Pivots Towards the Blockchain – Loony or Smart?
Kodak and Long Island Iced Tea have both been criticised recently for loony pivots towards the blockchain to attract feverish cryptocurrency investors. But, can you blame them when shares for the former rose as much as 90% after announcing their new KodakCoin, and the latter share-price spiked 289% after changing their name to Long Blockchain Corporation.
Consequently, a cacophony of warnings about the dangers of investing in cryptocurrencies has arisen as similarities between the dotcom bubble and crypto-mania become increasingly apparent. But do they really? Or is there more substance to those news than cynical haters are willing to admit?
Well… It depends.
Loony pivots towards the blockchain, which provide no return to investors, will occur as long as (retail) investors consider cryptocurrency and blockchain ‘buzzwords’. But, these companies should be fairly easy to identify. In short, beware of companies radically shifting their business model and/or changing their name.
Where is the Light?
But adding blockchain technology to existing tech business’ (‘old tech’) or even “old economy” business’ can be a fundamentally smart move. Better to recognize the disruptive nature of blockchain and decide to become the disrupter, rather than the disrupted. Many of these companies have a great opportunity to create leading cryptocurrencies and ecosystems, by combining experience and existing revenues with blockchain vision.
If You Can’t Beat Them, Join Them
A positive example: JDC Group (Bloomberg: A8A.GR), the largest transaction “machine” for mutual funds and insurance products in the German-speaking financial and insurance market, is about to join the blockchain movement.
JDC Group already today is a technology powerhouse. Embracing blockchain is the logical next step for a company that already has the most popular digital insurance wallet in Germany. Moreover, take comfort in the knowledge that JDC has significant financial depth to make this step successful. Estimates for 2018 are approximately 110 Million Euros revenue and pre-tax earnings of 8 Million Euros. Furthermore, being able to recruit erudite Google managers to their board should not be overlooked.
As they are the biggest financial sales force in Europe (16,000 independent financial advisors, 1.4 million existing retail clients), they should be easily able to equip all their clients with a crypto wallet and some JDC coins. Overnight they will become the largest crypto-wallet provider in Germany. Armed with innovative insurance products, built on cutting-edge blockchain technology, JDC revenue could rise to 200 million Euros and earnings to 20 Million Euros till 2020, analysts predict.
It Pays to Be in Blockchain
Companies like JDC offer an excellent opportunity to profit from the cryptocurrency boom, especially to market participants prevented from buying cryptocurrencies directly, for example, mutual funds, or to investors who find the process of purchasing a cryptocurrency cumbersome and complicated. Blockchain is the biggest investment opportunity since the broad-scale introduction of the internet 20 years ago. In the next 5 years, we will see the Google, Amazon, and Facebook of the crypto world and we all have the chance to be a part of it.
How big will the blockchain industry get and who will be the major players? Let us know what you think in the comments below.
Images courtesy of AdobeStock, JDC Group