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Why You Must Buy The Brand Names

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No matter if you are a developer with deep knowledge of technology or a prospective first time investor, your choices are pretty mind-boggling. This year started with 1384 cryptocurrencies. More are coming every week.

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Literally billions are being made but how to choose the right one. If it means spending you life buried in complex technical blogs trying to understand both the obtuse technical language and then the writers jargon, you may decide to bail.

Putting Perspective on The Technology

There are loads of folks who understand the different technology between bitcoin and Litecoin or between Ethereum and Cardano. My perspective comes from analyzing dozens of businesses over more than four decades and cryptocurrencies is one of the most promising yet.

Simple Solution

Here is a solution that will help you cut through the complexity. Buy the best brand name. Classic investment risk management dictates a completely different strategy. Every certified investment advisor will recommend risk diversification and clearly cryptocurrencies are about as risky as you can find.

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However, after digging through all 1384 cryptocurrencies, you will be fully diversified by owning just two brands. The couple that we are talking about is bitcoin and Ethereum.

There are other choices in the top ten like Ripple, bitcoin Cash, Cardano and Litecoin. Each brand is worth researching but none offer all the combined benefits of bitcoin and the Ethereum Network.

ICOs Don’t Need To Be Confusing: Look To Ethereum

 In the past year some huge returns have been chalked up by initial coin offerings. Here we are talking about companies seeing their value go from fractions of a penny to dollar multiples in no time. The challenge is how to choose the right one.

Consider what you are dealing with. Initial coin offerings allow companies that are at pre-venture capital stage to get started. So the risks here are higher than investing in a blind pool venture capital fund.

The accepted formula by VCs is to aim for a success rate of 2%-5%. This means that 95% of the companies that are much further developed than most ICOs will fail. With your chances of finding the dream ICO generously placed at 1%-2%, why bother.

In 2017 more than 1,000 ICOs raised about $4 billion. According to ICO Watch List, 78.7% of those used the Ethereum platform. So if you want to play the ICO game, why not simply own the gas the powers the network: Ether.

 The Ethereum Brand: Think Microsoft Corp

In a recent CNBC interview Ethereum co founder Steven Nerayoff made the comparison of Ethereum with the early stages of Microsoft Windows. Along with Bill Gates, Microsoft is one the world’s most ubiquitous brands. Side note: Microsoft didn’t reach Ethereum’s present value until after ten years of Windows.

Nerayoff cites billions of dollars being poured into as many as ten times the number of projects in 2018 over the previous year. From his vantage point these projects include a wide breadth of industries starting from financial tech, oil & gas, gaming, travel/resorts, government and various creative areas.

According to Jeremy Millar, cofounder of the Enterprise Ethereum Alliance (EEA), CEOs across the world are clamoring for blockchain technology. Millar believes most CEOs require a heavy dose of education about the new technology and that means there will be a natural demand for the largest supplier with the biggest brand- Ethereum.

A key to Ethereum’s brand leadership started last February when the EEA to connect Fortune 500 companies with Ethereum experts. Now with almost a year under their belt membership has grown to over 300. This is brand leadership in the most important market for Ethereum. Nobody else is close.

The Bitcoin Brand

Think of bitcoin as a brand like MasterCard, Visa, American Express or even Crest toothpaste. Each of these names enjoys instant consumer recognition thanks to million invested in advertising, marketing and image development. Bitcoin is unique in the sense that not a single bitcoin has been spent to advertise its usefulness.

One source claims there are well over 10,000 merchants that accept payment in bitcoin. Headliners include Microsoft Corp, Subway, Whole Foods, Intuit, Expedia, Bloomberg, Dish Network and Overstocked.

Ask First Data, Fiserv or any other payments processing company and they will attest to the difficulties of changing client habits in accepting payments. Any newbie attempting to enter the payments business will have to answer the dual questions: what makes you better, faster and cheaper then bitcoin and do you have greater consumer acceptance? Right now, bitcoin has a lead of at least two year and they aren’t sitting still.

The Bitcoin Moat Is Being Built

 Bitcoin is the king of digital currencies but the king is not perfect. There are those shortcomings like volatility and slow speed.

The start of a bitcoin futures market began on December 18. The CME and CBOE are giving everyone the ability to hedge. The prospect of reduced price volatility will attract additional mainstream retailers.

No more than a few days after futures trading began on the CME, one of the largest luxury used car dealers in Japan announced the acceptance of bitcoin. Since then the giant investment bank Goldman Sachs has created a research team and issued a glowing report on the cryptocurrency outlook. The tipping point for bitcoin has taken place.

The bitcoin moat is being built even wider by Bitcoin Lightning Network, which was released this week both increasing speed and resulting in dramatically lower fees.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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2 Comments

  1. douglash

    January 13, 2018 at 11:13 am

    Wow, are we paying to subscribe to Hacked to get the advice, “Just buy ETH and BTC for full diversification”?

    A more sophisticated approach to diversification would be to think about various token functions as ‘sectors’ and buy 2-4 high class offerings within each sector. Example:

    Store of Value coins: Bitcoin, Diamond
    Convenient Transaction coins: Dash, Litecoin, Bitcoin Cash
    Smart Contract coins: Ethereum, NEO, QTUM, Cardano, EOS, Lisk, Ethereum Classic
    Business-friendly coins: Ripple, Bancor, Neblio, Modum
    Functionality coins: Raiden Network, BlockCat,VeChain, Walton Coin, Quantstamp
    Exchange coins: KuCoin Shares, Binance Coin, COSS, Spectre, Kyber Network
    Blockchain for the Masses coins: Everex, UTRUST, NEM, Stellar, Omise Go
    IOT coins: IOTA, IOT Chain, Golem, SPARK
    Privacy coins: ZCash, ZCoin, ZClassic, Monero, Pivx, Zen Cash
    Masternode coins: Dash, Pivx, Diamond, Crown
    Change the World coins: SALT, Substratum, Civic, ARNA
    AI coins: Deep Brain Chain, Neurotoken, Red Pulse

    I could call out a few more sectors, but you get the point. There are key differences in utility of these blockchain ecosystems. Targeting high quality coins within each sector is a far better approach, to me, than just loading up on ETH and BTC. It’s a lot of coins, but the great thing about being diversified is that you really don’t need to trade often. Every day you’re having a good day in some sector.

  2. douglash

    January 13, 2018 at 11:15 am

    *sorry, Golem and SPARK were supposed to be under AI coins.

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Are You Considering a Career in Crypto?

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In 2008, a bizarre and esoteric technology by the name of bitcoin was introduced to the world in a whitepaper penned by Satoshi Nakamoto. Just one decade later, that whitepaper would spawn a budding industry racing toward the trillion-dollar mark.

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At the time of writing, there are more than 1,550 cryptocurrencies trying to do a variation of what bitcoin has accomplished. Hundreds more are expected to be created this year alone. To bring these currencies online, startups, institutes and not-for-profits are depending on a talented workforce made up of engineers, analysts, marketers and business professionals.
That’s a long-winded way of saying the crypto-economy is hiring, and there’s no shortage of opportunity. Recently, freelance marketplace Toptal announced it was launching a blockchain engineering platform for talented technology professionals. As TechCrunch pointed out, this is a huge deal because Toptal represents about half of “on-demand engineering labor by revenue.”

Blockchain Talent Demand: By the Numbers

Blockchain engineering has quickly emerged as the fastest-growing segment on Toptal. Since January 2017, demand for professionals in this category has surged 700%. The company also reports that some 40% of fully managed software development jobs in the last month require blockchain skills and domain knowledge.

Toptal isn’t the only freelance community witnessing a surge in blockchain skills. Upwork also reported blockchain as the fastest-growing skillset in terms of revenue, with billings skyrocketing 35,000% year-over-year. For a site like Freelancer, bitcoin job posts grew 82% in the third quarter alone.

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It’s not just freelancing websites that are witnessing an upsurge in blockchain-related job posts. Last year, LinkedIn reported that finance companies saw a 900% increase in bitcoin-related job postings since 2014. There are now tens of thousands of users who list “blockchain” as one of their available skillsets.

At the time of writing, there are 1,060 “cryptocurrency” jobs listed on the U.S. section of Indeed.com, one of the world’s largest job boards. The “blockchain” job category had nearly 3,200 hits. Pretty much all of the jobs had a minimum salary of $70,000 per year and about 40% paid six figures.

Job Categories

From the author’s perspective, working in blockchain/crypto usually involves one of the following organizations:

  • startup company launching an initial coin offering (ICO)
  • an advisory service helping ICOs launch their product
  • a large technology or financial services company utilizing blockchain technology
  • an institute or not-for-profit researching blockchain applications and use case

In terms of job categories, you are mostly looking at the following:

  • Technical: Software developers, engineers, programmers and other IT specialists get the lion’s share of job postings.
  • Writing and Marketing: This is a fairly broad category that covers journalism, content development and copywriting. If you understand blockchain technology and the world of crypto and have good writing skills, there’s no shortage of opportunity.
  • Advisory Services: Domain experts can charge a premium advising startups on how to navigate the crypto sphere. Experts usually make it on to an ICO’s adviser page.
  • Legal: We are seeing a steady rise in legal services that assist token issuers navigate the regulatory requirements of cryptocurrency crowdfunding.

It’s clear from many of these categories that most people didn’t specialize in blockchain initially but have applied their skills and experience to the domain. Depending on how you view the future, specializing may or may not be a good idea.

In mainstream and institutional circles, blockchain is much more of a sure thing than cryptocurrency. That’s one place budding professionals can focus on if they do decide to enter the labor market.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 152 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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First Internet Bancorp: Breaking The Shackles

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Traditional bank stocks have been pretty boring until recently.  Yes, that is changing.  The prospects of a steeper yield curve could make for better earnings in 2018.  But if it weren’t for some of the exciting things to come along in financial technology, the S&P 500 financial index would still be stuck in the rut of underperformance.

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So let’s take a look at one of the early innovators that draw their roots to the small town of Fisher Indiana in 1999.  That was era of landline telephones and dial up Internet.

The Original Internet Bank  

So what makes First Internet Bank (INBK: NASDAQ) different?  For starters, they are the first state-chartered, Federal Deposit Insurance Corporation (“FDIC”) insured Internet bank.

INBK does not have a conventional brick and mortar branch system. It operates through a scalable Internet banking platform.  That may not sound like a big deal since every bank around has mobile banking.

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Everybody in fintech wants to tap into branchless online banking but getting and FDIC charter isn’t so easy. It takes a huge amount of paperwork and lots of time to get approval.

Many startups like Simple attempted to enter the game acting as a broker for FDIC insured banks.  However, under banking rules growing out of the 2008 financial crisis, this proved a tuff road.  

So little old plane vanilla First Internet Bancorp has the key benefit of being an FDIC chartered and insured bank just like the big boys like Citibank and JP Morgan Chase but without the bricks and mortar branches.

INBK’s structure gives them nationwide reach. The implications for costs and customer acquisition being a major benefit.  Until more recently, however, capital limitations put the brakes on major expansion opportunities.  But now, things have changed.

What To Do With $150 Million

On August 8, 2017 INBK filed a registration statement for a $150 million secondary offering with all proceeds going to the company for “general corporate purposes.” Considering the market cap of INBK at the time was about $250 million, the offering was huge.  It substantially bolstered Tier One Capital.  That means for the first time in a while since the financial crisis that INBK could expand its deposit and lending base.

These days INBK’s balance sheet looks darn attractive with cash and deposits more than tripling since 2015 to $656 million and long term investments more than doubling to $2.4 billion.  INBK is exceptionally lean.  They have no long term debt.  When you add up all the fixed overhead like offices, computers and employees, it amounts to just a little under $15 million.  That, as they say, is chump change.  

Full Service Banking

INBK offers the usual assortment of commercial, small business, consumer and municipal banking products and services. They conduct consumer and small business deposit operations primarily through online channels on a nationwide basis and have no traditional branch offices.

Residential mortgage products are offered nationwide primarily through an online direct-to-consumer platform and are supplemented with Central Indiana-based mortgage and construction lending.

Consumer lending products are originated nationwide over the Internet as well as through relationships with dealerships and financing partners.

Commercial banking products and services are delivered through a relationship banking model and include commercial real estate (“CRE”) banking, commercial and industrial (“C&I”) banking and public finance.

A public finance team was established in early 2017, provides a range of public and municipal lending and leasing products to government entities on a nationwide basis.

Free At Last

In 2017 customers shelled out about $45 billion in fees to the banking industry in account service fees, check return fees, overdraft fees and more.  All of this was needed to cover the overhead of the bazillion bank branches.

In 20 years it is possible that 80% of all branches will be replaced by mobile devices. Perhaps there will be none at all.

With no branch overhead to cover, First Internet and others like them can offer appealing perks like free checking, no overdraft or bounced check fees.  That is a big selling point.

Customer Turnover Is Low In Banking

Customers hate those annoying fees but it takes a lot to get them to move.  Costs are often measured on the amount of marketing dollars needed to attract new customers.  There are many ways of measuring these costs so there is no single guide to the true cost.

One bank, BBVA placed the cost at $100.  Other estimates run as high as $145.  Both numbers include the cost of branches.

A study that I participated in several years ago placed the cost for an online bank as low as $50 per new customer.  The difference in these two numbers is just one reason why you should get excited about pure online banks.  First Internet Bank looks well positioned.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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USA Technologies: Thinking Small To Grow Fast

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Malvern Pennsylvania is the home of USA Technologies, a town of just 3,000 people. In Malvern it pays to think small.  USA Technologies (USAT: NASDGM) is trying to make it big by thinking small.

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The word small ticket comes up frequently in USAT’s self-description. Here is why they want to be a big fish in a small pond.

What They Do For A Living

USAT provides wireless networking, cashless transactions, asset monitoring, and other value-added services to the small ticket, unattended Point of Sale (“POS”) market.  This sounds super cool, but what does it mean?

USAT developed something they call ePort technology.  When it is installed into things like vending machines, commercial laundries, amusement games, or stand alone kiosks so you no longer have to carry cash.  It is another application of network technology and it is spreading rapidly.

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While thinking small, USAT also developed ePort Connect, which amounts to a Payment Card Industry Data Security Standard (PCI DSS)-compliant, comprehensive service that includes simplified credit card processing and support, consumer engagement services as well as telemetry, Internet of Things (“IoT”) and machine-to-machine (“M2M”) services, including the ability to remotely monitor, control, and report on the results of distributed assets containing electronic payment solutions.

Competitive Position

Company CEO Stephen Herbert claims the company is a leading provider in the small ticket, beverage and food vending industry.  They are expanding solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others.

Historically, these businesses have relied on cash for payment in the form of coins or bills, whereas, USAT systems allow the acceptance of cashless payments through the use of credit or debit cards or other emerging contactless forms, such as mobile payment.

How Does USAT Make Money

Revenues are generated from the sale of equipment and from license and transaction fees.  It is this last source that helps make USAT most interesting.

During the fiscal year 2017, 73.0% of revenues came from recurring license and transaction fees related to ePort Connect service and just 27.0% from equipment sales.

CEO Herbert believes that a service based business model, will create a high-margin stream of recurring revenues as a foundation for long-term value and continued growth.

Financials: Small Is Getting Big Quickly

USAT strategy seems to be paying off handsomely.  Revenues over the past five years have been growing a better than a 25% pace going from $29 million in 2012 to $104 million in the year ended June 2017.

For the six months ending December 2017 the company surpassed last years total ringing up about $43 million in revenues, a 30% increase.

In their February 8th earnings release, the company raised guidance for fiscal 2018 revenues to $140-$145 million and for adjusted EBITDA to between $13.5 and $14.5 million.

At this time four Wall Street firms cover the company and these folks expect USAT to earn $0.06 per share this year before tripling in fiscal 2019 to $0.18.

Cantaloupe Acquisition

Back in November USAT signed an $85 million deal to acquire Cantaloupe Systems, Inc based in San Francisco.  Just like USAT, Cantaloupe is a provider of cloud and mobile solutions for vending, micro markets and office coffee service.  The two companies tout the deal as bringing together complementary portfolios for the purpose of creating the industry’s top solutions platform.

The acquisition had only minor benefits to reported USAT first half results.  On a pro-forma basis, if the acquisition had occurred on July 1, 2016, first half consolidated revenue would have increased 26% year-over-year.

Management With Beverage Industry Background

CEO Stephen Herbert has considerable history in the beverage industry and has been CEO at USAT for over 5 years. In other words, he needs no on the job training.

For the 10 years prior to joining USAT in 1996, Herbert had been with Pepsi-Cola in their beverage division vending area.

The company believes Herbert’s intimate knowledge and experience with all aspects of USAT for over 20 years and his extensive vending experience at PepsiCo before joining USAT provide the requisite qualifications, skills, perspectives, and experiences to serve.  We would tend to agree.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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