manufactures mining hardware)
  • Silvergate (offers banking services to blockchain and cryptocurrency firms)

Individual blockchain stocks: crypto-related companies

Alternatively, there are some publicly traded companies that either offer crypto-related services or are directly exposed to cryptocurrency:

  • Square (offers bitcoin payment service, also holds bitcoin)
  • PayPal (offers a bitcoin payment service)
  • Grayscale Bitcoin Trust (operates a bitcoin investment fund)
  • MicroStrategy (invests in bitcoin)
  • Intercontinental Exchange (operates Bakkt cryptocurrency exchange)
  • CME Group (operates a market for bitcoin futures contracts)
  • Overstock (digital retailer which accepts bitcoin)

As cryptocurrency becomes more mainstream in its uses, it’s likely that more crypto firms will be publicly listed. For example, Coinbase – the largest crypto-exchange in the U.S. – is planning to hold its IPO in early 2021.

Blockchain funds

Buying individual stocks isn’t the only way to gain exposure to blockchain.

“There are funds that provide exposure to blockchain technology, largely grouped along the lines of traditional [investment] funds,” Jones says.

Holding a portfolio of assets, mutual funds and exchange-traded funds always tend to be the individual investor’s instrument of choice, offering diversification – and thus less risk – at relatively low cost. But they have a special advantage with this sector.

While a few options exist, like the aforementioned Grayscale Bitcoin Trust, bitcoin ETFs remain scarce: In the US, the SEC has refused (as of early 2021) to allow them, due to the difficulty of accurately assessing the currency’s value and liquidity. 

No such problems exist with blockchain. There are a growing number of blockchain ETFs now available. These invest in a selection of companies working with blockchain tech. Some of the biggest include:

Tips for investing in blockchain technology

Despite its promise, blockchain technology remains an immature sector that hasn’t fully proven itself in terms of viable products.

“As an emerging technology, blockchain is no different to other emerging technologies such as quantum computing, electric aviation, or spatial computing all of which involve taking risk to innovate,” says Hadyn Jones.

So there are a number of tips worth keeping in mind when looking to invest in blockchain tech.

Do your due diligence: Lots of companies claim to be involved in blockchain these days (remember Long Blockchain?), but some are pursuing the technology more meaningfully than others. It’s for this reason that research into a particular firm, and its fundamentals, is particularly important. 

“The starting point is to build a case for the investment itself based on factors such as the opportunity for growth, the competitive environment or differentiating factors relative to other projects,” says Jones.

Treat blockchain as a high-growth, high-risk sector: As with tech stocks, blockchain stocks represent a high-growth sector that exposes investors to plenty of risk. Because the wider utility of blockchain still remains mostly unproven, it would be wise to invest only a small portion of your available capital in blockchain companies and to diversify in other areas as much as possible.

Watch out for new laws and regulations: Keeping up to date with regulators is just as important as researching individual companies, particularly when so much of the blockchain sector remains unformed. Government officials and agencies may potentially legislate in a way that significantly disrupts blockchain-focused companies.

“Understanding the regulatory backdrop is also a useful indicator, and with both the UK and EU investing time in readying themselves for legislation relevant to digital assets, the underlying blockchain technology is very much on the administrations’ radar as a driver for growth,” says Jones.

Concentrate on the bitcoin connection: Yes, blockchain investing has advantages over bitcoin investing. But, given that bitcoin remains the most successful use of blockchain technology to date, some analysts advocate fixing on firms that mostly use it to work with the cryptocurrency.

“The best way to invest in companies working with blockchain technology would be to focus on companies leveraging themselves to bitcoin. Companies that own bitcoin on their balance sheet like Square and MicroStrategy, or companies that are creating businesses on top of bitcoin like Square, Paypal, Coinbase, Silvergate Bank, Galaxy Digital, Hive, Voyager,” says Adam Pokornicky, the COO at Digital Asset Investment Management.

The financial takeaway

Blockchain technology represents an exciting area of innovation that now crosscuts many different sectors. Its possibilities have piqued the interest of investors throughout the world, insofar as they promise higher-than-average growth. 

Interest in blockchain tech has also been generated by interest in cryptocurrencies like bitcoin, which has risen in price by 300% in 2020 alone. 

This is why anyone seeking to invest in ‘blockchain tech’ should concentrate at least as much on companies offering crypto services or investing in crypto, as opposed to focusing on those solely using blockchain. 

At the same time, investing in a blockchain ETF may be a wiser strategy than investing in individual blockchain-related companies, since these cover a broader range of firms.

Related Coverage in Investing:

Here’s everything you need to know about blockchain, the ground-breaking tech that could be as disruptive as the internet

How to invest in bitcoin: The major ways to buy, their pros and cons, and the strategies to consider

‘I have changed my mind’: A top market strategist and long-time crypto skeptic explains why he now believes bitcoin should be in investor portfolios

Alternative investments are exotic assets that can diversify your portfolio – here are the five major kinds and everything you should know about them

Bitcoin taxes: Understanding the rules and how to report cryptocurrency on your return

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Adobe’s chief product officer predicts the 8 biggest tech trends of 2021

Scott Belsky
Scott Belsky.

  • Scott Belsky is the chief product officer of Adobe and founder of Behance, Adobe’s social media platform. He’s an early investor and product advisor for top startups including Pinterest, Uber, Carta, and Airtable.
  • As 2020 comes to a close, Belsky predicts eight major trends to emerge in the tech industry in the near future.
  • He says talent will increasingly own their audiences through apps like YouTube, TikTok, and Patreon, and that systems and apps supporting creativity will be emphasized over productivity tools.
  • Belsky also says an era of “eduployment” will emerge, integrating the process of choosing a trade, getting an education, finding a job, or starting a company.
  • Visit Business Insider’s homepage for more stories.

As we pull ourselves out of the ditch that was 2020, there are a few major themes of the future I’m particularly excited about. I’m sharing them as a way to connect more dots, meet more founders, and solicit input to further develop these ideas.

No surprise, some of the companies I mention within these trends I know personally, but I have challenged myself to share ideas still on the cusp of breakout rather than the obvious trends and winners. Here they are.

1. The notion of “decentralized” is spreading to unexpected places. 

Yes, Bitcoin and blockchain-powered solutions are all the rage these days, and one side-effect is ideas for how other aspects of work and life can be decentralized. For example, Ben Rubin’s /Talk is developing ways to decentralize how teams work (it turns out the very notion of “meetings” may be an archaic and wasteful vestige of centralized workplaces).

The team at Braintrust is using both the principles and technology of blockchain to build a user-controlled talent network. Rather than take any fees or percentage of the participating talent’s income, Braintrust gains value alongside other participants via tokens that become more valuable as the network grows.

The team at CashDrop has built a way for anyone (from a taco stand owner to an apparel designer) to build a storefront without relying on a traditional marketplace that charges commissions or fees. Taking a step back, the traditional model of central owners of community-powered utilities (marketplaces, app stores, etc.) taking a percent of everything (and central “bosses” for huge teams insisting on reviewing and approving everything) may finally be getting old.

2. Behold the era of “eduployment:” The process of identifying a trade, getting an education, and getting a job (or starting a company) will become fully integrated.

Take Nana for instance, a company that will train you in appliance repair (think unique brands of dishwashers, etc), and then set you up in a marketplace to start getting jobs in your local area fueled by leads from the manufacturers of these appliances. Or take Main Street, who will train you as a painter, outfit you with everything you need, and set you up to be a successful business out of the gate within 30 days  –  essentially turning you into a franchise.

 

Rather than enduring an expensive education only to assume the complete risk of your career, this new eduployment model, as I’ve come to call it, gives everyone skin in the game. The vertical integration of education and employment is upon us, and I think this trend will help address (at-scale) major systematic issues in our economy at scale while also minting a ton of new small businesses.

Read more: No more student debt: 64 apps and startups aiming to replace the university experience

3. A few seemingly quirky social apps will tune into the under 16 demographic’s distinct approach to creation as a form of self-expression and tolerance for transparency by default.

I’m seeing more entrepreneurs starting social apps now than in years past, and they’re no longer building off of Facebook’s graph or emulating existing products with slight iterations. Nope, these are (finally) wildly new and original ideas. One of my favorites, under the radar but experiencing rapid growth, is ItsMe. Now approximately #24 in App Store under social networking, ItsMe connects you with others based on your mood, it make you create your own appearance, and allows you to communicate with text, voice, audio, or drawing among other forms. And there are a few other new social models brewing that I am quite excited about.

What do these next gen social platforms share? They combine ephemeral sharing with lasting reputation building, they lean towards default transparency and with a more liberal interpretation of “privacy,” and they have fewer creative constraints and are geared to reward those with the most creative self-expression.

In the category of social, I am also quite excited about the rebirth of Gowalla as a wild social game still a bit under wraps that will take place in the real world, and Public, a social network for public market investing. Suffice to say, the future of social is exciting and, contrary to popular belief, will not be constrained to today’s dominant social networks.

4. Talent will increasingly own their audience, with the rise of “channels of one” and community-as-a-service.

Gone are the days when super talented people needed to sign a contract with a TV network to break through. But the ad-supported and algorithmically-driven alternatives, like YouTube and TikTok, still have the upper hand with talent. The pursuit to “own your own audience” will be a macro trend over the coming years.

Equivalents to Substack (where you build and monetize your own email list) will emerge in video, communities, and other ways to build, manage, and monetize your audience. Some early breakouts like OnlyFans and Patreon give us a sense of what is possible.

I am especially enthusiastic about products like Circle and Geneva that power fully-fledged community functionality for brands and individuals. If you’re a content creator of any kind, you can now spin up a community to gather your audience and spawn all sorts of offshoot services to delight (and monetize) your base.

In such a world, the Instagram and YouTube type products simply serve as top-of-funnel marketing initiatives. The goal becomes simple converting everyone you reach on other platforms to your own privately owned and managed channel. We will see a massive acceleration of this trend in the years ahead.

Read more: The loneliness economy: Companies and entrepreneurs see a spike in interest for rent-a-friend services, chatbots, and online communities that target feelings of isolation

5. More and more niche functions of enterprise will become multi-player, powered by a next generation of highly specialized, AI-bolstered, enterprise companies with consumerized product experiences.

From procurement and security to financial planning and design, functions of a company that were once siloed to particular teams are being transformed by SaaS tools that are collaborative-by default, easier to use, and inclusive of stakeholders across the company. Those of you who co-invest with me know my obsession with this space.

From companies like Globality for procurement, Sora for HR interactions, Meter for WiFi and IT, Welcome for hiring, closing, and onboarding new employees, there are many approaches and the list goes on. These types of products will fundamentally change how big companies operate across functions while transforming the quality of life for employees.

To help fuel this transformation, WorkOS is building enterprise-readiness as a service, enabling new companies to start selling to enterprise customers with just a few lines of code, with the value proposition “Single Sign-On (SSO) to your app in minutes.” And Scarf is building tools for open source developers to service and monetize enterprise customers. So, lots of energy in this space up and down the stack. One side consequence of all this: increasingly crowded and outdated customer acquisition channels for enterprise SaaS. This is also a problem/opportunity to solve.

6. Creativity tools will be deployed across the enterprise, much like productivity tools were deployed in previous decades.

Until the age of AI, being more productive was the best way to stand out at work. But now, as bots and algorithms supplant mundane and repetitive labor in the workplace, the benefits of human labor will shift to the skills and capabilities that are uniquely human. Chief among them: creativity.

Think compelling ways to visualize data, better ways to share a narrative with your coworkers, attractive graphics to spice up every presentation, and powerful prototypes that are worth a hundred meetings. These capabilities will drive outperformance at work (and in school, and on social) in the coming decades, and everyone must be outfitted to make it happen.

Obviously, this is a major focus in my day job as chief product officer for my creative teams at Adobe. We see this massive broadening of the market divided into two types of personas: content-first creators and collaboration-first creators. The former wants to be start with something  –  an image, a video or a graphic  –  and remix or deconstruct. The latter starts by bringing together a group of people and leveraging a shared assets (we’ve been gradually turning Creative Cloud into a “creative system” of sorts for this very purpose). Of course, this need requires new types of tools on modern platforms like the web. Adobe, along with a whole ecosystem of new apps, are working to make this happen.

Read more: Sleep-tracking ring Oura is beloved by some of the biggest names in tech. We asked 7 investors and execs how it’s helped them revamp their routines to sleep better and live healthier.

7. New and disruptive interfaces will emerge that aggregate and connect the underlying services we use to live and work.

This is certainly not a new trend, and I’ve been writing about the “interface layers” and the “battle to be the default” since 2014. But the explosion of SaaS offerings for everyday work (enterprise trend noted above) and life is setting the stage for a new problem and opportunity: How do we stitch it all together?

Consider the digital spaces in which we spend our days  –  the “home” page of our favorite apps, the finder on our desktops, the home screens of our phones. We’re creating different kinds of documents, files, folders, and teams all over the place. We have specialized apps for everything and must manage permissions in so many places. All of these various cloud documents and services have different schemas and don’t interact with one another  –  it’s a mess.

Some companies are rising to the occasion, including Command E (an easy keyboard shortcut to open any document, contact, file or record from the cloud) and another early stage stealth company I am excited about. No doubt, all of these underlying services and resources WILL be stitched together, and whoever does the stitching will control the interface where we actually live, work, and make decisions.

8. Another round of the Roaring ’20s is ahead of us, where the pent-up desires from the pandemic will be unleashed in the form of fashion, travel, and culture-bending creative self-expression.

My family and I endured a good chunk of the pandemic with our neighbor and dear friend Jenn Hyman, cofounder and CEO of RentTheRunway, and her family. Needless to say, the stay-at-home world made for a very difficult year for Jenn’s team. But now, with a light at the end of the tunnel, Jenn has a new energy. She believes that post-pandemic fashion will have more fun and edge than ever before.

I agree, and imagine our vaccinated selves fervently jumping back into the world through travel, fashion, parties, concerts, and meeting new people. (After all, the last century’s Roaring ’20s also followed a pandemic, the 1918 Spanish Flu.) Our desire to fill the cultural void that has accumulated in us will result in a form of overcompensation that will make for an epic decade ahead (yes, I’m a relentless optimist).

Like all of you, I am eager to move past the challenges of 2020. I’m hopeful that we emerge more productive from the “great refactoring” we all endured, and that we can all reclaim the ~30% of cognitive load that has been consumed by politics, gaslighting, and a seemingly never-ending stream of things to worry about. With our newfound peace and capacity, may we all dream and build in equal parts!

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Scott Belsky is the founder of Behance, which was acquired by Adobe, where he now serves as Chief Product Officer and EVP for Creative Cloud. He is an early investor and product advisor for some of this decades top startups, including Pinterest, Uber, Carta, Flexport, Airtable, and sweetgreen among others. Get his latest book  “The Messy Middle” or sign up for his newsletter. Follow him Twitter.

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Bitcoin’s market cap could hit $1 trillion in 2021 as its growing reserve currency status drives adoption higher, a cryptocurrency expert says

bitcoin
A chain of block erupters used for Bitcoin mining.

  • Bitcoin’s market cap could hit a trillion dollars as early as 2021, according to Blockchain.com’s head of research.
  • “My expectation is that bitcoin will become a trillion dollar asset as early as next year,” Garrick Hileman, who is also a visiting fellow at the London School of Economics, told Business Insider.
  • Although the 2020 bitcoin rally was largely driven by institutional investors, he expects to see continued buy-in more from retail and Wall Street investors going forward.
  • The researcher expects the US to digitize the dollar, but not too soon as he said “the Fed is happy with the way the world is.”
  • Visit Business Insider’s homepage for more stories.

Bitcoin’s market cap could reach $1 trillion sometime in 2021 as investors take its reserve currency status more seriously, according to Garrick Hileman, head of research at Blockchain.com.

Major institutional players like Stanley Druckenmiller, BlackRock, Bill Miller, and Jack Dorsey have acknowledged that bitcoin is not only going away, but is becoming a reserve asset and validating the digital gold thesis, Hileman said. 

Bitcoin has a current market cap of about $350 billion, while that of gold’s stands at roughly $10 trillion. This week the cryptocurrency gained 12% over two days alone, and was trading at $ on Friday.

“My expectation is that bitcoin will become a trillion dollar asset as early as next year,” the crypto researcher told Business Insider.

Blockchain.com observed a 39% growth in wallet creation year-to-date on its crypto exchange. That is about 17 million wallets created since December 2019. 

The exchange saw a broadening of adoption and ownership of crypto assets this year as more people continued to want in on acquiring the token. As many as 100 million people own crypto assets today, according to Hileman.

He noticed a lot of the recent price action was driven by institutional investors, based on transactions that occur on the chain, and is unlike the retail investor frenzy of 2017. On-chain demand and other metrics suggest that the 2020 rally was driven more by institutional hedge funds, family offices, and money managers.

Hileman expects to see continued buy-in from retail and Wall Street investors going forward, rather than corporates. That’s because it is harder for bigger players to participate than professional investors who already have accounts and easy access to major exchanges, he explained. 

For bitcoin’s market cap to reach $1 trillion, it would have to hit a price of $54,000 per coin next year – a 130% rally from where it’s at.

As for the US dollar, the researcher expects the world’s most popular reserve currency to be digitized sometime in the next five years. “At this point, the Fed is still taking its time because the Fed is happy with the way the world is,” he said. 

The status quo is working well for the dollar because it is dominant through the SWIFT mechanism and the corresponding banking system, he said. The US government can also raise debt at attractive interest rates, supporting the dollar’s status. But a competitive challenge lies in the crypto space and in the rise of stablecoins.

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