Blockchain hype like dotcom bubble, warns Dutch investors group
Dutch investors association VEB warns investors against companies that are using the cryptocurrency hype to attract investors and boost share prices by adding "bitcoin" or "blockchain" to their name. According to the association, this is very reminiscent of the dotcom bubble, when companies added '.com' to their names to suddenly increase their share prices without actually changing the company fundamentally, accountant.nl reports.
VEB used American beverage manufacturer Long Island Iced Tea as an example. Last month the company announced that it is dropping soft drinks manufacture and will focus on blockchain technology, changing its name to Long Blockchain. "That change in name alone and the promise to seek opportunities in blockchain caused the stock price to explode. The market value went from less than $25 million to nearly $100 million", the association said, according to the magazine.
And Long Blockchain is by no means an exception. Small-scale technology investor Longfin saw its share price increase by 2 thousand percent just days after announcing its acquisition of Ziddu.com, according to VEB. "Ziddu.com focuses on corporate finance through digital currencies, but does not even have a fully working website yet."
According to VEB, cryptocurrencies are a hype, but blockchain - the underlying technology that makes cryptocurrency possible - is something worth retaining. "If one thing is missing on the internet it's trust, and blockchain could provide that trust.