Friday Feedback: The “Existential Crypto Crisis” Edition
Great Ones, what’s the meaning of life? Why do we invest? What’s the airspeed velocity of an unladen swallow? Why is a raven like a writing desk? What’s the meaning of “is?”
So many life-altering questions … none of which I’m actually going to answer today. What? If I had the definitive answer to any of these questions, I wouldn’t be writing Great Stuff, now, would I?
But the arrival of so many questions can mean only one thing … it’s Friday Feedback time!
That’s right! Today’s the day when we fold your emails into paper planes, throw open the office windows, turn on the ceiling fans and answer whatever’s left in the room when we’re done drinking … or something like that.
The exact process of Great Stuff‘s email selection is a secret kept right alongside KFC’s 11 secret herbs and spices.
Anywho … if you’ve got a burning market question, a hot investing take, or just an off-the-wall existential rant, we wanna hear it!
Send your market insanity to GreatStuffToday@BanyanHill.com and we’ll jump right on it … assuming your email doesn’t go out the window, that is. But, then, we all go out the window, don’t we?
OK, that’s enough silliness … or is it? Let’s get to today’s featured presentation and find out:
Great Stuff Team!I still don’t understand how cryptos will function as an everyday currency. Then again, I *hated* economics because nearly all of the principles depend upon a static environment to be true. The world is anything but static, and that always rubbed me the wrong way.
Aside from supply and demand, which is a straightforward cause and effect principle, nearly everything else is based upon a world that has defined assumptions. But the principles of economics are at least easy to digest, even if they give me indigestion.
There are many fundamentals to cryptocurrencies that seem to tear at the very fabric of my left-sided brain. Just looking at bitcoin, it is well established that there will only be 21 million bitcoins in existence. Since the vast majority of transactions that would take place on a platform like Amazon would deal in fractional “coins,” how are bitcoins fractured? And given the volatility of bitcoin, how does a supplier determine a price in fractional coins for its goods and services?
And, if bitcoins can be fractured and the majority of transactions are conducted at this micro level, wouldn’t that recalibrate the number of bitcoins available since fractional coins will become the standard medium for trading? And if a bitcoin can be fractured, is there a limit to the number of fractional coins that can be created?
Then, there is the number of different cryptocurrencies on the market. It seems anyone can just create a crypto. (Dogecoin anyone?) What determines the value between cryptocurrencies? It is only logical that once a company accepts one form of crypto, eventually, they will accept others.
Bitcoin has established a “maximum” number for their cryptocurrency, but others have not. So, while bitcoin can maintain “scarcity,” it seems others will not, so how will a company determine the value of its goods across cryptos? Can a consumer pay for a transaction using multiple cryptocurrencies?
Now my brain hurts. — Mike B.
Your brain hurts? I’m questioning my entire existence now, Mike. Thanks for writing in … I think. I’d ask how you’re doing, but I don’t want to break what fraction of your brain is still with us in reality.
First things first … why do cryptocurrencies like Bitcoin (BTC) have value? Because people think they do. It really is that simple. Ask yourself: “Why does gold have value?” Sure, gold is used as a material or commodity in some manufacturing processes, but that’s not what drives its value.
Gold has value because people think it’s pretty and it’s hard to get … well, relatively hard to get, at least here on Earth. NASA has found an asteroid with enough gold to make everyone on Earth a billionaire … so, make of that what you will.
The point is, cryptocurrencies have value because enough people say they have value. I did a nice write-up on that back in January called O Crypto! My Captain! … you should check it out.
With that out of the way, let’s hit a couple other points here.
How is Bitcoin fractured?
Bitcoin can be divided up to eight decimal places. So, even though there will only ever be 21 million whole Bitcoin in existence, those 21 million can be divided into literally quadrillions of individual units for transactions. Because of this, Bitcoin has managed to achieve both scarcity and daily utility in a way that gold or even the U.S. dollar never will.
How does a supplier determine a price in fractional coins for its goods and services?
The same way they determine the price in “fractional” U.S. dollars? If the U.S. dollar has a certain value, then the value of pennies, dimes, nickels and quarters are all based on that — they’re divisions of a dollar, after all. The volatility thing is certainly an issue, but if a crypto gains enough acceptance to become a mainstream currency, that volatility should go away, and price/value will stabilize.
What determines the value between cryptocurrencies?
Right now? Ironically, it’s the U.S. dollar. The ol’ greenback is still the world’s reserve currency and is used to set a common value across nearly all major markets. So, Ethereum and Bitcoin can be compared to each other in terms of value by comparing their respective valuations in U.S. dollars.
That said, if one crypto ever gains enough dominance to become the world’s reserve currency, that crypto will set the bar for valuation comparisons.
Can a consumer pay for a transaction using multiple cryptocurrencies?
I would say this depends entirely on the vendor. I don’t know of any merchants that accept enough cryptos to allow you to do this — i.e., pay with both Bitcoin and Ethereum. Doing so right now would be a bit of a headache for any merchant, payment system or banking institution facilitating the transaction.
Will it happen one day? Maybe. If I knew, I’d tell you, and we’d all be rich.
I think that covers all your bases, Mike. Thanks for writing in! I’m gonna go soak my brain in something now and contemplate my life choices … and it’s all your fault.
What you should contemplate, however, is why you’ve still not checked this out:
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And now … it’s time!
Time for us to beat back the inbox invasion and catch up on your emails. It’s also time for you to write in and make sure your voice is heard for next week’s issue.
GreatStuffToday@BanyanHill.com. Write to us with your tales of woe, a blow-by-blow of your latest trade … or just list off the random asides and diatribes that pop into your head. (I mean, it’s what we do here.)
As you’re about to see, it takes all kinds of emails to make one unhealthy serving of Reader Feedback. And we mean all kinds.
INO You Have Something To Say…
Good morning, how do you see INO? I see a struggling company with innovative technology (DNA-based) and a decent pipeline. The potential is there, however, two huge issues in looking at the stock: INO has never taken a drug out of testing and [there’s] no insider buying. I do like their technology and believe we are very close to a major announcement; would you take a starter position or maybe a little bit more? Thank you for your time and effort. — Vince
Vince! Happy Friday, brother.
To answer your question, I jumped on Inovio Pharmaceuticals (Nasdaq: INO) way back at the beginning of the pandemic — on January 31, 2020, to be exact — and Great Stuff Picks readers made 117% in just three months on the stock. But that fire has all but burned out by now.
Inovio still has all the makings of a potential takeover target. The problem is that the company — as you note, Vince — has never brought a drug to market. In January 2020, I was banking off the pandemic furor to send Inovio’s shares higher. And that momentum should’ve kept going over the past 18 months … except that it didn’t.
The issue here isn’t Inovio’s DNA technology. That appears to be solid, and we’ll get more info on said tech when Inovio finally submits its COVID-19 vaccine to the FDA. However, it’s taken Inovio way too long to develop this vaccine … and that raises questions about its leadership.
I do still think the company is a great takeover target. But unless Inovio can prove its tech and processes, even a takeover is questionable at this point.
In other words, Inovio is worth keeping on your radar … and it might even be worth investing in if you have the money to burn and feel comfortable taking on that level of risk. But I’m personally avoiding INO shares.
I hope that helps, Vince!
Apple’s Court Of A-Peels
Dear Apple, Please drop the appeal and give customers a choice versus lining your pockets with more wealth. — Jim B.
Oh, Jim, you must be one of those optimistic types!
I think anyone who’s followed along with Apple’s (Nasdaq: AAPL) class-action lawsuit and its bogus “Apple Tax” feels similarly at this point. But you expect too much from a company that claims it taxes third-party app developers to “provide safety and security to its App Store users.”
We all know this is about Apple wanting to increase its service revenue and that it has nothing to do with benefiting users (or developers) in any way. But in the end, Apple’s gonna Apple. Apple fans will keep buying Apple products.
And AAPL investors will keep buying into a company that lacks both innovation and integrity — same as it ever was.
Thanks for writing in, Jim.
We’ve Had One Breakfast, Yes…
Why do people eat breakfast, and what do you eat for breakfast?Imagine if we all stopped eating breakfast what a saving it would be on our pockets, health and the planet. An investment idea in the brewing here. — Tibha
What is this, a Seinfeld episode? Hey, if you wanna talk shop about breakfast, I’ll be your Cap’n Crunch — er, Huckleberry. Huckleberry or blueberry waffles for you, Tibha? Or are you one of the “no breakfast” bunch?
No judgment here, mind you — I’m more of a liquid breakfast kinda guy. (Bean juice, that is, not bourbon … well, most mornings anyway.) I guess if you were looking for a hearty stock selection for a well-balanced breakfast portfolio … General Mills (NYSE: GIS) or Kellogg (NYSE: K) will give you your fill of processed grain.
Did you say: “100% whole gains?”
No, definitely not. There’s no “wow” factor that you’re getting when you buy General Mills or Kellogg — just like real prizes inside the cereal box are a far distant memory. No, Kellogg, I will not scan your QR code for a special VR surprise. Where’s my freaking decoder ring?
These are solid, consumer-oriented blue chips to their core … but you might fall asleep in your cereal bowl most of the time.
And unless you’re looking at buying Starbucks (Nasdaq: SBUX), you’d be hard-pressed to find a major-leagues coffee-related pure play for that caffeine fix. Without selling your soul out to the likes of Nestle, that is.
The Power Of Proofing Compels You
Thanks for writing in, Art. Bet you were chomping at the bit to chime in, eh?
I mean, I live in Kentucky … so I know a bit about horses and “champing.” Horses, bourbon and truck nuts … that’s what we’ve got here. But there really isn’t an excuse for this one … mea culpa. I’ll add this one to Ken B.‘s list, along with “reign/rein/rain.”
That said, to me, it is chomping. And chomping it shall stay. What bits are being chomped, however, I will not divulge publicly.
Phrasing? Are we not doing “phrasing” anymore?
Billionaires Are Temporarily Embarrassed Trillionaires
Same, Gerald. Same.
They don’t think it be like it do, but it do.
And now, a selection from our resident poet, Great One Dave S., who just switched over the channel from ancient battery discoveries to the inspiring essence of the cosmos:
Not A Rant Or Rave Or Anything To Do With The Market
Remember:95% of the universe is invisible.
That doesn’t include the those of us
who feel 100% invisible 100% of the time.
So next time you’re feeling low
Your Matter — Dave S.
Thank you, Dave. Your matter too. (Are you still wincing, Art?)
Your reward, for such a heartwarming message, is the lithium play you seek … at least, I thought you asked for lithium stocks somewhere deep in the rest of your email.
We just recommended Albemarle (NYSE: ALB) in Great Stuff Picks a couple weeks back — you should check it out. We wrote it especially for you! Who feels 100% invisible now?
If you would like to make like Led Zep and ramble on, you don’t have to go over the hills and far away to do so. Just drop us a line right here in the inbox for next week’s edition of Reader Feedback!
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Until next time, stay Great!
Editor, Great Stuff