If you want to succeed in business, there’s one thing, just one thing, you need to do. That isn’t making money — how quaint! — but rather adding the word “blockchain” to your company’s name.
Don’t believe me? Just ask the biotech firm Bioptix, which saw its stock price nearly double after it announced it was changing its name to Riot Blockchain and shifting its focus — or “pivoting,” as CEOs like to say — to cryptocurrencies. Or the Long Island Iced Tea company, whose market value increased 500 percent after it rebranded itself as the Long Blockchain Corp., and said it would move beyond just making soft drinks to start looking for “an investment in opportunities that leverage the benefits of blockchain technology.”
To be honest, though, you don’t even have to use the word “blockchain” in your name as long as you say you’ll be using it in your business. That was all it took for a failing Chinese juice company to make its stock shoot up 150 percent last week, or for a small financial tech firm to send its shares on almost a straight line up 2,600 percent during that same time.
If this sounds like the most obvious bubble ever, even more so than the tulip, Beanie Babies or dot-com manias, well, that’s because it is. And it might already be popping.
Now, for the uninitiated, a blockchain is just a record of every transaction a cryptocurrency like bitcoin has ever been used for. The important thing to understand, though, is that it’s also a public record. The way it works is that every time a new bitcoin is “mined” — that is, someone wins it by solving computationally-complex math problems — everyone who’s a part of the bitcoin network updates their list of who owns what. This might not sound like that big a deal, but it’s potentially revolutionary. It means that, unlike with, say, dollars, you don’t need a bank to tell you who has bitcoin to send and who doesn’t. Everybody already knows that. It’s right there in the blockchain. So there’s a chance, then, that we might eventually be able to transfer things online without having to pay anyone to do it.
But it’s only that: a chance. Bitcoin isn’t actually good at these things right now, and it might never be. The most immediate problem is that bitcoin has artificially given itself a very limited amount of bandwidth to process transactions that, guess what, isn’t sufficient to process even its very limited number of transactions. That’s created a long line of people waiting for their bitcoin deals to clear — a line that you have to pay an average of $50 to get to the front of today. Now, as easy as that would be to fix technically, it’s hard politically. You’d need to get bitcoin’s many medium-sized players to go against their own interests by making the coins hold more data and harder for them to “mine.” Although even that might not be enough to keep bitcoin from being useless. Nobody wants to spend a currency they think is going to make them rich. They’d rather use something that isn’t acting like their 401(k) for their day-to-day purchases, even if that means still having to pay the 2 percent transaction fees they do when they buy things online. After all, it’s not like people really mind those. Credit card companies actually give them something they want for them — the ability to undo transactions if they’ve been hacked or scammed — that bitcoin doesn’t.