O Crypto! My Captain!
Y’all know what time it is… It’s Great Stuff Reader Feedback day!
It’s once again time to hold my nose and dive into the Great Stuff email inbox to answer your questions, digest your rants and laugh at whatever absurd things you’ve sent me in the past week.
While you’re clearly too late to join this week’s edition — I’m not a time traveler, you know — you can always join in the fun next week by dropping me a line at GreatStuffToday@BanyanHill.com.
Today, we’re answering questions on cryptocurrencies, Chinese electric vehicle (EV) maker Nio (Nasdaq: NIO), quantum glass batteries and Alibaba (NYSE: BABA) … so let’s get started!
Our featured presentation delves into the philosophical depths of cryptocurrencies:
What is the underlying value of any cryptocurrency? I have never understood why it has any value at all.
— Tom B.
Welcome, Tom! You’re the first contestant on Great Stuff Reader Feedback. Come on down!
To paraphrase Dr. J. Evens Pritchard (Dead Poets Society): To fully understand cryptocurrency valuation, we must first be fluent with stores of value, blockchain and digital forms of payment. Then ask two questions: 1) How artfully has the objective of the crypto been rendered, and 2) How important is that objective?
Ethereum might score high for its artful execution and blockchain implementation but low as a form of payment. Meanwhile, Bitcoin would score high across the board due to its broad market acceptance and ease of use as a vehicle for securely transferring money digitally.
(Hulu just added Dead Poets Society … can you tell what I watched last night? Hmmm…)
Now, if you want more of that financial drivel on the fundamentals of cryptocurrencies like bitcoin, you can really dive into the meanings of stores of value and cryptos by clicking here.
However, if this were a class on cryptocurrencies and someone handed me a book with all that in it … I’d take a page from Dr. Keating’s playbook and tell you to rip that sucker out. Rip it all out! I don’t hear enough ripping!
Why does cryptocurrency have value?
Why does anything have value?
Because, enough investors decided it has value. There are lots of factors that go into that decision, but, ultimately, that’s your answer. The U.S. dollar has value because it’s a representation of the U.S. economy and the stability of the country itself. It used to be backed by gold, and more than a few people are upset that it isn’t anymore.
But, isn’t gold just another metal? It’s pretty. It’s shiny. It makes nice jewelry. It has some uses in technology. That’s about it, though. It’s not even that rare. The stuff is everywhere. In fact, the only reason gold is valuable is because investors decided it was.
I’ve heard that people and governments hoard gold just in case society breaks down. I’m telling you right now that I would rather have a warehouse full of Campbell’s soup in the zombie apocalypse than a warehouse full of gold. But that’s just me.
And diamonds? We can make those in laboratories so precisely that you can’t tell the difference between a lab diamond and a mined diamond.
These things have value because people want them. When they stop wanting them, they lose their value — I’m looking at you, Beanie Babies.
Now, I feel like I’ve gone on a bit of a rant here. So, let me give you two concrete reasons why the market values cryptocurrencies:
- Utility: Cryptocurrencies, like bitcoin, are traceable, exchangeable and not tied to any government. They have a built-in ledger via blockchain that allows you to see how they’ve traded before and where. These factors allow cryptos to have a level of security never before seen in currencies.
- Scarcity: Gold, diamonds, etc., have long held value tied to their scarcity. There is supposedly a finite supply. In the case of cryptocurrencies, this is doubly true. There are only 21 million bitcoins in existence. And there will only ever be 21 million bitcoins. Period. How’s that for scarcity?
Finally, if you are still hung up on the fact that you can’t hold a bitcoin in your hand … how much of your cash do you actually touch these days? Nearly every transaction is now digital. I can’t remember the last time I paid for something with cold hard cash. Digital payments are much easier.
The writing is on the wall. Soon, paper currency will be dead. With that in mind, cryptocurrencies and their digital security appear to be the best path toward securing these digital transactions going forward.
That is why cryptos have value.
The bottom line is that cryptocurrencies are legitimate, and they’re an investment you need to be a part of.
If you’re ready to suck the marrow out of the market and learn more about investing in cryptocurrencies — including the four specific catalysts driving bitcoin right now: Click Here!
OK, that was a bit more ranty than I expected. I hope that answered your question, Tom. Let’s see what’s next:
Batteries Not Included?
Love your newsletter and read it every day.
Your piece on NIO yesterday is really intriguing but prompted a thought about swappable batteries. Thieves already steal catalytic converters when the price of platinum gets high enough or if there’s a black market for parts, so would swappable EV batteries suffer the same fate?
What stops accessible for swap batteries from becoming accessible for theft?
— J. Argonaut
Hey, Argonaut! I’m glad your travels brought you to Great Stuff!
As for stealing Nio batteries? Well, it would be a lot easier just to snag another golden fleece from a dragon. While these batteries are swappable, they weigh upwards of 1,400 pounds — that’s just shy of a ton. Plus, they take up nearly the entire length of the vehicle’s undercarriage.
In order to steal one, you’d need to jack the car off the ground, remove it and lower all 1,400 pounds to the ground, then lift that awkward monstrosity into whatever vehicle you’re transporting it in — all without damaging the technology along the way.
Is EV battery theft possible? Sure. Is it likely? Not so much.
Heart of Glass
Quantum glass battery. Company name etc. Thanks!
— Laurie M.
Thanks for writing in, Laurie! You’re not the first Great Stuff reader to ask about quantum glass batteries.
While I am unfamiliar with whatever email or promotion you received, these batteries are pretty cool. But they are a long way off in terms of development right now. If you’re still curious about which companies are working on quantum glass batteries, here’s a list:
- Panasonic Corp. (OTC: PCRFY)
- Albemarle Corp. (NYSE: ALB)
- Samsung Electronics Co. (OTC: SSNLF)
These may or may not be the quantum glass battery stocks you’re looking for. However, I have an even better battery opportunity for you.
It’s a tiny “super battery” that is poised to take the EV market by storm. Click here to find out more!
The Chinese Conundrum
Hello, Great Ones,
Please tell me what you think of BABA. I’m in at $269. Thank you!
— Liz V.
Let’s get one thing straight, Liz. You are the Great One! I’m just this guy, you know?
Anyway, Alibaba … now there’s a name I haven’t talked about in a long time. And for good reason…
You see, Alibaba is fighting a two-front war right now.
First, it’s battling the U.S. government over new SEC financial reporting guidelines. These new rules have to potential to delist any Chinese company that fails to follow them. Second, Alibaba is under investigation for antitrust behavior by the Chinese government. That’s bad news.
Absent these two (major) issues, I rather like Alibaba. It has tens of billions in sales. It’s growing at a ridiculous pace of roughly 50% per year. And it’s one of the few companies on the planet that can go head-to-head with Amazon (Nasdaq: AMZN) and not blink.
It’s just those pesky government issues. Now, I can’t tell you what to do with your investments … the SEC and all that, you know. However, I can’t see China putting its capitalist cash cow out to pasture. Nor can I see Alibaba not complying with U.S. financial reporting guidelines.
Still, until these issues are resolved, BABA will be quite volatile — especially if China decides to take action on its antitrust investigation. If you’re in BABA at $269, you need some upside right now to make back your losses. Whether you hold on in hopes of recouping that capital depends on your risk tolerance levels … and the Chinese government is a rather big unknown at this point.
Tea Bag In My Bourbon
That’s bloody brilliant. Now I can drink my Old Grand Dad without the bride getting upset!
— Gary W.
Old Grand Dad? The 114 right? Gary, you are indeed a man of culture.
But please don’t get me in trouble with your bride. I don’t want her to go all Kill Bill on me over bourbon life hacks.
Far Beyond Driven
Reinventing the Steel Pantera line was spot on. Maybe their best album. Keep “Upliftng” those portfolios!
Awesome stuff, man. Appreciate the newsletter.
AJ, a fellow Pantera fan! Thank you for writing in. Stick with Great Stuff, and we’ll take you to a new level of confidence and power. A strength beyond strength … if you will.
I mean, have you seen the Great Stuff Picks portfolio lately? Three 300% winners! And you don’t need to join planet caravan to find those results … it’s free!
That’s all for this week’s Reader Feedback. If I didn’t get to your question or email, it’s nothing personal … I promise. I am only human, limited by time and space — but mostly by word count.
That said, I do read each and every one of your emails! So keep writing, and I’ll keep reading and responding: GreatStuffToday@BanyanHill.com.
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Until next time, be Great!
Editor, Great Stuff